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FCA proposes extending MCOB rules as P2P platforms eye residential lending

  • 27/07/2018
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FCA proposes extending MCOB rules as P2P platforms eye residential lending
The Financial Conduct Authority (FCA) plans to extend its Mortgage and Home Finance: Conduct of Business sourcebook (MCOB) rules to peer-to-peer (P2P) platforms which enter the residential lending market.


The changes would include the rules on arrears, payment shortfalls and repossessions, but would allow platforms not to identify all its funders.

In its Loan-based (‘peer-to-peer’) and investment-based crowdfunding platforms consultation, the regulator said it was aware that some P2P platforms were considering moving into residential secured lending.

It said that if they did this they would likely to be carrying on the regulated home finance arranging activity.

As a result, it is proposing extending the MCOB and other FCA Handbook rules to these lenders or those providing activity.

“We also propose some limited modifications and exceptions to these rules to reflect the specifics of the P2P business model,” the FCA said.


Key points raised by the FCA included:

In cases where the mortgage contract is outside the scope of the Mortgage Credit Directive (MCD), the FCA is proposing to disapply the MCD MCOB rules which are applicable to home finance arrangers.

The FCA proposes applying the alternative provisions in MCOB 11 for particular forms of lending (for example, lending to high net worth borrowers, business loans, interest-only mortgages and bridging finance) to home finance platforms.

The FCA proposes minor amendments to MCOB 5 so that a home finance platform does not have to disclose the identity of the investor(s) in the Key Facts Illustration (KFI). Instead it will allow home finance platforms to explain that the loan is to be taken out via the platform with a description of the type of the investors. This will also be allowed in the offer document.

The full suite of reporting rules will apply to home finance platforms.

Fee blocks for home finance platforms will remain unchanged.



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