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Not enough preparatory detail published on MCD, brokers say

  • 02/10/2015
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Not enough preparatory detail published on MCD, brokers say
More than eight in 10 mortgage professionals say there has been insufficient in-depth information published on the Mortgage Credit Directive (MCD).

According to a poll conducted by Mortgage Solutions with 104 respondents, just 17% felt there had been sufficient information published in the run up to the MCD deadline on 21 March 2016.

Mark Dyason, director of Edinburgh Mortgage Advice said one of the main issues was lack of clarity surrounding consumer buy to let.

“The preparation that went into the MCD makes MMR’s preparation look fantastic. There’s a lack of ownership about what’s happening and what we need to do to prepare,” he explained.

“The reason we don’t know how big the consumer buy-to-let market will be is because I don’t think it’s been defined properly yet. If we don’t have a definition then we can’t do anything about what’s going to be inside or outside that market. It’s about time somebody took responsibility of it, I’m assuming that would be the Treasury.”

The consumer buy to let term was created through a legislative framework introduced by government, rather than the Financial Conduct Authority (FCA). Just this week the FCA admitted there was no clear definition of buy to let, but instead describes non-consumer buy to let loans as those ‘entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower’.

Terry McCutcheon, chief executive of Finance Planning Group, said seminars and conferences had helped some of the industry get a better grasp of regulation.

“I think leaders of businesses and senior staff from the lenders are aware because we go to regular meetings and conferences. However, I’m not sure all of the advisers in the industry are fully aware of the implications yet.

“As a business the size of the Finance Planning Group, we are able to hold regular conferences where we can explain the implications to our advisers and share our plans about how we are going to deal with MCD going forward.”

Tracey Cole, compliance and risk director at Stonebridge Group, said the network would be providing information and resources to keep its members up to speed with the requirements.

“In that sense they are going to be able to rely on us to help them through, what I believe, will be a much more challenging regulatory environment than MMR. With MCD there are far more advisory firm responsibilities that are going to need to be met; perhaps one of the biggest is that of the pipeline and the fact there is no MCD ‘handover period’ as such.

“There is therefore a need here for adviser firms to manage client expectations. On top of this they need to be fully aware of what lenders are planning to do, in areas such as disclosure documentation, and when they plan to do it, where currently there looks to be a strong level of communication in that regard. At the end of the day, firms can help themselves by knowing what they have to do and when they have to do it by – we will certainly be helping our ARs achieve their MCD goals in the months ahead.”

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