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Voluntary Mortgage Credit Directive rules start today

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  • 21/09/2015
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Voluntary Mortgage Credit Directive rules start today
Firms can begin to operate under the Mortgage Credit Directive regime today, supported by a raft of regulatory fact sheets outlining each sector's responsibilities.

The information sheets outline changes for first charge lenders and administrators, first charge intermediaries, second charge lenders and administrators, second charge intermediaries and house builders.

A separate fact sheet is also available for consumer buy to let, following the changes to the handbook outlined in PS15/11.

In the fact sheet for mortgage advisers, the regulator said advice firms do not have to broaden their scope of service to include second charge as well as first charge mortgages.

However, both products must be outlined to the customer if the adviser has chosen to offer both options and the customer chooses to borrow more.

Firms will need to consider what changes they need to make to their processes for both advised and execution-only sales, said the FCA.

All firms lending and advising on pipeline applications received before 21 March need to consider how to manage those and avoid duplicated disclosure, said the regulator.

“It is up to firms to decide how best to do this, whilst having regard to both the regulatory requirements and the customer experience. To help firms manage their sales pipeline, those with mortgage permissions can choose to apply the new rules up to six months early, from 21 September 2015.”

Another fact sheet includes information on consumer buy to let, defined as using the mortgage to buy a property with the intention of letting it out or already owning a property that has been let out on the basis of a rental agreement.

However, if a borrower signs a declaration that they are acting as a business and understands that they are forgoing protections they can sidestep the legislation, unless the firm suspects fraud.

The fact sheets targeted to walk firms through the changes can be found here.

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