The FCA has published PS15/11 Buy-to-let mortgages – implementing the Mortgage Credit Directive Order 2015, feedback on CP15/3 and final rules. The policy statement summarises the feedback the FCA received to the proposals contained in CP15/3 and the FCA’s responses which indicate where it has adjusted its approach to take respondents’ views into account. The consultation focused on four key areas – registration; aggregated data reporting; complaint handling rules; and modifications to other Handbook modules to incorporate consumer buy-to-let (CBTL). The statement also includes the final Handbook rules and guidance which are effective from 21 March 2016.
The policy statement will affect lenders, administrators and intermediaries, consumers in the buy-to-let mortgage market and also consumers who may wish to take out a buy-to-let mortgage after the government’s CBTL framework comes into effect. However, the FCA highlights that not every individual applying for a buy-to-let mortgage will be defined as a consumer under the legislation.
By way of background, the government decided to take advantage of an option in the Mortgage Credit Directive (MCD) that allows Member States not to apply the MCD to buy-to-let activity if they have an “appropriate framework” for regulating it. The government set out an appropriate framework in Part 3 of the Mortgage Credit Directive Order 2015 which establishes conduct standards, based on the MCD, which will apply to a firm conducting broking, advisory or lending activity with a buy-to-let consumer. These standards come into effect from 21 March 2016 and do not apply to a buy-to-let customer acting wholly or predominantly for the purposes of business.
From 21 March 2016, firms wishing to lend, administer, intermediate, arrange or provide advisory services in relation to CBTL will need to be registered by the FCA to do so. The FCA aims to start accepting applications around the start of Q3 this year. The FCA has published a specimen application form to assist firms in planning their application and are encouraging firms to apply as soon as possible.