This week sees the publication of the Mortgage Credit Directive (Amendment) Order and the draft Financial Services and Markets Act 2000 (Regulated Activities) Amendment Order (No.3). The release of these amendments coincide with the Government's recent close co-ordination with relevant industry stakeholders in the mortgage sector. In other news the appeal in the case of NRAM v McAdam has been allowed.

REGULATORY  Mortgage Credit Directive (Amendment) Order 2015

The Mortgage Credit Directive (Amendment) Order 2015 (SI 2015/1557) has been published along with an explanatory memorandum. The MCD Amendment Order was made on 21 July 2015. Articles 1 and 2 come into force on 20 September 2015. Article 3 comes into force on 21 March 2016. This Amendment arises as a result of the Government's engagement with the industry, where it emerged that several issues that had not been previously identified required further legislative change. The Amendment Order makes two key changes to the MCD Order, namely; it provides that the availability of a transitional arrangement for new loans secured by a second or subsequent mortgage is determined at the first contact with a customer, whether that contact is made by a mortgage lender or intermediary and it clarifies the regulatory status of a small number of existing buy-to-let mortgages which, if currently regulated will continue to be regulated by the FCA as regulated credit agreements, rather than being treated as regulated mortgage contracts, following the coming into force of the MCD Order.  Legislation.gov.uk, 22 July 2015 

Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 3) Order 2015 (DRAFT)

draft version of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 3) Order 2015 has been published along with a draft explanatory memorandum. The draft Order clarifies the correct regulatory treatment under the Financial Services and Markets Act 2000 (FSMA) for a small number of first charge mortgages dating from before 31st October 2004. It also makes supplementary changes necessary to ensure that the legislative changes to the regulatory regime for mortgages, which were made at the time of the UK implementation of the Mortgage Credit Directive (2014/17/EU) (MCD), achieve the government's policy aims that were consulted on in September and October 2014 and announced in January 2015.  Legislation.gov.uk, 22 July 2015

UK

Payday lender to provide £29m redress to over 92,000 customers

Ariste Holding Limited which trades as Cash Genie, has entered into an agreement with the Financial Conduct Authority to provide over £20 million of redress to more than 92,000 customers because of unfair practices. In June 2014, Cash Genie voluntarily notified the FCA that it had engaged in unfair practices. In July 2014, the firm agreed to an independent review of its past business and to carry out a redress scheme. As a result of the review, it has agreed to provide £10 million in redress. The firm had already voluntarily written off £10.3m of fees and interest.  FCA, 27 July 2015

FCA: Improving complaints handling, feedback and final rules

The FCA has published a policy statement (PS 15/19) and final rules reporting on main issues from CP14/30 on improving complaints handling. The final rules are set out in the Complaints Handling and Call Charges Instrument 2015 (FCA 2015/39), which is included as Appendix 1 to PS15/19. The Handbook instrument was made on 2 July 2015. It principally amends the Dispute Resolution: Complaints sourcebook (DISP) (Annex C) and General Provisions (GEN) (Annex B), but it also makes amendments to the Consumer Credit sourcebook (CONC) (see Annex D) and the Handbook Glossary (Annex A).  FCA, 23 July 2015  Gross lending rises in June

The Council of Mortgage Lending has said gross mortgage lending rose 29% in June to an estimated £20.5 billion and that year-on-year lending also rose 15% on the £17.8 billion of lending undertaken in June 2014.  Council of Mortgage Lenders, 16 July 2015

CASES

Appeal allowed in NRAM plc v McAdam

The Court of Appeal handed down judgment in the case of NRAM plc v McAdam and another [2014] EWHC 4174 (Comm) (10 December 2014) allowing the appeal. Lady Justice Gloster in her judgment confirmed that the judge at first instance was wrong to conclude that it was a contractual term of the agreement that the borrowers would be treated as if they had the benefit of certain, but not all, of the protections of the 1974 Act conferred upon borrowers under a regulated agreement. The court found that there would have to be very specific facts or an expressly drafted term of the agreement making it clear that the intention was to apply protections equivalent to those under the CCA. The mere fact of including statements (required by law for regulated agreements) to the effect that the agreement is a regulated agreement, was not sufficient to amount to a term indicating that the CCA rights would all be incorporated if the agreement was not regulated. In addition, the court found that the judge at first instance was also wrong to conclude that, having asserted that the agreement was a regulated agreement in its documentation, NRAM was estopped from denying that the respondents had the benefit of some, but not all, of the protections contained in the 1974 Act. The court found that there was a misrepresentation, giving rise to a potential claim under the Misrepresentation Act. However, the court was not asked to consider that further (it would seem that the limitation period for bringing such a claim may well have expired in this case).

Bailii, 23 July 2015