European Mortgage Federation - European Covered Bond Council
EMF-ECBC
The EMF-ECBC represents the interests of mortgage lenders and covered bond issuers in Europe.
Lobbying Activity
European mortgage industry urges simpler green building rules
2 Dec 2025
Message — They request simplifying technical criteria and making safeguards optional to avoid blocking finance. They advocate for reducing reporting burdens for homeowners and small businesses.123
Impact — Environmental groups lose the guarantee that green-labeled projects meet all ecological protection standards.6
Response to European Affordable Housing Plan
2 Jun 2025
The European Mortgage Federation - European Covered Bond Council (EMF-ECBC) is pleased to respond to the European Commissions Call for Evidence on the European Affordable Housing Plan by sharing its Concept Note on the Role of Mortgage Lenders & Capital Markets in Building an Affordable & Sustainable Housing Ecosystem. Unaffordable housing is a matter of great concern in the European Union (EU). It leads to housing insecurity, financial strain, and inadequate housing. It also prevents young people from leaving their parental home, impacting their mobility in the single market and limiting their labour/life opportunities. These problems directly affect peoples health and well-being, embody unequal living conditions and opportunities, and result in increased healthcare costs, reduced productivity, and environmental damage. In the past decade, homeownership in the EU has decreased overall, driven in particular by a drop in homeownership among young people. There has been an increase in Europeans living in apartments, concentrated in towns and suburbs. Mortgage lenders and capital markets have played and will continue to play a crucial and catalytic role in supporting economic transition, providing the means to respond to local, regional and national needs especially with regards to access to housing, with an overarching European financial infrastructure which supports the EUs leadership in ESG policies as a geopolitical financial model. In this context, designing an affordable and sustainable housing ecosystem that supports citizens, investors, and lenders is an opportunity to generate both macro- and micro-economic growth models. We stand ready to assist the EU institutions by sharing knowledge, advice, best practices, cooperating, and supporting the housing agenda with an ecosystem approach, bringing affordability, energy efficiency, and renovation solutions over the coming years. In particular, we believe that we can provide a tangible contribution with our expertise in developing and leading global market initiatives such as the Covered Bond Label with its specific disclosure section of the Harmonised Transparency Template for Green & sustainable Covered Bonds, the Energy Efficient Mortgage Initiative (EEMI), Energy Efficient Mortgage Label, the International Secondary Mortgage Market Association (ISMMA) and a global housing and housing finance database (HOFINET). These Initiatives, where innovation and harmonisation of best practices have already facilitated a leveraging of the market to scale-up efficiencies, demonstrate both the capacity and willingness of our sector to assume and play its full role here. Our Label initiatives reinforce the role of the European mortgage market as a driver for growth and risk reduction. These Initiatives lead stakeholders towards a cathartic renovation of market best practices across the Single Market, reducing market fragmentation, which constitutes a major source of risk for the real estate market in Europe, as identified in the Report Assessing real estate risks and vulnerabilities. Hidden cracks in the financial system? prepared by the Economic Governance and EMU Scrutiny Unit (EGOV) of the European Parliament at the request of the European Parliaments Economic and Monetary Affairs Committee (ECON). The EMF-ECBC remains at the disposal of the European authorities to play a market catalyst role and share its expertise on housing policies, covered bonds, securitisation, and mortgage credit to ensure a strong, stable, and sustainable future for all.
Read full responseMeeting with Dan Jørgensen (Commissioner) and
25 Apr 2025 · Housing
EMF-ECBC urges simpler Taxonomy criteria for real estate financing
25 Mar 2025
Topic — Amending EU Taxonomy rules to simplify sustainability reporting and reduce administrative burdens.
Message — The federation requests a significant reduction in criteria complexity for buildings. They advocate for reducing bank-specific reporting obligations to avoid trickle-down effects.12
Why — Lowering documentation requirements would reduce compliance costs and improve practical usability.3
Impact — Environmental integrity might suffer if failing specific standards no longer disqualifies activities.4
Response to Savings and Investments Union
28 Feb 2025
The European Mortgage Federation-European Covered Bond Council (EMF-ECBC) welcomes the European Commission's initiative to develop a European Savings and Investments Union (SIU). The housing market is a critical component of the broader financial landscape, building citizens' confidence in a better future with tangible micro and macro scaling-up opportunities for consumers, lenders and investors, which secure growth, competition and financial stability. The integration of housing finance markets within the SIU framework would not only enhance the set of options for lenders and institutional investors but more importantly would activate new value chain opportunities for citizens and SMEs, optimising sustainable single market housing policies. The SIU is a unique opportunity to drive a new market value chain with a critical spillover effect in many sectors crucially relevant for the success of the single market; first and foremost the European labour market. This new market Ecosystem addresses disparities in housing affordability and availability across EU Member States. By promoting cross-generation, cross-border investments in housing, the SIU could contribute to more balanced, inclusive, and sustainable housing markets. Existing financial instruments therefore should be safeguarded and where possible enhanced and be part of the toolbox at the disposal of financial institutions and investors participating in capital markets. Please see the attached file for our full contribution.
Read full responseEMF-ECBC Urges EU to Leverage Existing Green Mortgage Labels
5 Nov 2024
Topic — EU consultation on a voluntary portfolio framework to increase lending for energy renovations.
