Public Consultation Mortgage Credit Directive

On the 4 February 2014, the European Parliament and the Council adopted Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property (referred to here as the Mortgage Credit Directive – MCD).

The MCD was introduced as part of an appropriate regulatory framework designed to deal with problems in the area of mortgage credit. Such problems included, among others, ineffective, inconsistent or non-existent regimes for credit intermediaries and non-credit institutions providing credit for residential immovable property, and consumers having inadequate information about different aspects of credit transactions. The problems identified had potentially significant macroeconomic spill-over effects, could have led to consumer detriment, acted as economic or legal barriers to cross-border activity and created an unlevel playing field between actors.

The MCD was intended to facilitate the emergence of a smoothly functioning internal market with a high level of consumer protection in the area of credit agreements relating to immovable property.

Among other things, the MCD sets out provisions for:

• maximum harmonization in relation to provision of pre-contractual information

• standardised format and the calculation of the Annual Percentage Rate of Charge (APRC)

• better information to consumers on available mortgage products

• to assessing the creditworthiness of mortgage applicants

• limiting the exchange rate risk consumers are exposed to in foreign currency loans

• a guaranteed period of reflection or a right of withdrawal for borrowers prior to being bound by the credit agreement

• a right to an early repayment of the credit

The Directive also establishes business conduct principles aimed at ensuring that creditors and credit intermediaries act honestly and transparently in the consumer’s interests. Member States had to transpose the MCD provisions by March 2016; but not all Member States transposed the Directive on time.

This consultation sets out to gather information on the views of consumers, national and regional authorities, companies, industry representatives and other stakeholders as input to a study on the review of the MCD, commissioned by the European Commission. The study will contribute to a review of how well the legislation is performing and whether its objectives are being achieved.

Please feel free to upload a concise document, such as additional evidence supporting your responses or a position paper. The maximum file size is 1MB. This can be submitted to MCD@rpaltd.co.uk