The FCA has issued a consultation paper that sets out proposed rules for firms administering or performing activities in relation to variations of first charge mortgages regulated under the Consumer Credit Act 1974 (the CCA). The consultation paper is entitled Consultation Paper 15/36: Future regulatory treatment of CCA regulated first charge mortgages (CP15/36). In CP15/36 CCA regulated first charge mortgages are referred to as “pre-2004 first charge CCA mortgages”.
In November 2015 the Government made legislation (the Financial Services and Markets Act (Regulated Activities) (Amendment) (No.3) Order 2015) that will make the administration of a regulated mortgage contract in relation to pre-2004 first charge CCA mortgages a regulated activity from 21 March 2016 and the CCA will then no longer generally apply. The Government also plans to expand the definition of ‘advising on a regulated mortgage contract’ and ‘arranging a regulated mortgage contract’ to include advising and arranging on variations of pre-2004 first charge CCA mortgages. Firms that conduct activities in relation to these loans will need to hold appropriate mortgage permissions in place of consumer credit permissions.
In summary, in CP15/36 the FCA proposes:
- to apply its Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) to such firms in the same way that it applies to firms in relation to post-2004 first charge mortgages, with some limited modifications or exceptions; and
- that firms performing activities in relation to pre-2004 first charge CCA mortgages will be subject to other Handbook rules applicable to firms performing activities in relation to first charge back book mortgages, for example, the FCA’s manuals for Supervision, Dispute Resolution: Complaints and Training and Competence, with some exceptions.
The administration, and activities in relation to variations of pre-2004 first charge CCA mortgages will become regulated mortgage activities from 1 October 2016, although firms who wish to adopt the new rules early can do so at any date from 21 March 2016.
The deadline for comments on CP15/36 is 18 December 2015.
View CP15/36: Future regulatory treatment of CCA regulated first charge mortgages, 6 November 2015