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New EU Insolvency Directive could be major boost for cross-border mortgages – Hayes

New EU Insolvency Directive could be major boost for cross-border mortgages – Hayes

Only 3 % of EU citizens have availed of a cross-border mortgage, credit card or insurance product

Brian Hayes MEP today said that the European Commission will soon propose an EU Insolvency Directive, aimed at harmonising practices between national insolvency regimes.


“The new EU Insolvency Directive is coming down the tracks very soon. This could be a huge boost in establishing a cross-border mortgage regime in the EU. President Juncker through his recent State of the Union speech and Commissioner Dombrovskis have both made it clear that the Commission is rapidly pushing forward with legislative proposals to harmonise national insolvency laws.

“Cross-border mortgages will not become a reality unless we have harmonised insolvency practices across the EU. Citizens cannot avail of mortgages in other Member States because banks will not enter into cross-border mortgage agreements as there is such huge differences between national insolvency regimes.

“If we are to have a real internal market in the EU, cross-border mortgages should be the norm. We’ve already got Banking Union in place and one would think that if EU banks are under the same rules, cross-border mortgages should be a given. Yet, the Commission has carried out research that shows that only 3 percent of consumers in the EU have availed of a mortgage, credit card or insurance product in another Member State.

“A proper internal market for mortgages would be a huge boost for Irish citizens. There is a serious lack of competition in the Irish mortgage market with only five main providers in the market. Recent Central Bank of Ireland figures show that the average variable mortgage rate is still much higher than the Eurozone average.

“I expect that Commissioner Dombrovskis will propose an EU Insolvency Directive before the end of the year. This legislation has great potential and could cut out lengthy delays in insolvency proceedings and set a new EU benchmark for best practice on insolvency. The goal should be to have all national insolvency regimes performing at a minimum level of efficiency.

“Ireland made fundamental changes to insolvency rules through the Personal Insolvency Act 2012. Because of this legislation and the insistence of the Troika that reform in this area be applied, Irish citizens now have a number of realistic debt resolution options to deal with unsustainable debts. With our modernised insolvency regime in place, Ireland should be in a good position to deal with new EU rules should they come about.

“A key part of the insolvency plans will be on business restructuring and insolvency to speed up recovery of assets and give companies a second chance. The idea is to give business a chance to overcome bankrupcy in order to foster a dynamic business environment.

“Ideally, if a Directive becomes a reality it should provide clear guidelines on, for example, what rights creditors have in a restructuring plan and how and when insolvency regimes should be monitored.”

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