Can you remain independent after the EU’s MCD?

This means those involved have been allowed to transition to compliance since last September, thereby smoothing out the effects on the mortgage market as a consequence and avoiding any last-minute panic as the deadline approached.

As far as the Society of Mortgage Professionals are concerned, we always welcome any form of sensible, practical regulation that benefits the consumer.

Following the changes brought about by the MMR, the MCD, with an implementation date of March this year, may not make much material difference, outside the tightening up of areas such as second charge lending and disclosure.

So instead of all change, it’s very much business as usual so far.

MCD has given rise to another independence debate, which we will be viewing with interest. We believe remaining independent, post-MCD, may not necessarily be as onerous as some are suggesting. Getting the right proposition and customer outcomes must come before a label.

What led to the regulation?

The European Commission decided to introduce the directive to create a union-wide mortgage credit market with a high level of consumer protection, covering secured credit (first and second charge loans) as well as home loans.

Over time, borrowers may notice changes in the disclosure documents presented to them by lenders

Interestingly however, an assessment from the European Mortgage Federation (EMF), said that the MMR in the UK already went beyond the core provisions of the MCD.

What the regulation will do?

MCD has introduced minimum regulatory requirements across Europe.

The main provisions include new disclosure requirements, new rules for the performance of services such as conduct of business obligations, competence and staff knowledge requirements, a consumer creditworthiness assessment obligation on creditors, provisions on early repayment, regulation of consumer buy-to-let lending and provisions on foreign currency loans.

What does it mean for advisers/the sector as a whole?

Advisers were warned to brace themselves for a three-year period of flux by the FCA’s technical mortgage specialist, Keith Hale, who also admitted that the new rules would bring little consumer benefit to an already tightly-regulated post-MMR sector.

In fairness however, the transition towards implementation was smoothed by the decision to give lenders a six-month window to adopt the directive’s measures to their own timetable.

As a consequence, firms had effectively been allowed to operate within the requirements of the directive since last September, which has helped reduce any broader, cumulative effects on the mortgage market and a last-minute panic as the deadline approached.