Message — EMF-ECBC recommends the framework builds on existing industry labels and aligns with current legislation. They call for better access to energy performance data and EU funding for vulnerable households. The group also suggests a 30% threshold for "best in class" to boost renovation lending.123
Why — Lenders would benefit from lower compliance costs and more favorable capital treatment for green mortgages.4
Impact — National regulators and privacy groups may face pressure to reduce restrictions on building energy data.5
Response to Guidance to Member States and market actors to unlock private investments in energy efficiency (EED recast)
26 Feb 2024
The European Mortgage Federation-European Covered Bond Council (EMF-ECBC) welcomes the opportunity to respond to the Call for Evidence in the context of Article 30 of the Energy Efficiency Directive. Indeed, since 2015, the EU-funded Energy Efficient Mortgages Initiative (EEMI), led by the EMF-ECBC, has sought to identify the financial, behavioural, operational, contextual and regulatory barriers to energy efficient mortgage market development from the perspective of financial institutions, households and public authorities and address these with a view to delivering robust and integrated market development over an accelerated timeframe. The result is an extensive and comprehensive body of quantitative and qualitative analysis, including market and consumer behavioural research, as well as concrete market-led tools, namely the EEM Label and the EEM Ecosystem. The EEM Label, inspired by the extremely successful market-led Covered Bond Label, acts as a catalyst for consumer demand by providing access to financing options, as a driver of the qualitative upgrade of the energy profile of loan portfolios and of enhanced asset quality and as a due diligence tool for investors based on robust data. This is achieved through a common EEM definition set out in the EEM Label Convention, an EEM Product Features Grid and the harmonised disclosure of EEM asset data through the Harmonised Disclosure Template (HDT), for energy efficient mortgages, and Harmonised Reporting Template (HRT), for energy efficient personal loans, to be included in green covered bonds and green securitisation. With the EEM Ecosystem, the EEMI has taken the lead in seamlessly integrating all market participants into a new supply/value chain, with the consumer at its heart. There has been a growing realisation that finance alone will not address the huge challenges facing us, but that a robust and integrated ecosystem to guide consumers towards financial and technical solutions which support them in the energy renovation of their homes holds the key to meeting the EUs targets in this area. These considerations resulted in the development of the EEM ecosystem, which aims at boosting consumer demand for building energy renovation, bringing together a wide range of relevant market players, including lenders, investors, SMEs and utilities. In this way, the EEMI is aligning strategies and actions through an innovative market mechanism focused on a green fulcrum of products, services and data, delivered by way of a one stop shop, thus dismantling barriers and fostering effective solutions. A key focus of the EEMI and the EEM ecosystem has been enhanced coordination between the private and the public sector and there remains huge potential within this ecosystem to plug-in public aid measures (in the form of guarantees, not refundable aids or tax subsidies) which are designed and adopted in line with best practices that have proved efficient and effective in EU Member States. We would like to highlight that while the mortgage industry has undertaken significant efforts to mobilise private finance through innovative financing products and by seeking to remove market barriers, it cannot achieve full mobilisation alone. Well-calibrated, coordinated and accommodative policy interventions can go a long way in further supporting the Industrys efforts. The measures taken under the EPBD recast to ensure access to the full EPC for financial institutions are an important step forward in addressing data availability and accessibility challenges, for example, and should be replicated as much as possible in other contexts. The EEMI is ready to support the European Commission in its efforts in this area by sharing knowledge and best practice developed under the EEMI and EEM Label in order to mobilise and to unlock private investments and financial products, to promote innovative financing mechanisms and to remove financial and knowledge barriers among stakeholders.
Read full responseMeeting with Tove Ernst (Cabinet of Commissioner Stella Kyriakides) and Insurance Europe and European Banking Federation
10 Jan 2024 · Europe’s Beating Cancer Plan; quality of life”
Mortgage lenders warn FIDA proposal risks competition from BigTech
31 Oct 2023
Message — The mortgage industry wants data sharing limited to raw information and exclusion of sensitive creditworthiness assessments. They also recommend extending the implementation timeline and clarifying definitions to avoid confusion.123
Why — Excluding sensitive loan data protects mortgage lenders from competitors exploiting their internal creditworthiness methodologies.4
Impact — Tech giants lose easy access to customer profiles if strict reciprocity rules are implemented.5
Meeting with Ciarán Cuffe (Member of the European Parliament, Rapporteur) and European Alliance to Save Energy
25 Oct 2022 · EPBD
Response to Distance Marketing of Consumer Financial Services - Review of EU rules
6 Jul 2022
The EMF-ECBC is pleased to provide the following comments on the European Commission’s Proposal for a Directive amending the Consumer Rights Directive (CRD) and repealing the DMFSD. Despite our overall positive assessment, we believe it is worth highlighting the need to further clarify and reflect on some elements as follows:
Scope:
• The scope of the Directive is unclear and should be clarified. Indeed, it is our analysis that there are inconsistencies relating to the interaction with product-specific legislation that need to be further investigated in order to avoid legal uncertainty. See below for further details.
Information requirements/Pre contractual information:
• The Proposal aims to simplify the customer journey, however the introduction of certain information requirements could serve to complicate the consumer experience.
• We believe that the obligation to provide “adequate explanations” in this specific context, will result in further information overload and is not compatible with certain types of distance selling media (e.g. smartphones).
