CELEX: 51987PC0255
Language: en
Date: 1987-05-22
Title: Amended Proposal for a COUNCIL DIRECTIVE on the freedom of establishment and the free supply of services in the field of mortgage credit (presented by the Commission pursuant to the second paragraph of Article 149 of the EEC Treaty)

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DOCUMENTS "COM"
COM (87) 255
Vol. 1987/0159
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                              COM(87 ) 255 final
                                              Brussels , 22 May 1987
                             Amended Proposai for a
                                COUNCIL DIRECTIVE
       on the freedom of establishment and the free supply of services
                         in the field of mortgage credit
         ( presented by the Commission pursuant to the second paragraph
                        of Article 149 of the EEC Treaty )
                                                                 ' X\
  C0MC87 ) 255 final
                                                  M                    Mr
                                                   % *                #/
 ---pagebreak---            Modified proposal for a Council Directive on the freedom of
                      establishment and the free supply of services
                              in the field of mortgage credit
1 . Explanatory Memorandum
    1.    On 24 January 1985 the Commission sent the Council a
          proposal for a Directive on the freedom of establishment and
          the free supply of          services  in the     field of mortgage
          credit.'1' ^
    2.    The Economic and Social Committee delivered its opinion
          at its 231st plenary session held in Brussels on 27 November
          1985 , and Parliament delivered its opinion at its sitting of
          19 February 1987 . 3 )
    3.    An amended proposal has been drawn up to take account , as
          far as possible , of the opinion delivered by Parliament and
          suggestions made by the Economic and Social Committee .
          The Parliament as well as the Economic and Social Committee
          have both endorsed the basic feature of the original
          proposal ; the liberalisation of mortgage credit based on
          mutual recognition of financial techniques . Only a few of
          the amendments proposed by the European Parliament have been
          considered to be in conflict with the basic principles of
          the proposal or the EEC-Treaty and have therefore been
          unacceptable to the Commission .
    4.    The majority of the proposed amendments take the form of
          improvements in presentation or in drafting , whereas others
          have a more substantial impact on the provisions . It seems
          therefore appropriate to comment on the most important
          changes .
    1 ) COM ( 84 ) 730 final ; OJ No C 42 , 14.2.1985 , p . 4
    2 ) OJ No C 344 , 31.12.1985 , p. 11
    3 ) OJ No C 76 , 23.3.1987 , p. 93
 ---pagebreak---                               2
a) Article 1
   The amendment makes it clear that the scope of the
   proposal covers all credit institutions , which are active
   in the field of mortgage credit , and not just specialised
   mortgage credit institutions .
b) Article 2
   For the clarity of the whole proposal it is proposed to
   include three new definitions of " designated credit
   institutions ",  " mortgage  credit   activities "    and   " mort ¬
   gage " especially . The new definitions have been inserted
   in the subsequent articles where appropriate .
c) Article 2 A
   The new Article 2 A is inserted in order to provide that
   nothing in this Directive shall reduce any existing
   rights   of designated    credit   institutions    to    undertake
   mortgage credit activities in their home Member State or
   any other Member State .
d) Article 3
   A new subparagraph has been added to Article 3 which
   requests that a home Member State does not restrict the
   use in another Member State of any financial techniques
   permitted for mortgage credit activities in the home
   Member State .
   The use of the term " techniques " in the original proposal
   Articles 4 and 5 has been     criticised because     it   could be
   interpreted too widely . To achieve greater clarity it is
   proposed    to     replace    " techniques "  by       " financial
   techniques " to make it clear that the techniques in
   question are the funding and lending techniques of the
   designated credit institutions .
e) Article 4 and 5
   The two articles have been merged in order to improve the
   clarity of   the proposal .   One of   the proposed modifica-
 ---pagebreak---                                     3
     tions in paragraph ( 2 ) needs a comment . It is proposed to
     add "who are adversely affected " to make it clear that a
     Member State is only obliged to authorize those credit
     institutions who have had the conditions of competition
     distorted by    the introduction     ( importation )   of   new
     financial techniques , to adopt similar techniques or to
     take equivalent measures . Nothing hinders a Member State
     from letting such an authorisation apply to all
     designated credit institutions but there might be cases
     where a Member State wants to exclude one or more groups
     of credit institutions not affected by the introduction
     of the new financial techniques .
