EFBS questions Commission approach on mortgage credit

13 September 2005

The European Federation of Building Societies (EFBS) issued its response on the Commission study on mortgage credit and considers the cost and benefit analysis as an attempt to justify European measures despite low growth figures. Previous efforts of the European Commission to harmonize consumer protection rules did not lead to the development of an internal market, EFBS argues. The Federation also fears that a common European standard by regulating individual parts of the mortgage credit would lead to the abolition of product variety by the European Commission.

EFBS criticizes that the assumptions of the report are based on the UK market and than extended to other European markets. The concerns expressed recently by the Bank of England on the highest rate of per capital indebtedness and the highest rate of private insolvencies in Great Britain at least raise doubts whether such a system could be exemplary for the EU internal market.

In any case the London Economics study shows that the internal market for mortgage credit cannot be created just by harmonising consumer protection provisions. The internal market can rather be achieved by guaranteeing the freedom of establishment and the freedom to provide services cross border by the European legislator via mutual recognition of financial services products.

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