Brussels, 15/06/2009 (Agence Europe) - The European Commission has launched a public consultation on "Responsible lending and borrowing in the EU", which will continue until 31 August. Contributions to this consultation will help gather ideas about what legislative needs there might be. A public hearing on lending and borrowing will take place on Thursday 3 September in Brussels. Responsible lending is where the credit products sold are appropriate for consumers' needs and tailored to their ability to repay. Given that harmonised and clear (pre-contractual) information on mortgages which is also relevant, complete and accurate, is necessary to make clear choices, the Commission is looking at the possibility of making standard information formats on mortgages legally binding( (and which currently, only figure in a voluntary code of conduct). It is also examining the possibility of drawing up guidelines for lenders and which provide warnings about the risks contained in the financial products they are planning on purchasing. The crisis has also revealed that lenders granted loans that were inappropriate to the profile of certain borrowers. The Commission is exploring whether preliminary assessments of lenders' financial situations should become standard. It is possible that enders (banks or credit intermediaries) do not have all the necessary guarantees, because they receive a commission that is higher if they sell a more at risk or inappropriate loan to their clients. The European institution is examining what is the most effective way of tackling potential conflicts of interest, particularly the commissions/bonus/fixed price contracts that lenders receive.
Credit intermediaries are not subject to specific European regulation and only some of their activities on loans are covered by European legislation (directive 2008/48/EC). Twenty two countries have introduced nation legislation on these intermediaries. The Commission has stressed that this has led to “considerable divergences” between member states. The Commission is interested in the views of all stakeholders regarding the difficulties they encounter due to this fragmentation. Credit intermediaries may be able to introduce a compulsory registration and supervision on the basis of safeguard criteria and a minimum level of own funds and professional qualifications (directive 2002/92/EC on insurance intermediary activities).
In 2007, the mortgages market in the 27 member states represented more than half of the European Union's GDP and consumer loans a little less than 8%. The Commission points out in its consultation document than developments in the former have played a significant role in exacerbating the effects of the financial in several member states such as Spain, Ireland, Latvia, Lithuania and the United Kingdom. (M.B./trans/rh)