• Furthermore, the provisions included in Art. 16a(3), requiring banks to provide information to the consumer at least one day before the consumer is bound to the contract and to remind consumers of their right of withdrawal, result in information overload for consumers and additional costs and administrative burden for banks. We believe that these requirements should be deleted.
Right of withdrawal:
• While it is indicated that product-specific legislation regulating online financial services (CCD, MCD, PSD II and IDD) should prevail over those set out by the new CRD, there are some cases (PSD II and IDD) in which the right of withdrawal is not regulated. This means that new CRD rules appear to affect a large scope of online financial services already regulated by sectoral directives i.e. all online payment services (PSD II), all insurance services (IDD), certain consumer credits exempted from the CCD (those below EUR 200 and over EUR 75,000, etc.) and certain mortgage credits (where local legislation opted for a reflection period instead of a right of withdrawal). It is necessary to clarify the scope of the revised CRD and the wording of article 16b point 6, as the wording of the new rules on the right of withdrawal appear to affect almost all online services.
• Furthermore, the right of withdrawal provisions (withdrawal button and additional reminder) are stricter than product-specific legislation (CCD, MCD), which is inappropriate, especially for the contracts excluded from those directives (e.g. consumer credit below EUR 200).
• Art. 16b(6) should be revised to refer only to the ‘right of withdrawal’ and not its ‘exercise’ as this is not consistent with the information requirements e.g. in the CCD, where there is no specific procedure for the exercising of the right.
• The introduction of a withdrawal button gives rise to a number of legal and technical considerations (e.g. no retention of proof and dates; uncertainty for digital sale of products regulated by other sectoral legislation; no explanation on how such a tool should be implemented). There are already mechanisms in place by which consumers can exercise this right which are clearer, well-functioning and less costly.
Right to human intervention:
• Mindful of the need to guarantee legal certainty, the reference to the right to human intervention included in Art. 16d is particularly broad. We therefore recommend clarifying the circumstances for the application of such a right.
Read full responseResponse to Revision of the Energy Performance of Buildings Directive 2010/31/EU
31 Mar 2022
The EU’s mortgage and covered bond industries will be instrumental in helping the EU meet its ambitious renovation targets and are fully committed to mobilising private finance to support the Renovation Wave and NextGenerationEU. Mortgages are crucial in securing an affordable socio-economic lift and incentivising the shift of critical volumes to support the climate transition. Deploying an integrated market ‘ecosystem’ which boosts and responds to consumer demand for energy renovation and supports investor due diligence is at the heart of the market-led Energy Efficient Mortgages Initiative (EEMI), the EEM Label (EEML) and the Covered Bond Label.
Better quality, more comparable and publicly accessible Energy Performance Certificates (EPCs) are fundamental for financial institutions. We therefore welcome many of the proposed actions which will support them in reaching their retail and funding potential, but would like to highlight 4 important considerations:
-Access to EPC databases should not be hindered by national legislation which in some countries is currently preventing open access to existing registers, due to different GDPR interpretations. Please see attached document for proposals for amendment.
-We support the standardisation of EPCs which will allow for the comparison of building energy performance across the EU. In this respect, digitalisation presents an opportunity to enhance the comparability and accuracy of EPCs by metering real energy performance and the EPBD should allow for this.
-Linked to the point above and regarding the requirement for “on-site visits” in Art. 16, it should be possible to issue EPCs by whatever means national legislation or practice deems adequate, including by digital means.
-Regulatory stability regarding energy performance thresholds is fundamental for the EU’s citizens and financial institutions.
We understand it might be necessary to put in place measures to achieve climate neutrality in buildings and support an approach with an initial focus on the worst performing buildings. However, this huge challenge can only be achieved with strong incentives and/or subsidies for borrowers and lending institutions, which is not addressed in the proposal for Minimum Energy Performance Standards. The subsequent risk is the creation of stranded assets, with negative social and financial implications for borrowers (especially where renovation is not economically viable (often the most fragile households)) and financial institutions, that could undermine social and financial stability. A careful balance should also be struck between measures needed to achieve the climate goals and measures that are practicable.
To support market efforts to mobilise private finance, EU Taxonomy eligibility should be aligned with the EPBD’s goals e.g. where a 30% PED reduction is achieved in a renovation, the entire building and thus the entire loan for its acquisition should be Taxonomy compliant. Any other approach would distort lending institutions’ strategy on renovation financing, resulting in higher borrowing costs.
Finally, regarding “Mortgage Portfolio Standards”, lenders are not the owners of the underlying buildings in their loan portfolios and cannot themselves improve their energy performance. Rather this is the choice and responsibility of borrowers, as owners, supported by lenders via specific instruments, such as EEM. Proposals to emulate other industry portfolio standards, particularly without appropriate and efficient access to EPC data, represent an oversimplification for these reasons and because of legal complexities (GDPR compliance) rooted in regional/national discretions. The application of these standards to the mortgage business is inappropriate and could limit consumer access to finance and hinder the Industry’s ability to support the Renovation Wave. Specific public guarantee schemes, fiscal incentives and preferential supervisory rules can support the development of the EEM market.
