Home warranty provider set to fight proposed EU directive over fears of more costs and bureaucracy
The National House Building Council is to question a proposed European directive that may bring it within the remit of the Financial Services Authority.

As well as acting as a lobbying organisation for housebuilders, the NHBC arranges warranties for buyers of new-build homes. It is concerned that if these transactions become subject to FSA oversight, it would increase its administrative and regulatory burden.

The NHBC has applied for a judicial review of whether the directive would mean that it had to submit to FSA regulation. It has also been in discussion with the authority itself over whether it would have to register its housebuilder members, who actually provide the warranties.

The Insurance Mediation Directive, which is being proposed by the European commission, will require statutory regulation of insurance sales and mediation from 14 January 2005.

The directive could drive up the costs of existing trade association schemes

Industry insider

In a statement, the NHBC said: "We have applied to the High Court for permission to apply for a judicial review of the FSA's guidance, to establish the correct interpretation of the insurance mediation directive in respect of NHBC-registered builders."

The directive may affect other groups, such as the Federation of Master Builders, which runs a warranty scheme called MasterBond. One industry insider said that the directive could drive up the costs of trade associations' schemes because of the increased regulatory burden.

Speculation is growing that the government is considering introducing a bond for its faltering quality mark scheme. The quality mark's existing warranty scheme expires later in the year, and the government has admitted that it considering a bond scheme as an alternative.

The introduction of a bond scheme could mean that organisations do not have to complying with the directive, and may also encourage the industry to opt for the quality mark instead of a trade body scheme.