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FSE 2014: ‘Start planning now’: FCA warns second charge brokers

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  • 25/09/2014
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FSE 2014: ‘Start planning now’: FCA warns second charge brokers
The Financial Conduct Authority has warned mortgage brokers operating in the second charge market to ‘start planning now’ ahead of new regulations being introduced.

FCA director of policy David Geale (pictured) told an audience of brokers that while the March 2016 implementation date was still some way away, firms should begin preparing now.

Speaking at the Financial Services Expo in London, Geale said: “Remember, you also need permissions to carry out activity in the second charge mortgage business from 21 March 2016.

“We know the majority of second charge firms also carry out other consumer credit activities and we’re currently reviewing our application forms and processes to ensure we can make the application process as clear, straightforward and as quick as possible.”

The new rules will require all second charge loans to be made on an advised basis and the regulator told the audience of brokers that existing level 3 qualifications would apply under the new regime.

“We think it is important that where a sale involves interaction customers receive advice from sellers who are appropriately qualified so we propose to apply the same MCOB sales standards to the second charge market,” he said.

“We are proposing to extend the level 3 qualification requirement to second charge sellers to strengthen the sales process.

“We don’t believe it appropriate or necessary to develop a separate second charge exam and there are clear similarities across all forms of secured lending and this will be strengthened by the application of consistent regulation.”

The FCA said it plans to implement the EU mortgage directive using as many current rules as possible with lifetime mortgages redefined to fit the new rules.

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