On 2 February 2016, the Government published the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2016, together with an explanatory memorandum.
The Order amends legislation (including the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001) concerning the regulation of activities relating to peer-to-peer (P2P) lending, mortgage lending and other credit granted to consumers. The Order also amends the Small and Medium Sized Business (Finance Platforms) Regulations 2015 so that finance applications made by brokers are out of scope of those Regulations. In summary, the Order seeks to:
- Extend the scope of the regulated activities relating to the operation of P2P lending by aligning the treatment of P2P loans with other ISA qualifying investments. The draft Order also makes the provision of advice to lenders on entering into a P2P loan a regulated activity. The Order extends the scope of the regulated activity of operating an electronic system in relation to lending to ensure that all the relevant activities are included within this, including notably the activity of facilitating the transfer of rights under a peer-to-peer loan between lenders.
- Provide for a transitional period until 21 March 2016 before first charge mortgages which were entered into before 31 October 2004 and are currently regulated as consumer credit agreements must be regulated as mortgages. It also ensures that all of the regulated activities applicable to regulated mortgage contracts (including, ‘advising on regulated mortgage contracts’ and ‘arranging regulated mortgage contracts’) apply to mortgages which were entered into before 21 October 2004, and that the promotion of those activities is regulated.
- Clarify the regulatory position of a consumer credit or consumer hire agreement entered into before 1 April 2014 such that that the regulatory position will be determined by the position existing at the time the agreement was entered into.
- Supplements the definition of “regulated mortgage contract” such that agreements entered into before 21 March 2016 will only be considered regulated mortgage contracts if they were: (i) regulated when entered into; or (ii) regulated credit agreements which are becoming regulated mortgage contracts pursuant to the Mortgage Credit Directive Order 2015.
The provisions of the Order will come into force on different dates (mostly March 2016), with the remaining provisions coming into force on 6 April 2016.