Read full response30 Mar 2022
The European Covered Bond Council (ECBC), representing 95% of the covered bond industry, would like to thank the European Commission for the ongoing commitment to ensuring relevant, up-to-date and transparent data disclosure with the European single access point for company information (ESAP) and would like to provide the following points of reflection.
With the Covered Bond Label Foundation (CBLF), the ECBC already in 2012 has started to organise and harmonise data collection of both covered bonds and respective cover pools. This market based reporting instrument is currently covering over 70% of the global covered bond market, providing information on over 5,000 covered bonds on the covered bond label website and detailed data of their respective 148 cover pools scattered in 23 countries world-wide using the Harmonised Transparency Template (HTT) which is required to be completed at least every three months and which undergoes annual revision process in order to guarantee its alignment with the law. The HTT is publicly available to investors and stakeholders and labelled issuers provide data required by the Covered Bond Directive (CBD). The template undergoes annual revision managed by the Label Committee which comprises representatives of the issuers and is supported by the Advisory Council including organisations such as EBA, EBRD, ECB, EIB, the World Bank alongside national regulators, rating agencies and the investor community. Thanks to this annual revision important legislative developments such as the CBD as well as new trends in the market such as the increased interest in sustainable finance and ESG are actively analysed and absorbed in the template.
Article 14 of the CBD on investor information states that lending institutions are required by Member States, in order to inform and guarantee protection of investors, to publish on their websites a certain amount of minimum portfolio information. Moreover, the transparency of the cover pool securing the covered bond increases comparability and enables investors to perform the necessary risk evaluation on different issuances of covered bonds thereby representing a fundamental element of this type of financial instruments.
Against this background we would like to reiterate our reservation as to whether the information required in Article 14 fits into the objective of ESAP, whose purpose is to increase the visibility of companies and the disclosure on corporate information in order to stimulate investments and access to capital markets. Whereas data on financial intermediaries are, to a great extent, already been made available and public, ESAP could add value particularly in relation to data concerning non-listed and non-financial companies (including SME) and on ESG information. In the final analysis, it is fair to say the benefits for investors of feeding CBD-compliant information into ESAP would be less considerable than, for instance, in the case of SME information.
Should Article 14 information fall under the scope of ESAP, we welcome the approach adopted by the EC to include this information not since the outset of the project but at a later stage i.e. from 1.1.26 onwards. This would mean that no request of further data should be mandated above and beyond those data which constitute matter of an obligation of disclosure by Banks. That said, we deem it extremely important to avoid any extra-requirement and related costs on the banking sector and that burden of submitting reported data to ESAP rests solely with the national and EU authorities collecting bodies, and that related costs for the authorities are not directly or indirectly passed on to the companies. It is also important to ensure that the adoption and the entry into force both of Level 1 and of Level 2 rules are adequately synchronised and the “proportionality principle” is actually implemented, e.g. when it comes to the content of the Draft EBA ITS thereby minimising the compliance efforts for banks.
Read full responseResponse to Mortgage credit – review of EU rules
24 Feb 2022
The MCD is a largely well-functioning, well-balanced Directive which has established a common EU legal framework for mortgages, further increasing consumer protection and contributing to financial stability. However, some limited legislative changes to provisions which are overly complex in an increasingly digital world (i.e. those on advertising and pre-contractual information) or have resulted in market detriment (i.e. foreign currency loans) could be appropriate.
1.New market actors
Based on the principle of “same business, same rules,” all professionals providing credit to consumers should be included within the scope of the Directive.
Concerning new products, reverse mortgages are designed to suit a specific audience without a creditworthiness assessment or borrower insurance. In order for lending institutions to continue to offer this type of financing, they should not be included in the scope of the MCD.
2.Creditworthiness Assessment & automated processing
The proposal – in case of automated processing - appears to be stricter than the GDPR provisions that already regulates automated individual decision making, including profiling. There is no need to duplicate this right in the MCD, creating the risk of different interpretations and double supervision. The GDPR should be the reference point.
3.Overly detailed & complex information
There is a concern that the amount of information provided in the ESIS and its prescriptive format have resulted in complex information and information overload. However, mindful of the challenges in striking the right balance in information provision and of the heavy industry investments, any intervention should deliver the most added value and be determined by a cost-benefit analysis. The potential for a ‘one-pager’ is inspired by the recent introduction of a similar document in Denmark. However, the latter is the result of several years of national discussion and time is needed to assess its effectiveness. We believe that the emphasis should be on simplifying the information requirements and improving the way it is provided in an increasingly digital world.
4.Green Mortgages
On green mortgages, the following considerations should be borne in mind: 1) The EU-funded Energy Efficient Mortgages Initiative (EEMI) provides a market-led definition of an EEM and has launched the EEM Label to identify and disclose information on EEM in banks’ portfolios, delivering a quality and transparency benchmark for consumers, lenders, investors and regulatory authorities. We strongly believe that the EEMI and EEM Label already deliver the benefits the EC is seeking to achieve in this area through the MCD; 2) The MCD is principles-based: including specific product details or requiring particular information to be collected for CWA purposes for example would add a level of prescription to the MCD currently not present, potentially creating distortion. As such, appropriate references in the MCD’s recitals could be a proportionate way of respecting its principle-based nature, while promoting supply and uptake of EEM.
