The mortgage credit system is under attack
Shortly before the summer holidays, there was political agreement that the Competition Authority’s recommendation No. 16 for the mortgage market should be implemented.
The main purpose of the Danish Competition Authority’s report was to improve competition, and the specific recommendation is that homeowners should be able to dispose of their bonds themselves when paying off mortgage loans, as was the case
Homeowners have instead been given a price cut and raised costs
An institute change (of a loan of 3,000,000) can be made for approx. 6,500, but the bill will be DKK 30-40,000.
When you can take 30-40,000 for a product that RealRåd can complete for DKK 6,500 then there is no competition. Bond trading and registration are completed in minutes.
We have now learned that the Polish majority has disappeared and that the reason must be that credit unions believe that it will affect their earnings too much if they are deprived of the opportunity to make money in bond trading. Especially on the price cut and the associated costs.
Common practice for credit unions to offer bond loan disbursements
By transferring bonds so that customers could choose their own securities trades, e.g. their own bank, but that has been changed, so that 3 of the credit unions’ own bank now MUST handle the transactions on the terms that they set themselves. Including the spot rate that forms the basis for the subsequent price cut.
The spot price is no longer determined by supply and demand on the stock exchange, but by the credit union itself, and our experience is that the spot rate is often higher on the stock exchange, which is why the real price cut is greater than that shown in the official price lists.
Consumer protection rules have existed in Danish legislation for many years. They are called “best execution” and in short, the credit unions must do everything they can to achieve the lowest cost for the customer. Costs in this regard are brokerage and price cutting (s). And according to the Danish Financial Supervisory Authority’s guidelines for the rules, credit unions MUST follow the customer’s request to use a specific trading venue, for example. stock exchange.
Totally contrary to the intention of the rules that the credit unions
Now completely fail to trade bonds on the stock exchange, but even set the settlement price, and even deprive the customer of the opportunity to obtain better prices on the stock exchange. They do this by refusing to issue the client’s bonds, and it is this unreasonable, and perhaps illegal, action that led to the Real Council’s proposal to the Competition Authority, which subsequently became recommendation 16.
There is something to suggest that credit unions even know that they are at odds with the best execution legislation, because why should one of the credit unions otherwise change the general business conditions and price lists so that the word trade is replaced with settlement and brokerage is replaced with settlement commission. And why does another credit union invent the term mortgage trade (and adds: which recalls the principles of bond trading), and why does a third point out that the bonds are traded between the credit union and the bank, and the customer is therefore not a counterparty?
For us to see, this is an attempt to give customers the wrong impression that mortgage financing has nothing to do with securities trading and is therefore not subject to consumer protection rules on best execution. And when you give customers a wrong impression of reality, credit unions are also on the edge of good practice rules.