Breakthrough in talks on new mortgage code

Date: 20/07/2000

By Renée Cordes

CONSUMER and financial service representatives agreed the key elements of a voluntary code for the mortgage industry this week, ending years of wrangling over what kind of information lenders should be forced to give customers.

"We are very happy," said one negotiator, who predicted that the new code of conduct should be in place before the end of this year, once it has been approved by all the organisations involved and formalised in the shape of a European Commission recommendation.

The breakthrough came after years of talks between banking and consumer officials which repeatedly broke down because of disputes over key details of the code. The main bone of contention was what kind of information lending institutions should be obliged to give potential borrowers to help them make an informed choice when buying a home.

The parties had reached agreement on some key issues, such as the definition of mortgages and what information should be disclosed in early contacts between the house buyer and the would-be lender, before this week's talks.

They have now gone a vital step further by agreeing on what information should be provided when a contract is signed, although those involved in the talks said they could not give precise details of the accord at this stage because of a confidentiality agreement.

This week's deal came at the 11th hour, with officials warning before the meeting that if it failed to produce an accord, the Commission would begin work on proposals for binding legislation, a move which some banks strongly opposed.

The pressure on the industry to agree a code has intensified recently because of a surge of lending activity across the EU spurred by strong growth in the residential property market.

Consumer and financial service representatives have agreed the key elements of a voluntary code for the mortgage industry, ending years of wrangling over what kind of information lenders should be forced to give customers.