5.Cross-border lending & foreign currency loans
The MCD has not created a single, cross-border market for mortgages due to legal or infrastructural differences between Member States, such as differences in product ranges across Member States and consumer preference to shop and contract locally. Ironically, the provisions on foreign currency loans have limited cross-border lending. Some lenders have stopped offering such loans due to the definition of such loans in the MCD and the associated requirements. Limiting the scope of the definition would allow more consumers to conclude a mortgage loan in cases where there is no or limited exchange rate risk.
6.Potential protective measures
Extraordinary events such as the COVID-19 Pandemic can be better dealt with at national level. Member States can more easily and quickly respond to specific national challenges as they arise.
Read full responseMortgage lenders urge changes to prevent hike in housing costs
16 Dec 2021
Topic — Updating EU banking laws to implement international Basel III standards for capital requirements.
Message — The Federation requests making beneficial mortgage risk treatments permanent for all banks. They also propose a granular risk-weighting framework to prevent sharp capital increases.12
Why — This would lower capital requirements for lenders and protect their mortgage lending volumes.3
Impact — National regulators would lose the power to set specific local capital requirements.4
Meeting with Stefano Grassi (Cabinet of Commissioner Kadri Simson) and Transport and Environment (European Federation for Transport and Environment) and
2 Dec 2021 · EPBD - Energy efficiency - Minimum Energy Performance Standards
Meeting with Andrea Beltramello (Cabinet of Executive Vice-President Valdis Dombrovskis)
11 Oct 2021 · Basel III
Meeting with Tommy De Temmerman (Cabinet of Commissioner Mairead Mcguinness)
11 Oct 2021 · Basel III
Response to EU Standard for Green Bond
14 Sept 2021
We welcome the opportunity to comment on the EU Green Bond Standard (EuGBs).
Covered bonds are mostly backed by mortgages on real estate and are essential to put the EU’s building stock on a net-zero emissions pathway. It is important to ensure that the EU Taxonomy works in practice and can be applied to EU covered bond markets, especially considering the long-term nature of mortgages.
Grandfathering of Covered Bonds & Underlying Assets
We welcome the voluntary nature of the EuGBs and believe it has the potential to boost green bond markets. However, we are concerned about the wording of Art.7(2) 3rd subparagraph suggesting in the case of financial assets a 5-year grandfathering. This is not in line with Recital 11 of the proposal, which is very clear on why grandfathering is necessary. To ensure that the Taxonomy works in practice and supports credit market models, the wording of Art.7(2) should be modified in line with Recital 11. This proposal is fully aligned with the Technical Expert Group (TEG) recommendation on p.29 of its EuGBs Report and p.32 of the accompanying Usability Guide.
The rationale is to provide certainty and predictability to borrowers, lenders and investors, also in the case of financial assets refinanced through green bonds, which is crucial for the transition towards more sustainable finance. Financial assets are directly linked to economic activities, such as real estate activities. The risk of losing Taxonomy eligibility creates possible barriers to long-term investments.
Taking into account the TEG’s recommendation, we consider the grandfathering of EU Green Bonds for their entire tenur to be equivalent to considering both the covered bonds and their underlying fixed and financial assets, according to Arts. 4 & 5, as taxonomy eligible throughout their lifetime. Therefore, grandfathering should apply not only to the covered bonds but also to the underlying assets e.g. mortgage loans, given the structural link between the asset and the liability side.
Use of Proceeds
Regarding the requirement that 100% of the proceeds of green bonds issuances be used to finance or refinance Taxonomy-aligned assets, it is important that there is appropriate flexibility in this area. Indeed, the EU Taxonomy introduces a new and significant risk for issuers in terms of validating compliance by customers – both in terms of minimum safeguards, DNSH-criteria but also the technical criteria.
In order to achieve the climate goals in the real estate sector, banks should be able to refinance Taxonomy compliant mortgage loans through EuGBs aligned covered bonds. However, this will require large volumes of such mortgage loans which would take years to accumulate to meet minimum issue size. Without appropriate flexibility, it would take years before banks – and especially small banks - could issue an EU Green Bond, with knock-on effects for financing to borrowers and for the climate goals. We therefore propose a threshold of 80% for a transition period of at least 5 years, and the possibility to extend to categories of assets which are not included in the current Taxonomy, considering that the latter must be updated in a timely manner.
Reporting on Taxonomy Compliance
Issuers of covered bonds should be allowed to report on the greenness of the cover pool using the Taxonomy in force at the time of granting the loans backing the bond. In other words, it should be possible to label the proportion of assets in the cover pool that are aligned with the Taxonomy, as recommended by the TEG in section 3.3.4, p.40 of its Taxonomy Report.
These covered bonds should still meet the same requirements as 100% Taxonomy aligned covered bonds i.e. verification, 2nd party opinion, allocation reporting, impact reporting etc.
Investors would still have an incentive to buy covered bonds from a cover pool with a high percentage of Taxonomy aligned assets, which would give the issuers an incentive to promote lending to green projects.
Read full responseResponse to Consumer Credit Agreement – review of EU rules
2 Sept 2021
We are pleased to comment on the Proposal for a Revised CCD and to provide the following insights, which take account of the changing business environment and draw on our experience regarding implementation of the MCD.
Digitalisation
• A key objective of the revised CCD is to address how digitalisation has profoundly changed the decision-making process and habits of consumers, however we have concerns that the Proposal does not adequately achieve this objective.
