On 28 February 2020, the European Banking Authority (EBA) published a report on a review of the regulatory technical standard (RTS) specifying the minimum monetary amount of the professional indemnity insurance (PII) or comparable guarantee for mortgage credit intermediaries.

The report has been developed in accordance with Article 29(2)(a) of the Mortgage Credit Directive (MCD), which mandates the EBA to review, and if necessary, develop draft RTS to amend the minimum monetary amount of the professional indemnity insurance or comparable guarantee, for submission to the European Commission by 21 March 2018 and every two years thereafter. Given the late transposition of the MCD in some Member States, the EBA decided in early 2018 to postpone the review by two years, from 2018 to 2020.

The EBA assessed the information obtained from national authorities, from a sample of intermediaries and through desk-based research and has concluded that no amendments to the RTS are currently required.

In reaching this conclusion, the EBA stresses that its mandate laid down in the MCD only refers to the threshold amounts themselves. The mandate does not extend to the EBA assessing, for example, the extent to which the usage of the minimum payout amounts prescribed in the RTS are potentially impeded by specific clauses in PII contracts; the nature of the comparable guarantee(s) that may be used in the market; or what should be understood as a “comparable guarantee” at all. The EBA did not analyse those elements or conduct any thorough assessment of the contents of the insurance contracts.