One focuses on the treatment of borrowers in mortgage payment difficulties and one on responsible mortgage lending. The EBA focus is clearly on harmonising supervision across the EU.
At this stage the papers are simply setting out best practice. They are not aimed directly at firms but they do give some helpful future insight into what may be shaping supervisory thinking.
Intended to promote common practices across the EU, the EBA claims that the ultimate aim is to enhance consumer protection and contribute to the stability, integrity and effectiveness of the financial system.
So as things stand, these are non-binding interventions, with no question of having to ‘comply or explain’.
However, there are some who think that, once the Mortgage Credit Directive (which I have written about here many times, and which is currently due to be voted on in plenary this autumn) comes into force, these opinions may move towards more formal guidance; a situation which in the UK we would be keen to avoid.
The opinions are, however, informed by the negotiations on the Mortgage Credit Directive (MCD), and from the EBA’s perspective, are therefore intentionally positioned as an aid to supervisory authorities in their thinking about national implementation of relevant aspects of the MCD.
Generally speaking, this is not unreasonable. In so many areas, the MCD has ended up in a far more positive position than we had once feared. And in many ways it will not cause an overlap with the UK Mortgage Market Regulation (MMR) rules coming into force in April 2014.
We are pleased that in all of the negotiations on the MCD, that industry, the FCA and HM Treasury, were generally singing from the same hymn sheet. And we should be grateful that the FCA has been heavily involved in the work with the EBA, with the result that these opinions are closely aligned with supervisory thinking in the UK.
But this doesn’t take away the fact that the MCD is not perfect. There will be issues for lenders in the UK to deal with. Plus, not only will we be facing two new sets of rules (MMR and MCD) but also two supervisory views.
We would urge the EBA to continue to engage with national supervisors when developing its policy, to ensure it continues to remain in concert with national positions, rather than conflict.
Paul Broadhead is head of mortgage policy at the Building Societies Association