• The Proposal does not take account of the significant digital evolution of recent years and the increasing use of "digital devices". Documentation must still be provided on "paper" or via a durable medium.
• Th Proposal claims to simplify and adapt advertising requirements to digital use but no changes of note have been made, particularly with regard to the quantity of information to be provided.
• Article 8 (new) leaves room to provide less information however the explanatory note gives ‘radio advertising’ as the sole example of such a case and it is questionable whether this exception actually reduces information overload.
• It would be most appropriate to identify a minimum, streamlined set of information on the loan to be included in advertisements.
Information
• While consumers have likely benefited from pre-contractual information in a standardised form, the Proposal adds yet more information to the SECCI in the form of general information and the SECCO, which risks generating information overload.
• The SECCO should only be used for digital channels and it should be possible to also deliver it via digital channels when the credit is provided and signed through physical channels.
• We propose that the obligation to send a reminder be achieved through agile and simplified communication methods and that this information be reported in the SECCI itself.
• It is proposed to provide for ways of discharging the obligation to deliver the SECCI or to introduce the possibility of “viewing" information, which is compatible with the digital process.
Creditworthiness Assessment
• We are concerned that the proposed rules in Article 18(6):
a) will undermine creditor discretion in making creditworthiness assessments, contrary to the objective of avoiding over-indebtedness.
b) are more stringent and broader in scope than those in the GDPR. Moreover, it should be clarified how Article 18(6) CCD and Article 22 GDPR are related to each other.
c) will increase potential disputes between bank and customer.
• It is important to stress that it is in the creditor's interest to assess with the utmost care the consumer's ability to fulfil contractual obligations by regularly repaying the credit.
• Finally, there should never be a “right to credit”. We suggest including a similar concept to the one expressed in recital 57 of the MCD.
Interest Rate Cap
• In general, free market forces determine interest rates and the fee structure in the financial sector.
• The impact on the market of an interest rate cap is unclear and a harbinger of possible credit restrictions. The CCD is not the right place to regulate this without considering the existence of national regulations to combat usury.
• It is crucial for the financial sector to be able to continue offering credit on market terms and that, for example, the Directive does not require the use of a reference rate.
Early Repayment
• The proposed wording – in conjunction with recital 62 – regarding the reimbursement or not of upfront and recurring costs is unclear and potentially misleading.
Non-discrimination principle
• It should be clarified that Article 6 should not affect creditor discretion in assessing consumers’ creditworthiness and in deciding to grant or not the loan to a consumer from another Member State.
• Article 19 (new) requires access for creditors to databases in cross-border situations however it is questionable whether such a provision will work in practice given the differences in databases between MS.
Read full responseResponse to Climate change mitigation and adaptation taxonomy
11 Dec 2020
The European Mortgage Federation-European Covered Bond Council strongly supports the Next Generation vision, the Green Deal and Renovation Wave Strategy. We recognise the significance of the Taxonomy’s socio-political perspective, particularly in the current pandemic context and are working to mobilise stakeholders via the Energy Efficient Mortgages Initiative to scale up consumer demand and capital market leverage. We would like to highlight some serious concerns which will be extremely disruptive for the energy efficient mortgage (EEM) and green bond market:
1. Acquisition & ownership of buildings
The proposal that pre-2020 buildings must have at least EPC A (mitigation) to be taxonomy eligible would significantly impact market critical mass by reducing (up to 95%) eligible assets, with knock on effects for the entire value chain, from eligible mortgages to Taxonomy aligned green bonds. Indeed, 90% of the building stock was built before 2001 and EPCs vary across countries: for example, buildings with EPC A may only represent 1% of the building stock in some countries. Moreover, upgrading a low energy level building to EPC A is extremely difficult technically, economically and financially and will create ‘stranded assets’ in the housing market for consumers, lenders and investors.
This will disincentivise banks and borrowers to favour better homes when purchasing and financing. Post COVID-19, the proposal will be socially exclusive for less affluent citizens in less efficient buildings. Finally, the proposal creates a ‘moral hazard’ by disincentivising Member States from tightening of EPC definitions and jeopardises a level-playing field.
We strongly support a more inclusive approach where, in addition to EPC A (mitigation), buildings in the “top 15% of the local existing stock” will be considered taxonomy eligible. The EEM Label will support consumer demand and provide a gradual market alignment mechanism for banks, enabling them to demonstrate portfolio eligibility and deliver transparency and best practice at European and global level.
2. Renovation of buildings
The renovation of the existing building stock is key to upgrade EPC levels and promote EPC alphabetisation. Only buildings sold or rented since 2010 have an EPC so many do not. The Renovation Wave will help drive the qualitative upgrade of bank portfolio energy profiles, enhance asset quality in terms of loan to value and improve borrower disposable income. This aids financial stability by reducing NPLs and making bank books more resilient. Green renovations boost employment, achieve positive socio-political impacts and fight energy poverty.
It is therefore important that the entirety of renovation loans be ‘eligible transition activities’ when at least 50% relates to energy efficiency. When expenditure cannot be distinguished by type, 50% of the total renovation cost should be the proxy of energy efficiency. Furthermore, where costs cannot be practically separated in loans for acquisition and renovation, acquisition costs should be considered integral with eligible renovation costs. Finally, when determination of whether the loan relates to energy efficiency is not feasible, which is often the case for mortgages to retail customers, eligibility should be based on a minimum 30% decrease in primary energy demand certified by an EPC pre- and post-renovation.
