Regulator warns firms on pre-directive changes to handbook

Regulator warns firms on pre-directive changes to handbook

The Financial Conduct Authority has published a policy statement flagging up consequential changes to the Consumer Credit Sourcebook (CONC) in preparation for implementation of the Mortgage Credit Directive and ahead of further consultation later this year.

In a policy statement published today (31 July), the regulator said that in general, respondents agreed with proposed amendments to the final rules, the majority of which will come into effect on 21 March 2016.

The regulator’s response to the non-MCD changes to CONC will be published later in 2015.

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In February the FCA published its proposed changes to consumer credit, which included changes to credit broking, guarantor lending, high-cost short-term credit, financial promotions and mortgages.

Some respondents raised questions about the forms of secured lending which remain within CONC, while others asked for clarification on the future regulatory treatment of first charge CCA mortgages.

“We have discussed this issue with HM Treasury and understand that their intention is that the administration of first charge CCA mortgages should become a regulated mortgage activity,” the document read, adding that the government is considering legislative changes to put the question beyond doubt.

“We are exploring what further amendments to our rules are necessary in light of these changes,” it added, stating that these will be consulted on in the coming months.

The FCA said that firms involved in lending that is currently subject to CONC, but which will be subject to the mortgages conduct of business (MCOB) book from next March, will need to consider how these changes affect them.

Virtually all agreements secured on land will now be subject to MCOB, so affected firms should consider how the new rules apply to their business and implement the changes necessary to comply within the appropriate deadlines, the policy statement read.

Firms that currently hold an interim permission for credit-related regulated activity in relation to second charge mortgages will need to apply for the appropriate mortgage permissions if they wish to continue with this activity after 21 March 2016.

Authorised firms will need to apply for a variation of permissions to add relevant mortgage permissions if not already held, with the regulator noting that they should apply in good time before the deadline, to enable proper consideration and determination of the application.

Firms conducting activities relating to MCD lending not secured on the home will require consumer credit permissions and may need to apply for the new permission of advising on MCD lending not secured on the home, if they are providing advice on such loans.

In September the FCA will consult on minor changes to the handbook to address outstanding issues relating to MCD lending not secured on the home, including whether to amend the definition of ‘credit related regulated activity’ to include the activity of advising borrowers in respect of this type of lending and whether to apply the cancellation rights in CONC.