f ) Article 6
    It is proposed to replace the original time-unlimited
    derogation concerning the choice of funding and lending
    currency and on matching with a maximum period of 7
    years . After 7 years the financial integration should be
    so far developed that there will be no          need for    the
    derogation . The original proposed use of the ECu'as ^-
    alternative remains unchanged .
g ) Article 9
    Most of the proposed changes are to clarify and
    strengthen the procedures for cooperations between super ¬
    visory   authorities    used when    a designated       credit
    institution wants to supply services to another Member
    State .
h ) Article 11
    It is proposed to change the period in which Member
    States may limit the supply of mortgage credit from a
    domestic credit institution to other Member States .      It is
    proposed that the five years after notification of the
    directive is changed to a period of 7 years after the
    adoption of   the directive .  Furthermore   it   is  proposed
 ---pagebreak---                             4
        that  the  limitation of 25%  shall  be  25%  of the  total
        domestic mortage lending of   the  relevant  credit  insti ¬
        tution in the previous year .
     i) Article 12
        Finally it is proposed that Member States shall comply
        with the Directive within 2 years of its adoption .
50-32E7
 ---pagebreak---    Modified proposal for a Council Directive on the freedom of establishment and the
                  free supply of services in the field of mortgage credit
II . Text of the proposai
                 Original Proposal                                   Modified Proposal
The "title ( 1 )
Proposal for a COUNCIL DIRECTIVE on the             Proposal for a COUNCIL DIRECTIVE on          the
freedom of establishment and the free               freedom   of   establishment   and  the freedom
supply of services in the field of mort-            to supply services in the field of
gage credit .                                       mortgage credit .
The preamble                                        The preamble
Whereas Nos 1 to 5 remain unchanged
Whereas No 6                                        Whereas No 6
Whereas the elimination of such obstacles           Whereas   the   elimination of   such  obstacles
can be achieved by making it possible to            can be achieved by making it possible to
grant mortgage credit secured on real               grant mortgage credit secured on real
property situated in a Member State other           property situated in a Member State other
than the home Member State and by making            than the home Member State and by making it
possible to operate mortgage credit in              it possible to operate mortgage credit in a
host Member State in accordance with the            a host Member State in accordance with the
specific lending and funding techniques             financial     techniques    permitted   by   the
authorised in the home Member State ;               law of the home Member State ;
Whereas Nos 7 and 8 remain unchanged
Whereas No 9                                        Whereas No 9
Whereas , pending the achievement of                Whereas , during a transition period ,
complete freedom of capital movements ,             Member States may require matching between
Member States may require matching between          assets and liabilities of the currencies
assets and liabilities of the currencies            related to mortgage credit operations ;
related to mortgage credit operations ;             whereas they must at all events allow the
whereas they must at all events allow the           possibility of conducting such operations
possibility of conducting such operations           in ECU ;
in ECU ;
 ( 1 ) Ibis applies only to the English text
 ---pagebreak---                                             2
             Original Proposai                      Modified Proposai
Whereas No 10                                 Whereas No 10
Whereas , at all events the effective         Deleted .
exercise of the activities mentionned in
the Directive requires the removal of
some of the existing restrictions on
capital movements ; whereas a specific
directive will deal with such restric ¬
tions ;
Whereas Nos 11 to 15 remain unchanged
Whereas No 16                                 Whereas No 16
                                              Whereas the provisions in the Directive
                                              apply without prejudice to the provisions
                                              relating to capital movements ; whereas the
                                              effective exercise of certain activities
                                              mentioned in the Directive awaits the
                                              removal of existing restrictions on capita ]
                                              movements ; whereas a Directive based on
                                              Article 69 of the Treaty will deal with
                                              these restrictions .
