The FCA has published Consultation Paper 14/20: Implementation of the Mortgage Credit Directive and the new regime for second charge mortgages (CP14/20).
The Mortgage Credit Directive (MCD) applies equally to first and second charge mortgages and the UK Government has decided that second charge mortgage regulation should move from the FCA consumer credit regime to the FCA mortgage regime as part of the Directive’s implementation.
In CP14/20 the FCA sets out its proposals for the new second charge lending regime alongside its plans to implement the MCD. The FCA has proposed that from 21 March 2016 the regulation of second charge mortgages will move to its mortgage regime. Under these proposals, second charge firms would be required to comply with FCA mortgage rules in areas such as affordable lending, advice, and dealing with payment difficulties.
In relation to implementing the MCD the FCA notes that this will be achieved mainly through reliance on existing mortgage rules. But two areas, product disclosure and annual percentage rate of change, require full harmonisation with the new European rules.
The deadline for comments on CP14/20 is 29 December 2014. The FCA intends to publish a Policy Statement by the end of Q1 2015.
View FCA consults on implementing the MCD and regulatory framework for second charge mortgages, 25 September 2014