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Eight out of 10 brokers still need time for total MCD readiness

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  • 26/11/2015
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Eight out of 10 brokers still need time for total MCD readiness
Just 21% of mortgage professionals say they are completely prepared for the incoming Mortgage Credit Directive (MCD) which comes into effect in just four months.

An online poll conducted by Mortgage Solutions found that while 40% of respondents said they were almost fully prepared for the new regulation, 39% admitted they were not prepared at all.

From 21 March next year, the MCD will require mortgage brokers to either advise or refer on second charge mortgages to customers looking to remortgage, should it be a more suitable option for them.

In addition, buy-to-let mortgages which are not used in a business capacity will be regulated by the Financial Conduct Authority (FCA) as a consumer product.

Robert Sinclair, chief executive at the Association of Mortgage Intermediaries said: “I think the problem is nobody is very clear on what it is that needs to be done and I don’t think the FCA has helped by not hosting any roadshows on this.

“Disclosure documents need to be in place but there’s still quite a lot of communication from lenders to come on how they will deal with things.

“Brokers will need to have the new disclosure documentation that takes into account second charge mortgages as well as actually make a decision on how they plan to deal with seconds. In addition, they will have to provide further documentation to show how they earn their fees from lenders and decide whether they will advise on consumer buy-to-let cases. It will also be useful for them to know whether lenders are offering a KFI+ or ESIS, but whether they get there in time will be a different issue,” he added.

Terry McCutcheon, CEO of the Finance Planning Group says brokers that are currently unprepared will not have sufficient time to get ready by March.

“This is probably due to lack of knowledge from the regulator, but again it’s up to people to find out through their networks or who they work with. I suspect there will be quite a lot of people who will be caught out and not have the right documentation and authorisations,” he said.

“There probably will be an almighty rush towards the end with people trying to get their applications through the FCA which is going to prevent them from trading in the buy-to-let market.”

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