             TITLE I                                       TITLE I
Definitions and scope                         Definitions and scope
          ARTICLE 1                                 ARTICLE 1
This Directive applies to the credit          This Directive applies to the credit
institutions falling within the ambit         institutions falling within the ambit
of Directive 77/ 780 / EEC , the activities   of Directive 77/ 780 /EEC all or part of
of which consist in receiving funds from      whose activities consist of receiving
the public collected in the form of           funds from the public collected in the form
deposits or the proceeds from mortgage        of deposits or the proceeds from the issuing
 ---pagebreak---                                           -  3-
           Original Proposai                            Modified Proposai
bonds or reimbursable shares and in granting    of mortgage bonds or other bonds or
loans to the public secured by mortgage         securities or reimbursable shares
on real property for the purpose of             and in granting loans to the public
acquiring or retaining property rights          secured by mortgage on real property
in building land or in existing or              for the purpose of acquiring or retaining
projected buildings or for renovating           property rights in building land or in
or improving buildings .                        existing or projected buildings or for
                                                renovating or improving buildings .
          ARTICLE 2                                     ARTICLE 2
For the purposes of this Directive :            For the purpose of this Directive :
- " home Member State " shall mean the          - "home Member State" ^ shall mean the
  Member State where a credit institu ¬           Member State where a credit institu¬
  tion as referred to in Article 1 has            tion as referred to in Article 1 has
  its head office ,                               its head office ,
- " host Member States " shall mean the         - "host Member States " shall mean the
  Member State where a credit institu ¬           Member State where a credit institu¬
  tion as referred to in Article 1 has            tion as referred to in Article 1 has
  a branch or into which it supplies              a branch or into which it supplies
  services .                                      services ,
                                                - "designated credit institutions " shall
                                                  mean the credit institutions referred
                                                  to in Article 1 ,
                                                - "mortgage credit activities " shall mean
                                                  the activities referred to in Article 1 ,
                                                - "mortgage " shall mean a mortgage or
                                                  other legal instrument having equivalent
                                                  legal effect .
                                                1 this applies only to the Dutch
                                                  text
 ---pagebreak---                                          - 4 -
         Original Proposai                                 Modified Proposai
                                                             ARTICLE 2A
                                               Nothing in this Directive shall reduce
                                               any existing rights of designated credit
                                               institutions to undertake mortgage
                                               credit activities in their home Member
                                               State or in any other Member State .
           TITLE II                                        TITLE II
General provisions to facilitate               General provisions to facilitate
exercise of the right of establishment         exercise of the right of establishment
and the right to supply services               and the right to supply services
          ARTICLE 3                                         ARTICLE 3
Member States shall authorize credit           Home Member States shall authorize
institutions as referred to in Article 1       designated credit institutions to
to grant mortgage credit secured by            undertake mortgage credit activities
mortgages on real property situated            in any other Member state in respect
in another Member State .                      of real property situated anywhere in the
                                               Community .
                                               Furthermore , they shall not restrict the
                                               use in another Member State of any
                                               financial technique permitted for
                                               mortgage credit activities in the home
                                               Member State .
 ---pagebreak---                                             5-
           Original Proposal                              Modified Proposal
              ARTICLE 4                                  ARTICLE 4
Member States shall repeal all legal or        1 . Host Member States , subject to the
administrative provisions preventing or        exception contained in paragraph 3 , shall
obstructing a credit institution , as          repeal all legal or administrative
referred to in Article 1 , having its          provisions preventing or obstructing
head office in their territory , form          a designated credit institution
operating mortgage credit in another           having its head office in another
Member State in accordance with techniques     Member State , form undertaking
specifically authorized within its home        mortgage credit activities in their
Member State , or shall so amend such          territory in accordance with financial
provisions as to make the operation of         techniques permitted under the law of
such techniques possible .                     its home Member State , or shall so
                                               amend such provisions as to make the
                                               operation of such techniques possible .
            ARTICLE 5                                      ARTICLE 5
1 . Each Member State shall allow within        ( delete article number and first
    its territory a credit institution , as    subparagraph )
    referred to in Article 1 , having its
    head office in another Member State ,
    to fund and , in particular , refinance
    itself subject to the provisions of
    paragraph 2 , according to the
    techniques of financing which are
    authorized in its home Member State ,
    in order to grant loans secured by
    mortgage for the purposes referred
    to in Article 1 .
    Where the introduction of such new          2 . Where the introduction of new
    techniques in a Member State gives              financial techniques alters the
    rise to distortion of the conditions            conditions of competition in a
    of competition in that Member State ,           Member State , that Member State
     that Member State shall authorize all          shall authorize all designated
    credit institutions established in              credi t institutions
 ---pagebreak---                                                6-
            Original Proposai                                 'édifiée Proposai
    its territcry to adopt simiiar                    established in its cerri tcry who
    techniques or take équivalent measures .          are ad.ersely af fected    by the cringe
                                                      tc adopt similar techniques or take
                                                      equivalent measures .
