Plan for Europe-wide home loans

BRITISH banks and lenders are poised to benefit from a fresh Brussels campaign to help people across Europe shop around for the best deals on loans and savings.

In a policy document to be unveiled this week, the European Commission is expected to appeal for ideas from consumers' organisations and the financial sector on how best to bring about a real single market in everything from mortgages to pensions, life insurance and savings plans.

'The UK has one of the most sophisticated markets in Europe for mortgages,' said Simon Walley, adviser to the European Mortgage Federation. It could now be time for the rest of Europe's consumers to benefit from the choice offered to UK property buyers, he added.

The paper is also expected to raise the propect of European-wide standards for life insurance and savings products.

The green paper is part of the EC's Financial Services Action Plan and is expected to focus on making current rules work more smoothly rather than introducing new legislation. It will focus on the entire range of retail financial products, with a seperate paper concerning mortgages due out in late summer.

But consumer groups and industry alike are not anticipating an explosion in cross-border retail financial services. All point to a series of barriers, many of which would be difficult for Brussels to take on.

Some European Union countries have stricter rules on access to borrowers' credit histories, without which financial institutions would be hard-pressed to cough up the price of a new house to a foreign buyer.

Life insurance and pension payments on foreign schemes may not be deductible at home. And because Britain is not signed up to the euro, any cross-Channel borrowing or saving involves a 'massive exchange rate gamble' according to Walley.

Because of differences in the way retail financial products are drawn up from one country to another, 'it's like apples and oranges', said Dominique Forest of the European consumers' lobby BEUC.

The European Commission is expected to explore ways of improving the information consumers receive so they can compare what is on offer in different countries. Whatever the solution, EU internal market Commissioner Charlie McCreevy is likely to regulate only where absolutely necessary.

The UK's Council of Mortgage Lenders is sceptical about the plans. A spokeswoman said: 'We accept that their are benefits to be derived from a single market but we don't feel lenders will be comfortable operating outside their home markets.'

She added the EC would have to overhaul the way homes are purchased throughout Europe to create a single system. 'Each country has different legal systems, credit check systems and land registration laws. If this is to work there needs to be a huge investment in infrastructure.'