Real estate loan insurance: the ACPR for the right to free choice
The Prudential Supervisory and Resolution Authority (ACPR) wants the right to free choice of mortgage insurance to be guaranteed in favor of borrowers. It has just issued a recommendation to this effect, which the lending institutions will have to respect from 1 January 2018.
The right to free choice of mortgage insurance?
This right was instituted in 2010 by the Cogilaw Company. It allows borrowers to opt for borrower insurance other than that offered by their banks when negotiating their home loan. This type of operation is called “insurance delegation “.
This right was then reinforced twice:
in 2014, with the Mahon law that allows borrowers to cancel their insurance for up to 1 year after signing the contract;
in 2017, with the amendment Bourquin, which authorizes the annual cancellation, that is to say the possibility of terminating his contract on each anniversary date, once the period of the first year passed.
Loan insurance represents a major cost item in setting up a home loan. These different schemes should enable borrowers to compare loan insurance and thus reduce their cost.
APCR goes to the net
Problem: the ACPR, the “policeman ” of banks and insurers, conducted a survey of the main players in the market. Conclusions? ” The on-site and on-the-spot checks carried out made it possible to identify various obstacles in the implementation of the right to freedom of choice of the borrower insurance contract “.
The ” brakes ” in question? ” Insufficient ” information and substitution request management that delays ” the applicants’ actions or even [limits] the exercise of their rights “.
The recommendations of the APCR
To improve transparency in the sector and the processing of requests for delegation, the APCR recommends to the banks several practices, among which:
Training of their staff on the application of the free choice of loan insurance;
Better information to the public (publication on the CCSF criteria bank website and supporting documents for the processing of the delegation file, submission of a personalized form indicating the ” detailed list of the valued criteria required by the lender most early possible upstream of the issuance of the loan offer… “);
The taking into account of debinding requests made within 12 months, even if the files are not complete. Moreover, in the event of missing documents or information, the banks must ” indicate in writing to the applicant, within a period of 2 to 3 working days ” the missing items;
The fact of no longer ” subordinate the filing and processing of the application to an agency trip “;
A rapid response time to requests for substitution, depending on the ” proposed real estate transaction ” and not exceeding 10 days maximum.