2 . Pending           co-crdination relating      3 . ur.c.hanced
    to bonds secured by mortgage , the host
    Member State cay require that issues
    of such bonds on its territory shall
    be m conform ty with the relevant
    provisions in force in that Member
    State .
                  ARTICLE 6                                 ARTICLE 6                            -f
The host Member State may require that both       1 . Tor a maximum period of 7 years after       A
funding and lending transactions be in its            tne adoption of fchis Directive tse           ;
currency ; the institution in question may            host Member State may require that
however always use the ECU as an alternative .        both funding and lending transactions        f
The home Member State may require matching            be in its currency or , wh ere it allows     :
between assets and iiabi litres in each               transactions to be in another national     ,i
national currency ; the institution in                currency , that assets and liabilities
                                                                                                   i
question may however always choose to                 in each na tier, al currency be matu red •    \
meet the matching requirement in 6GJ .                the inst.j. tuticn in question may howaver  -j
                                                      always use the ECU as an alternative .
                                                                                                   i
                                                  2 . Paragraph 1 shall nor apply
                                                      to rr.crtoaçe crédit activities between
                                                      a designated credi " instl tu lion and a
                                                      rational of its home Member State .
                                                  3 . For a maximum period c£ 7 years after
                                                      the adoption of tris Directive , the
                                                      home Member Stare may require matching
                                                      between assets and liabilities in each
                                                      national currency ; the institution
                                                      in question may however always choose
                                                       to meet the matching requirement m ECU
 ---pagebreak---                                            - 7 -
          Original Proposai                                 Modified Proposai
            ARTICLE 7                                            ARTICLE 7
In cases of State intervention or other          State or other public assistance
public assistance of any type in the field       measures of any type , including tax
of mortgage credit related activities ,          benef its , in the field of mortgage credit
including the saving of funds with and the       activities undertaken by designated
granting of mortgage credits by credit           credit institutions shall apply to
as referred to in Article 1 , similar            transactions undertaken within the
measures shall apply to transactions under ¬     scope of this Directive .    There shall be
taken within the scope of this Directive .       no discriminatory or restrictive treatment
Such measures shall be non-discriminatory        based either on nationality or on the
as between nationals of Member States .          fact that a designated credit institution
                                                 is not established in the Member State
                                                 where the services are provided .
               TITLE III                                    TITLE III
Provisions relating to the freedom of            Provisions relating to the freedom of
            establishment                                     establishment
             ARTICLE 8                                        ARTICLE 8
Until the conditions for home country control    Until other appropriate provision for
are fulfilled , supervision of any form of       control is made by a further directive ,
establishment in another Member State of a       supervision of any form of establishment
cred.it institution ad referred to in            in another Member State of a designated
Article 1 , shall be exercised by the super¬     credit institution shall be exercised
visory authority of that host Member State       by the supervisory authority of that host
in close cooperation with the supervisory        Member State in close cooperation with
authority of the home Member State .             the supervisory authority of the home
                                                 Member State and according to the legal
                                                 provisions in the host Member State
                                                 which are not inconsistent with this
                                                 Directive .
 ---pagebreak---                                              - 8 -
            Original Proposai                                Modified Proposal
                TITLE IV                                          TITLE IV
Provisions relating to freedom to                  Provisions relating to the freedom to
         supply services                                    supply services
            ARTICLE 9                                           ARTICLE 9
1 . A credit institution , as referred to in       1 . A designated credit institution wishing
    Article 1 , wishing to extend its                  to exercise the freedom to supply
    activities by way of the exercise of               services in the field of mortgage
    freedom tc supply services in the field            credit activities into the territory of
    of mortgage credit into the territory of           another Member State for the first time
    another Member State , shall give notifica ¬       shall give notification thereof to the
    tion thereof to the supervisory authority          supervisory authority of the home
    of the home Member State which has granted         Member State which has granted the
    the authorization pursuant to Article 3            authorization pursuant to Article 3 of
    of Directive 77/ 780 / EEC .                       Directive 77/ 780 /EEC .