3. Construction of new buildings
The EPBD aims to achieve the Paris climate goals in the building sector and the NZEB definitions should be designed accordingly. Consequently, for new buildings it should be sufficient to refer to the NZEB standards.
4. DNSH
Some of the DNSH requirements and the evidence required cannot be met by the financing institutions. EG, due to a lack of national regulations/laws and therefore of data collection, proof of water consumption is unavailable. First, legal requirements should be addressed to manufacturers, before a corresponding legal standard can be set up.
Read full responseResponse to Amendment to the LCR Delegated Regulation
24 Nov 2020
The European Covered Bond Council, representing 95% of the covered bond industry, would like to thank the European Commission for the ongoing commitment to ensuring that covered bonds remain an essential drive to support the real economy., The Covered Bond Directive (CBD) provides both a useful framework in the EU and a global benchmark reinforcing legal certainty.
We welcome the efforts from the European Commission in the proposed amendment to the LCR Delegated Regulation to address the issue of double-counting which is positive for covered bonds.
We would however like to take this opportunity to highlight the following critical considerations which are extremely relevant for certain jurisdictions:
1) Reference to the CBD as replacement of UCITS definition of covered bonds
The current proposal suggests referring to Article 129 CRR only by deleting Article 52(4) rather than replacing Article 52(4) UCITS with the CBD definition of covered bonds. The significant narrowing to only CRR-compliant covered bonds being eligible as Level 1, 2A and 2B assets should be avoided and all types of CBD compliant covered bonds should be able to qualify as LCR-eligible. The proposed approach is more than an editorial change and risks undermining the intention and initial motivation of creating a European wide, harmonised Covered Bond definition for regulatory purposes.
2) Assets (HQLA) to be deemed unencumbered
The proposal fully recognises as prudentially sound, that liquidity risks related to net outflows in a covered bond programme can be fully covered by assets encumbered in the cover pool. Clarification is needed to ensure that encumbered assets in a cover pool can be deemed to be unencumbered in the LCR requirement up to the amount of net liquidity outflows (the LCR requirement) from the associated covered bond programme – irrespective whether the assets (HQLA) are held as part of the cover pool liquidity buffer or due to other regulatory coverage requirements.
3) Clarification of non-mandatory OC unencumbrance
In some jurisdictions covered bonds are issued through dedicated vehicles, the funding is composed of (privileged) and (non-privileged) resources to fund the non-mandatory OC. While the current proposal solves the issue of liquid assets facing privileged resource outflow, it does not deal with the non-privileged ones, which are however accounted for in the LCR ratio. As all assets of specialised issuers form the cover pool some assets need to become unencumbered to match the arising outflows from non-privileged resources or it becomes structurally impossible to comply with the LCR ratio. Since non-mandatory OC is free to be removed from the covered bond programme all liquid assets counting as non-mandatory OC can be used to match the arising outflows from both privileged and non-privileged resources. It should be clarified that all HQLA in excess and part of the ‘non-mandatory OC’ in covered bond programmes (according to article 411 (1)(6) in CRR2) should be considered as unencumbered. For this we would kindly ask the confirmation this to be in line with the NSFR rules (according to article 428p (6) (c) in CRR2. Furthermore, it should be explicitly stated that haircuts under the LCR framework are taken into account.
4) Recognition of adjusted net liquidity outflow
The net liquidity outflow from cover pool liabilities and cover pool assets should be adjusted by cover pool HQLA (unencumbered for this purpose only) before the calculation of the LCR is conducted. Thus, only net liquidity outflows which are not covered by (unencumbered) cover pool HQLA add to the LCR and covered bond liabilities that can be fully offset do not change the LCR at all. This is important because the inclusion of (i) the unadjusted net liquidity outflow in the denominator and (ii) unencumbered cover pool HQLA in the numerator will lead to a decrease of the LCR. This is true even if covered bond liabilities are fully covered by HQLA in the cover pool.
Read full responseMeeting with Valdis Dombrovskis (Executive Vice-President) and
28 May 2020 · COVID-19 relief measures
Meeting with Valdis Dombrovskis (Executive Vice-President) and
28 May 2020 · COVID-19 relief measures
Meeting with Andrea Beltramello (Cabinet of Vice-President Valdis Dombrovskis)
6 Nov 2018 · Covered bonds
Response to Targeted revision of EU consumer law directives
24 May 2018
The EMF-ECBC is pleased to share its comments on the Commission proposal for a Directive on representative actions for the protection of collective interests of consumers. We have, in the past, expressed reservations about EU intervention in the area of consumer collective redress, and, most recently in the response to the Commission’s Call for Evidence we reiterated the view that more appropriate mechanisms would provide consumers with access to redress for claims of low value, for example, national ADR mechanisms.
The EMF-ECBC would like to highlight four key principles to follow in regulating collective redress at EU level:
• Promotion of consensual dispute resolution;
• Opt-in method, rather than opt-out method;
• Prevention of abusive litigations, including by avoiding contingency fees and by applying the ‘loser pays’ principle;
• No punitive damages, but strictly compensatory redress measures.
