In the coming weeks, the Dutch Parliament’s lower house is expected to address the legislative proposal on residential mortgage credit, which was submitted by the Dutch Minister of Finance and the Minister of Justice back in September 2015. The legislative proposal implements European Directive 2014/17/EU on credit agreements for consumers related to residential immovable property (the "Directive") which must be implemented by 21 March 2016. 

A majority of these rules already apply through existing laws, regulations and codes of conduct currently in use. Below are the eight most important changes suggested in the new legislative proposal:  

  • Licenced consumer mortgage credit intermediaries will be able to "passport" their licence to other EU Member States to enable them to perform cross border activities or to establish a branch. However, passporting remains not possible for mortgage credit providers ("financiële dienstverleners"), holding licenses based on article 2:60 AFS.                        
  • Adequate professional liability insurance for consumer mortgage credit intermediaries will be mandatory.                       
  • The professional skills and competence requirements will be expanded to direct managers of persons who have client contact. For cross border activities and branches in other EU Member States the host state may impose minimum requirements in addition to the home state’s rules related to professional skills and competence.                        
  • The Dutch legislator has chosen self-regulation with respect to setting standards for the appraisal of real estate. Professional organisations are working on a central register for appraisers, professional codes of conduct and a central disciplinary tribunal. 
  • To allow consumers to compare offers from different parties in an efficient manner pre-contractual information must be provided using the European Standard Information Sheet (ESIS). Under the legislative proposal, a completed copy of the ESIS must be provided without delay after a consumer has given the required information about his financial requirements, financial situation and preferences, but in any case "in good time before the consumer is bound by a credit agreement or an offer".               
  • Offers made to consumers must be binding (and accompanied by an ESIS, unless one was provided previously and is still considered up-to-date). At this stage an assessment of creditworthiness must already have been completed and verified.                       
  • Penalties due for early repayment are limited. Upon the consumer's request, information on possibilities, conditions and consequences of early repayment must be provided promptly and in writing.                      
  • In view of the duty of care towards consumers in relation to the planning of possible foreclosure activities due to payment arrears, a statutory 2 month grace period shall be introduced during which discussions between bank and customer will take place aimed at finding a solution for the payment arrears.

Mortgage creditors should check commercial and transaction documentation, internal processes and procedures as soon as possible. Furthermore, mortgage credit providers and intermediaries should consider reviewing their current cooperation agreements, especially in relation to the processes that lead to binding offers and the duty of care with respect to consumers that are behind on payments.