Regulatory news

White Paper focuses on tie-ins

23 February 2008

The original White Paper proposals detailed in December 2007 called for a greater harmony between the mortgage markets of member states of the EU.

The proposals also suggested greater cohesion within markets and promoted the need for consumer choice.

The updated provisions followed this up with proposals to look at lenders tying in borrowers.

The paper stated: ‘The Commission will review arrangements for ‘tying in’ mortgage customers to other products to see whether legislative action is needed to ensure that customers are not disadvantaged or competition restricted.

'A study will go out for tender in April 2008. The European Mortgage Federation will submit comments by the end of May 2008.’

As a result of the continued effects of the credit crunch, market liquidity, transparency of bank exposures to securitisation transactions and transparency of information about risks from the investor perspective were also highlighted as in need of further action.

Alex Hammond, PR manager at Kensington, said: “Under regulation, mortgage lenders are required to make ‘Treating Customers Fairly’ (TCF) an integral part of their working culture and this means applying TCF not just to the mortgage but also any associated products that are linked to that mortgage.

"It should therefore be the case that any lenders operating within the guidelines of TCF do not impose any unfair commitments.

“Of course, brokers are well placed to get involved with cross-selling as they can search across the market to choose the most appropriate products to sit alongside their clients’ mortgage.”