With these principles in mind, we particularly welcome the fact that the current proposal for a directive clearly states that no punitive damages can be sought in a representative action and that only no-profit entities can qualify to bring representative actions before courts. Moreover, we support the explicit confirmation in the proposal of the application of the ‘loser pays’ principle. Finally, we welcome the objective of promoting out-of-court settlements.
We would like however to express the following concerns, in particular regarding certain important safeguards against abusive litigations which are left to the discretion of Member States.
Promotion of consensual dispute resolution
As stated above, the EMF-ECBC welcomes the promotion of consensual dispute resolution. We believe that the establishment of permanent national mechanisms for out-of-court settlement should be provided at EU level through this Directive. In particular, we strongly support inserting point 26 of the Commission Recommendation of 11 June 2013 in the Directive, in order to mandate MS to ensure that judicial collective redress mechanisms are accompanied by appropriate means of collective ADR available to the parties before and throughout the litigation. It is in fact worth noting that the Consumer ADR Directive only provides for individual disputes.
It would be therefore coherent with the previous Commission commitment and with the spirit of the proposal to provide for the mandatory establishment of national ADR mechanisms within the framework of the Directive, in order to facilitate consumers and traders in trying to reach out-of-court settlements.
Opt-in vs Opt-out
The Commission Recommendation of 11 June 2013 on collective redress mechanisms identifies the opt-in method as the appropriate method to form the claimant party. The Commission itself stated that the opt-out method could be more prone to abuse, not to mention the substantial legal questions arising from it, such as the possible impairment of the freedom of consumers to decide whether they want to litigate.
Notwithstanding the previous explicit commitment to the opt-in method, we regret to notice that the proposed Directive leaves to the discretion of the Member States the decision on how to design the process for the formation of the claimant party.
The EMF-ECBC strongly supports the previous analysis of the Commission and believes that the opt-out method may raise a series of serious legal concerns, in addition to opening the door to abusive litigations by qualified entities acting in bad faith. Therefore, Member States should be required to impose the obligation on qualified entities to require the mandate of individual consumers concerned in order to seek a redress order. This would effectively prevent qualified entities from seeking monetary compensations based on vague claims coming from unidentifiable consumers. At the same time, this would ensure that consumers can make a free and informed decision on whether becoming a party in a litigation.
Read full responseResponse to Initiative on an integrated covered bond framework
16 May 2018
The European Mortgage Federation - European Covered Bond Council (EMF-ECBC) welcomes the European Commission’s legislative package on covered bonds, which aims at completing the Capital Markets Union (CMU) in the EU.
The EMF-ECBC appreciates the long and careful consideration given by the European Institutions to preparing the draft framework for the key qualitative characteristics of the covered bond asset class, and to maintaining its fundamental role in the long-term funding strategies of European lenders and is ready to play a role in the further implementation process.
We greatly appreciate the constructive dialogue that has taken place to date between the Industry and the EU Institutions on this crucial topic for the EU, as well as the proposal’s recognition of the fundamental role played by the Covered Bond Label as a globally recognised benchmark in improving transparency, harmonisation and setting high qualitative standards. As we move forward with the implementation of the Directive, the Industry stands ready to continue its key role in supporting the European Institutions’ push for a strong EU covered bond framework to improve the efficient funding of the real economy and to contribute to the further development of covered bonds across the whole EU.
Against this background the ECBC’s present paper highlights key concerns with an EU-wide relevance which have been identified by the 14 jurisdictions which took part in this feedback collection exercise. This collection of feedback can help to map the potential issues to be addressed in the coming legislative debates.
The paper is organised as follows:
First, besides an introductory statistical description of the replies received, we present a brief overview of the major concerns highlighted in respect of the most commented Articles.
Second, the paper presents for each country a detailed grid of the four key concerns ranked by priority with a clear indication of their level of seriousness. In this grid, the concern is precisely identified and there are also proposals for amendment to the legislative package in order to provide constructive input.
Third, the paper concludes with an annex which presents the first wave of feedback received by the EMF-ECBC and which formed the basis for the present document.
Finally, with a view to providing a comprehensive sense of the broader market view of the legislative package, in annex to this annex is the latest feedback provided by the Covered Bond Investor Council (CBIC). Please note that this feedback does not express an official ECBC perspective but has been included for completeness of information.
Preliminary Remarks
With a view to mapping the key concerns of its members regarding the European Commission proposal for a legislative package, the EMF-ECBC asked its members to highlight the four major concerns with an EU-wide scope for each covered bond jurisdiction, clearly ranking them by importance, flagging the level of seriousness of each concern expressed and proposing an amendment or a rewording of the passage concerned. In total, 55 concerns were received from 14 jurisdictions which represent 95.7% of the outstanding market in the EEA and over 86% of the global covered bond market outstanding , thus constituting significant geographic coverage of the covered bond market. All but two concerns highlighted relate to concern articles or specific sections from the directive, indicating that in the legislative package proposed by the European Commission the Directive is the subject of most discussion.
Read full responseMeeting with Silvia Bartolini (Cabinet of Vice-President Miguel Arias Cañete)
20 Feb 2017 · Low interest rates for efficiency improvements
Meeting with Valérie Herzberg (Cabinet of Vice-President Jyrki Katainen)
3 Feb 2015 · EU covered bonds market