Conservative MEP Vicky Ford was the shadow rapporteur for the committee overseeing the EU mortgage directive and succeeded in protecting the UK’s buy-to-let market and certain first-time buyer products.
However, despite tabling 50 amendments on the topic, she was unable to prevent the directive demanding the replacement of KFIs. The UK mortgage industry now has five years to move to a standard European document.
She told Mortgage Solutions: “The industry felt that it was worth many millions in terms of having to restructure computer systems to product information in a different format.”
Ford said she had fought to make the European document as close to the existing KFIs as possible, as well as securing time for the industry to adapt: “I am giving them the maximum time I could get and that was five years.”
A Council of Mortgage Lenders spokeswoman confirmed the change was likely to cost millions of pounds: “When you are a lender and you have to make system changes, it is a big deal.”
The European replacement would be less informative to consumers than the existing document, she added.
Grant Thornton Financial Services Advisory partner Ewen Fleming said the EU mortgage directive would mean lenders had to deal with yet another regulatory change: “The biggest part in my view would be the APR calculation if different algorithms were needed.
“Lenders would need actuarial support to embed that in the system and make sure it was working properly, because any mistake would be very damaging. You can imagine the fines that would go with that.”
Brokers might find it an irritation but were more able to take the change in their stride, he added.
