Abstract
This article assesses if and how the recently adopted EU Directive concerning consumer mortgage credit agreements (Directive 2014/17/EU) contributes to defining a common “responsible lending” policy in the varied contexts of the Member States’ mortgage markets. It addresses that question by analysing how the Directive’s rules will complement or change the regulatory regimes of the UK and the Netherlands. Drawing on data from economics studies regarding household debt, affordability of credit, and the institutional framework of mortgage market regulation, the article seeks to explain how different regulatory choices in these legal systems are informed by the sources of risk that regulators seek to control. Even with the harmonized rules laid down in the Mortgage Credit Directive, the modalities of “responsible lending” will still differ significantly between EU Member States. Nevertheless, the study of Member States’ policies may reveal common concerns and directions on how to address them.
Highlights
The term Bresponsible lending^ has become a moniker for regulatory reforms in consumer credit regulation and has gained new ground in the wake of the global financial crisis
Key changes concern stricter duties of responsible lending imposed on lenders, a new requirement that all interactive sales should be advised, and shifting the responsibility for the test of affordability of the credit entirely towards lenders, as well as some changes to information provision which anticipate on the introduction of the EU Mortgage Credit Directive (FSA 2012a, b, Table 1 and para. 1.10)
The conclusion must be that even though it is possible to distinguish common elements of a Bresponsible lending^ policy at EU level, specific rules remain diverse from one jurisdiction to another
Summary
The term Bresponsible lending^ has become a moniker for regulatory reforms in consumer credit regulation and has gained new ground in the wake of the global financial crisis. More stringent duties may be adopted or maintained in national laws Bin order to avoid adversely affecting the level of protection of consumers relating to credit agreements in the scope of [the] Directive,^ taking account of differences in market development and conditions in the Member States.4 What does this mean concretely for responsible lending policies in the Member States? A general definition of the policy, consistent with the approach taken by the EU Mortgage Credit Directive, could look like this: the policy aimed at ensuring responsible behaviour of participants in the financial market – including both lenders and borrowers –, focused on preventing overindebtedness of borrowers, which is given shape through various regulatory mechanisms and which may be pursued through other legal means, such as remedies in private law, or non-legal means such as education.. Contexts for the Netherlands and for the UK, making some comparative observations between the two countries
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