In March 2003, the Commission launched a process to identify and assess the impact of barriers to the internal market for credit agreements relating to immovable property. In 2007, it adopted a White Paper on the integration of EU mortgage credit markets7. The White Paper announced the Commission’s intention to assess the impact of, among other things, the policy options for pre-contractual information, credit databases, creditworthiness, the annual percentage rate of charge and advice on credit agreements. The Commission also established an Expert Group on Credit Histories to assist the Commission in preparing measures to improve the accessibility, comparability and completeness of credit data. Studies on the role and operations of credit intermediaries and non-credit institutions providing credit agreements relating to immovable property were also launched. In accordance with the Treaty on the Functioning of the European Union (‘TFEU’), the internal market comprises an area without internal frontiers in which the free movement of goods and services and the freedom of establishment are ensured. The development of a more transparent and efficient credit market within that area is vital to promote the development of cross-border activity and create an internal market for credit agreements relating to immovable property. The financial crisis has shown that irresponsible behavior by market participants can undermine the foundations of the financial system, leading to a lack of confidence among all parties, in particular consumers, and to potentially severe social and economic consequences. Many consumers have lost confidence in the financial sector and borrowers have found their loans increasingly unaffordable, result in defaults and forced sales rising.

In order to facilitate the emergence of a smoothly functioning internal market with a high level of consumer protection in the area of credit agreements relating to immovable property, a harmonized Union legal framework needs to be established in a number of areas. It is also further necessary to establish harmonized standards in order to ensure that consumers looking for credit agreements relating to immovable property are able to do so confidently in the knowledge that the institutions they interact with act in a professional and responsible manner. This Directive should improve conditions for the establishment and functioning of the internal market through the approximation of Member States’ laws and the establishment of quality standards for certain services, notably with regard to the distribution and provision of credit through creditors and credit intermediaries. The establishment of quality standards for services for the provision of credit necessarily involves the introduction of provisions regarding approval and supervision of credit intermediaries and non-credit institutions. For those areas not covered by this Directive, Member States should be free to maintain or introduce national legislation. The provisions of this Directive apply irrespective of whether the creditor or credit intermediary is a legal person or a natural person. However, this Directive does not affect the right of Member States to limit, in conformity with Union law, the provision of credits relating to the immovable property offered to consumers to legal persons only or to certain legal persons.