Application of the Benchmarks Regulation to Consumer Credit Agreements

Application of the Benchmarks Regulation to Consumer Credit Agreements regulated by the Mortgage Credit Directive 2014 


The Benchmarks Regulation 2016/1011 came into force in January 2018.  It is an EU regulation on indices used as benchmarks. Among other things, it covers an index which is used to determine the applicable interest rate and the amount payable under consumer credit agreements as defined in the Consumer Credit Directive 2008/48 and Mortgage Credit Directive 2014.

The Benchmarks Regulation applies to mortgage credit agreements issued by EBS which reference an interest rate which is based on a benchmark.  Details of the interest rate provided by EBS which use a benchmark and its administrator are set out in the table below;

Interest Rate

ECB Tracker Rate

Benchmark

European Central Bank Base Rate

Administrator of Benchmark

The Governing Council of the European Central Bank

 

Interest Rate

Euribor

Benchmark

The Euro Interbank Offered Rate

Administrator of Benchmark

European Money Markets Institute

 

Potential implications for you where your credit agreement references a benchmark

The Benchmarks Regulation requires us to have a written plan in place and to implement that plan should the benchmark referenced in your mortgage credit agreement materially change or cease to be provided.   We will comply with the plan in our engagement with you under your mortgage credit agreement, unless we have a good reason for not implementing the plan (such as a legislative change or other binding legal obligation).

Should the benchmark used in your mortgage credit agreement materially change or cease to be provided, we will substitute an alternative benchmark if this is both feasible and appropriate at that time. Otherwise, we will look to find a solution that is transparent and that fairly balances your best interests with ours. 

We will then write to you to inform you what we have done to address the issue and the effect this will have on your credit agreement, including changes (if any) to:

  • the interest rate applicable to your mortgage credit agreement;
  • your repayment amounts; or
  • the term of your mortgage credit agreement.