2 . Member States shall require the                2 . Member States shall require the
    notification to be accompanied by the              notification to be accompanied by the
    following information from the credit              following information from the
    institution concerned :                            designated credit institution concerned
a ) the Member State into whose territory          a ) the Member State into whose territory
    it intends to supply services ;                    it intends to supply services ;
b ) the types of business it intends to            b ) the types of business it intends to
    carry out on the territory of that                 carry out on the territory of chat
    host Member State ;                                host Member State ;
c ) the general and sepcific conditions            c ) the general and specific conditions
    under which funds will be received                 under which funds will be received
    and loans granted .                                and loans granted .
                                                   d ) the address in the host Member State
                                                       where documents may be served upon it .
3 . Where the supervisory authority of the         3 . Unless the supervisory authority of the
    home Member State confirms the financial           home Member State has reason to doubt
    soundness of the credit institution                the financial soundness of the
    concerned , it shall , within three months         designated institution concerned on the
    of the notification referred to in                 basis of the information already in its
 ---pagebreak---                                             -  9 -
             Original Proposai                               Modif ied Proposai
    paragraph 1 , send the information mentioned       possession and/or any further infor¬
    in paragraph 2 to the supervisory authority        mation which it reasonably requires
    of the host country , together with a              from the institution , or which it
    declaration assessing the financial                obtains from other sources , it shall ,
    situation of the credit institution .              within three months of the notification
                                                       referred to in paragraph 1 , send the
                                                       information mentioned in paragraph 2
                                                       to the supervisory authority of the
                                                       host Member State .
4 . Where the supervisory authority of the         4 . Where the supervisory authority of the
    home Member State refuses to confirm               home Member State decides that there
    the financial soundness of a credit                is reason to doubt the financial soundness
    institution , reasons shall be given               of a designated credit institution
    to the institution concerned within                it shall refuse to send the information
    three months of receipt of the                     mentioned in paragraph 2 to the super¬
    information mentioned in paragraph 2 .             visory authority of the host Member
                                                       State and shall give reasons to the
                                                       institution concerned within three months
                                                       of receipt of the information mentioned
                                                       in paragraph 2 . Such refusal shall have
                                                       the effect of suspending the right of the
                                                       institution to supply services in the
                                                       field of mortgage credit activities
                                                       into the Member State named in the
                                                       notification .
5 . Before the credit institution commences        5 . Before the designated credit institution
    its activities the supervisory authority           commences its activities the supervisory
    of the host country shall , within a               authority of the host Member State shall ,
    period of three months following receipt           within a period of three months following
    of the information and of the declaration          receipt of the information mentioned
    mentioned in paragraph 3 , prepare for the         in paragraph 2 , prepare for the
    constant supervision of the credit                 supervision of the institution pursuant
    institution pursuant to Article 10 .               to Article 10 .
 ---pagebreak---            Original Proposai                             Modified Proposai
                                             6 . A designated crédit institution
                                                 wishing to change any of the matters
                                                 notified pursuant to paragraph 2 shall
                                                 give written notice of the proposed
                                                 change to the supervisory authorities
                                                 in the relevant home and host Member
                                                 States at least one month before making
                                                 the change .
            ARTICLE 10                                     ARTICLE 10
1 . A credit institution exercising freedom  1 . A designated credit institution
    to supply services into the territory        exercising freedom to supply services
    of another Member State shall report         into the territory of another Member
    quarterly on its operation in the            State shall report quarterly on its
    host Member State to the supervisory         operations in the host Member State
    authority of that Member State .             to the supervisory authority of that
                                                 Member State .
2 . If the supervisory authority of a host   2 . Unchanged
    Member State ascertains that an
    institution providing services into its
    territory is not complying with the
    legal provisions in force in that
    Member State which are justified on the
    grounds of the general good , that
    authority shall request the institution
    concerned to put an end to the irregular
    situation .
 ---pagebreak---                                        - 11-
         Original Proposai                           Modified Proposal
3 . If the institution concerned fails to take  3 . Unchanged
     the necessary steps , the supervisory
    authority of the host Member State shall
    inform the home Member State accordingly .
    The authority of the home Member State
    shall take all appropriate measures to
    ensure that the institution concerned
    puts an end to the irregular situation .
    The nature of those measures shall be
    communicated to the authority of the
    host Member State .
