On 7 April 2016, the FCA published a modification by consent relating to hybrid lifetime mortgages and the application of a new rule in chapter 9 of the Mortgages and Home Finance Conduct of Business sourcebook (MCOB).

This modification has been made as the FCA no longer considers that an affordability assessment is required where there is no risk of arrears and repossession in the event of missed payments. The modification also makes changes to the product disclosure rules in MCOB 9.4 and the prescribed text of the key facts illustration (KFI) in MCOB 9 Annex 1. As a result, the KFI gives a meaningful description of features and risks – both when interest payments are being made and when they are rolled up. 

The modification is valid until 7 April 2017 (or earlier if any of the rules are amended or revoked) and applies to lifetime mortgage providers and intermediaries.

In order to take advantage of the modification, firms must contact the FCA waivers team. The FCA will respond to confirm that the modification has been granted and publish each modification direction on its website.