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EBA publishes guidelines to encourage cross-border mortgage markets

The European Banking Authority (EBA) has published final guidance on the operation of a system it hopes will lead to mortgages being more frequently provided across European borders. 12 Aug 2015

The The final guidelines on 'passport notifications' for credit intermediaries under the Mortgage Credit Directive (MCD) are designed to encourage cross-border mortgage markets by making sure that information about credit intermediaries doing business in more than one member state is exchanged consistently between national authorities, the EBA said.

Mortgage markets in the EU are still relatively fragmented, due to a lack of consumer confidence and to barriers to offering cross-border services and setting up branches in other member states, the EBA said. The passport notification scheme is designed to overcome these difficulties, but there has been a lack of EU-wide guidance in the specific information that needs to be notified, it said.

Passport notifications are defined as 'the requirement for competent authorities of the home member state to notify the competent authorities of host member states in relation to credit intermediaries intending to carry out business in another member state'.

As well as stipulating the information needed and how it should be provided, the guidelines also cover how to update the public register on credit intermediaries and include template notification forms, the EBA said.

Financial enforcement expert Michael Ruck of Pinsent Masons, the law firm behind said: "The EBA guidelines aim to increase the regulatory intelligence held by the various European regulators regarding mortgage providers and intermediaries. While regulators will aim to have greater visibility of those operating within their territories, only time will tell if this ensures regulatory standards across Europe are met."

The MCD is due to be transposed into national law across Europe by 21 March 2016.

The EBA will now translate the English version of the guidelines into all EU languages. Competent authorities will then have two months to confirm their compliance status to the EBA, and this will be published on the EBA website.