General view of the European Parliament, in Brussels, Belgium. Olivier Hoslet / EFE
The mortgage market does not present all the guarantees that it should neither for the consumer nor for the economy in general. The former suffer from abusive mortgages or mortgage indexes that are not transparent. And the economy, victim of excess, can suffer a real estate bubble. The European Parliament has taken up all of this on Tuesday.
On the one hand, the plenary session of the European Parliament has approved by 659 votes in favor, 20 against and 28 abstentions a new rule that toughens fines for insider trading and manipulation of financial markets and benchmarks such as the libor or the Euribor.
Who manipulates indices will be guilty of market abuses and will face heavy fines Companies condemned for market abuse may be fined up to 15% of their annual turnover or 15 million euros. Individuals who violate these rules will be subject to fines of up to five million euros, as well as temporary prohibition (in the most serious cases may be permanent) of the exercise of a professional activity in investment companies.
After the scandal over the manipulation of the libor, which resulted in a heavy fine to the British bank Barclays, the scope of application of the new regulations has been extended to punish also the dissemination of false or confusing information to manipulate the calculation of benchmarks .
“Those who manipulate reference indexes such as the libber will be guilty of market abuses and will face heavy fines,” said Financial Services Commissioner Michel Barnier.
In parallel, the European Parliament and the governments must still negotiate a rule that provides for criminal sanctions for the most serious cases of insider trading and market manipulation. And the Community Executive is scheduled to present next week a standard to regulate the development of benchmarks.
Avoid new real estate bubbles
On the other hand, the plenary session of the European Parliament has endorsed a rule whose objective is to put an end to the excesses in the granting of mortgage loans such as those that caused the housing bubble in Spain or Ireland and improve the protection of consumers against evictions in case of non-payment
It puts an end to deregulation of the market and consolidates the responsible loan The directive has not yet been definitively approved , since the differences between the Parliament and the governments persist on how to supervise from the EU that Member States incorporate it correctly into their national legislations. Once this issue is agreed, the countries will have a period of two years to transpose it.
“The new directive puts an end to the deregulation of the European mortgage market and consolidates the responsible loan ,” said Socialist MEP Antolín Sánchez Presedo, parliamentary speaker of the regulation.
The directive prevents the Member States from opposing the dation in payment if the two parties expressly agree on it in the credit agreement. In addition, it requires banks to be “reasonably tolerant” in the case of clients with serious payment difficulties and to make “all reasonable efforts to resolve the situation” before initiating an eviction proceeding.
Banking is required to be “reasonably tolerant” with customers with payment difficulties When a citizen stops paying the mortgage, the rule requires that the property is sold for the best possible price and that the bank facilitates the payment of the outstanding amount in order to avoid that consumers are over indebted for long periods. Thus, unattachable minimums in salaries and pensions are foreseen.
The directive obliges the bank to assess the consumer’s ability to repay the loan , introducing European standards for the first time. Banks will have to provide customers with a standardized mortgage information booklet.
Consumers will benefit from increased competition because the directive prohibits, in general terms, linking the granting of the mortgage to the acquisition of another financial product . However, this link will be allowed in some cases, such as when it comes to insurance or savings products.