In light of feedback received from trade bodies and lenders during the consultation, the FSA has re-thought its approach on a number of areas. The main changes to the MMR are:
– Transitional rules (affecting ‘mortgage prisoners’) – enabling lenders to make exceptions to the responsible lending rules for customers who need to remortgage, providing there is no increase in the outstanding amount to be repaid
– Advised sales – clarifying that while most sales will have to be advised, advice will not be needed for simple contract variations – providing there is no increase in the amount to be repaid
– High net worth borrowers, and business customers borrowing against their home, confirming that these types of customers require a tailored approach. This will allow opting out of receiving advice and involve a less stringent affordability check because of their different characteristics and circumstances compared with most other borrowers.
Paul Smee, director-general of the Council of Mortgage Lenders welcomed the rules, which have bought “certainty” to the market.
He said: “Lenders can now make firm plans to ensure that they meet the new requirements when they formally come into place in April 2014. In practical terms, the regulatory changes have already been widely anticipated and so are unlikely to create any significant additional or unexpected impacts.”
Andrea Rozario, director general of The Equity Release Council, said she was pleased that the MMR looked to ensure borrowers would not be” discriminated against” due to age.
The Building Societies Association also praised the regulator for providing greater clarity on the rules compared to its previous paper (CP11/31), however argued that the argument for a fully advised mortgage market was still not entirely “justified”.
While Mortgage Advice Bureau (MAB) said the rules were good news for ‘mortgage prisoners’ trapped by tighter affordability requirements.
The regulator has confirmed that the final rules will be implemeted on 26 April 2014.
