Consultation on Professional Indemnity Insurance (PII) for mortgage credit intermediaries

The European Banking Authority (EBA) launched today a public consultation on a draft Regulatory Technical Standard (RTS) on the minimum monetary amount of the professional indemnity insurance or comparable guarantee for mortgage credit intermediaries. These RTS refer to Article 29(2)(a) of the proposed Directive on credit agreements relating to immovable residential property (Mortgage Credit Directive - MCD).

The MCD aims at addressing a series of issues that the European Commission (EC) had identified in mortgage markets across the European Union (EU), including the lack of requirements pertaining to the professionalism, registration and authorisation of mortgage credit intermediaries.

One of the measures the MCD puts in pace to address these concerns is set out in Article 29, which requires Member States to ensure that mortgage credit intermediaries hold professional indemnity insurance (PII). The EBA is mandated to develop draft RTS to stipulate the minimum monetary amount of the PII or comparable guarantee. During the analysis, it emerged that the minimum amount could potentially be determined through four options emerged. These are set in the Consultation Paper and one of them is identified as the preferable option by the EBA.

Consultation process

Comments can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 18.03.2014. All contributions received will be published following the end of the consultation, unless requested otherwise.

Background to the Mortgage Credit Directive

The draft Mortgage Credit Directive was adopted by the European Parliament in the first reading on 10 December 2013. The EBA anticipates that the draft Directive will be formally adopted by the EU Council of Ministers, signed by the European Parliament, and published in the Official Journal of the European Union in the first quarter of 2014. The Directive will enter into force 20 days after publication.