4 _ If , despite the measures taken by the      4 . If , despite the measures taken by the
    home Member State pursuant to paragraph 3 ,     home Member State pursuant to paragraph
    or because such measures prove inadequate       3 or because such measures prove
    or are lacking in the Member State in           inadequate or are lacking in the Member
    question , the institution persists in          State in question , the institution
    violating the legal rules referred to in        persists in violating the legal provisions
    paragraph 2 in force in the host Member         referred to in paragraph 2 in force in
    State , the latter State may , after            the host Member State , the latter
    informing the supervisory authority of          State may , after informing the super¬
    the home Member State , take appropriate        visory authority of the home Member
    measures to prevent further irregularities      State , take appropriate measures to
    including , insofar as it is strictly           prevent further irregularities including ,
    necessary , the prevention of the further       insofar as it is necessary , the
    conclusion of mortgage contracts by that        prevention of the further conclusion
    institution by way of provision of services     of mortgage contracts by that institu¬
    within its territory . The Member States        tion by way of provision of services
    shall ensure that within their territory it     within its territory . The Member States
    is possible to serve the legal documents        shall ensure that within their territory
    necessary for these measures .                  it is possible to serve the legal
                                                    documents necessary for these measures .
5 . Any measure adopted pursuant to paragraphs  5 . Unchanged
    2 , 3 and 4 involving penalties or restric¬
    tions on the provision of services must be
    properly justified and communicated to the
    institution concerned . Every such measure
    shall be subject to the right to apply to
    the courts in the Member State in which
    the authorities adopted it .
 ---pagebreak---              Original Proposai                              Modified Proposai
6 . In the event of withdrawal of              6 . In the event of withdrawal of
    authorization the supervisory                  authorization the supervisory
    authority of the host Member State shall       authority of the host Member State shall
    be informed of such action and shall           be informed of such action and shall
    take appropriate measures to prevent the       take appropriate measures to prevent the
    institution concerned from continuing          institution concerned from continuing
    to conclude mortgage contracts by way of       to conclude mortgage contracts by way of
    provision of services within the               provision of services within the
    territory of that State .                      territory of the relevant host Member
                                                   State .
7 . Every two years the Commission shall       7 . Every two years the Commission shall
    submit to the Council a report                 submit to the Council and to the
    summarising the number and type of             European Parliament a report summarising
    cases in which in each Member State            the number and type of cases in each
    decisions recording non-confirmation of        Member State in which there has been a
    financial soundness have been communicated     refusal pursuant to    Article 9 or
    under Article 9 or measures have been          measures have been taken in accordance
    taken in accordance with the provisions        with the provisions of paragraph 4 .
    of paragraph 4 . Member States shall co¬       Member States shall co-operate with
    operate with the Commission by providing       the Commission by providing it with
    it with the information required for this      the information required for this report .
    report .
                    TITLE V                                   TITLE V
Transitional and final provisions              Transitional and final provisions
               ARTICLE 11                                  ARTICLE 11
The home Member State may , for a maximum          The heme Member State may , for a
period of five years after notification of         maximum period of 7 years after the
 ---pagebreak---                                             - 1 3-
            Original Proposai                                      Modified Proposai
this Directive , limit the transactions of a           adoption of this Directive , limit the
a credit institution in the field of                   transactions of a designated credit
mortgage credit carried on eigher through              institution in the field of mortgage
branches in other Member States or by way              credit activities carried on either
of the provision of services to 25% of the             through branches in other Member States
total mortgage lending of the relevant                 or by way of the provision of services
credit institution .                                   to 25% of the total domestic mortgage
                                                       lending of the relevant credit
                                                       institution in the previous year .
            ARTICLE 12                                           ARTICLE 12
1 . Member States shall bring into force the       1 . Member States shall bring into force the
    measures to comply with this Directive             measures to comply with this Directive
    by .                                               within 2 years of its adoption . They
    They shall forthwith inform the Commission         shall forthwith inform the Commission
    thereof .                                          thereof .
2 . Member States shall communicate to the         2 . Unchanged
    Commission the texts of the main laws ,
    regulations and administrative
    provisions which they adopt in the
    field covered by this Directive .
               ARTICLE 13                                        ARTICLE 13
This Directive is addressed to the                 Unchanged
Member States .
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