Order on Competence Requirements for Mortgage Lenders and Mortgage Intermediaries

Order on Competence Requirements for Mortgage Lenders and Mortgage Intermediaries1)

Pursuant to Section 43, paragraph 4, of the Act on Financial Business, cf. Act Consolidation No. 406 of 29 March 2022, Section 6, paragraph 2, of the Act on Financial Advisors, Investment Advisors and Mortgage Intermediaries, cf. Act Consolidation No. 2016 of 1 November 2021, and Section 8a, paragraph 3, of the Act on Real Estate Credit Companies, cf. Act Consolidation No. 1063 of 19 May 2021, the following is stipulated:

Scope of Application

Section 1. This Order applies to the following mortgage lenders and mortgage intermediaries who provide, intermediate, or advise on mortgage agreements to consumers:

1. Danish financial businesses, cf. Section 5, paragraph 1, item 1, letters a and b, of the Act on Financial Business, and foreign financial businesses operating in this country through branch establishment.
2. Danish mortgage intermediaries, cf. Section 2, item 2, of the Act on Financial Advisors, Investment Advisors and Mortgage Intermediaries, and foreign businesses operating in this country through branch establishment.
3. Real estate credit companies that professionally provide mortgage agreements, cf. Section 1, paragraph 2, item 2, of the Act on Real Estate Credit Companies.

Definitions

Section 2. In this Order, the following terms are understood as:

1. Mortgage Agreement: An agreement under which a lender provides or undertakes to provide a consumer with credit secured by either a mortgage or another equivalent security or another right attached to a residential real estate property, or credit agreements that form the basis for acquiring or retaining ownership rights to land plots for existing or planned buildings.
2. Advice: Personal recommendations, guidance, including information on risks associated with a transaction, and information on the immediate consequences of the consumer's choices.
3. Advisory Services: Personal recommendations to a customer concerning one or more transactions in connection with mortgage agreements that are independent of the provision of the mortgage agreement, and the activities provided by a mortgage intermediary, cf. item 4.
4. Mortgage Intermediary: A business that, as part of its main or secondary professional activity, presents or offers mortgage agreements to consumers, concludes such agreements with a consumer on behalf of a lender, or assists a consumer with advisory services, administration, or other preparatory work prior to the conclusion of a mortgage agreement.
5. Mortgage Lender: A business that, as part of its main or secondary professional activity, provides mortgage agreements.
6. Consumer: A person who, in connection with advice and other activities covered by this Order, acts primarily outside their professional scope.
7. Employee: a) Any natural person who works for a mortgage lender or a mortgage intermediary and is directly involved in providing or intermediating mortgage agreements, advising on mortgage agreements, or having contact with consumers in connection with these activities. b) Any natural person who directly manages or supervises the natural persons covered by letter a).

Competence Requirements

Section 3. Mortgage lenders and mortgage intermediaries must ensure that there are employees in the business who collectively possess sufficient competence to provide advice or offer advisory services on mortgage agreements, and where relevant, possess sufficient competence regarding the formulation, offering, and granting of mortgage agreements and mortgage intermediation activities. If the conclusion of a mortgage agreement includes an ancillary service, mortgage lenders and mortgage intermediaries must similarly ensure that employees have a sufficient competence level in connection with the provision of the ancillary service.

Section 4. In connection with advice, advisory services, and intermediation of mortgage agreements, the mortgage lender and mortgage intermediary must ensure that the employee has sufficient knowledge in the following areas:

1. Product knowledge of mortgage agreements and the ancillary services typically offered on the market alongside these.
2. Legislation regarding mortgage agreements for consumers, particularly concerning consumer protection and relevant legislation on debt.
3. The process in connection with the purchase of real estate.
4. Valuation of real estate.
5. Registration (Tinglysning).
6. The market for mortgage agreements.
7. Good practice, cf. Order on Good Practice for Mortgages.
8. Credit assessment of consumers.
9. Financial and economic understanding.
10. Tax rules relevant to the consumer in connection with mortgage agreements.

Paragraph 2. The mortgage lender and mortgage intermediary must ensure that the employee in the business can:

1. Analyze the consumer's need for mortgage agreements, particularly based on the consumer's own information;
2. Present and justify possible and appropriate solutions to the consumer's need to enter into a mortgage agreement;
3. Advise on the functioning of the different mortgage agreements; and
4. Calculate the economic consequences of the different solutions.

Documentation

Section 5. A mortgage lender and a mortgage intermediary must prepare a business procedure for systematic training courses that ensure that all the business's employees who intermediate or provide advice or offer advisory services on mortgage agreements have the necessary competences. A mortgage lender and a mortgage intermediary must ensure that employees have completed this training course before they begin to provide, intermediate, or advise on mortgage agreements or offer advisory services on mortgage agreements.

Paragraph 2. Employees of a mortgage lender and a mortgage intermediary may acquire the necessary competences by:

1. Completing and passing a theoretical training course relevant to the specific activity; or
2. Having had employment for a minimum of two years with a mortgage lender or a mortgage intermediary, thereby acquiring competences to provide sound intermediation and advice or offer advisory services on mortgage agreements, cf. Section 4.

Paragraph 3. The establishment of a necessary competence level cannot, after 21 March 2019, be based solely on competences acquired as stated in paragraph 2, item 2.

Paragraph 4. The mortgage lender and mortgage intermediary must describe in the business procedures covered by paragraph 1 how they ensure that employees update their competences in accordance with Section 3.

Entry into Force

Section 6. This Order enters into force on 1 July 2022.

Paragraph 2. Order No. 329 of 7 April 2016 on Competence Requirements for Mortgage Lenders and Mortgage Intermediaries is repealed.

Ministry of Industry, Business and Financial Affairs, 10 June 2022

Simon Kollerup / Hans Høj

1. The Order contains provisions implementing parts of Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directive 2008/48/EC and Directive 2013/36/EU and Regulation (EU) No 1093/2010, Official Journal of the European Union 2014, No L 60, page 34.

Official Gazette A 2022 Published on 14 June 2022 10 June 2022. No. 830. Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, Ref. No. 22-004865 CQ002257