The FCA has published a consultation paper detailing the proposed rules for firms performing activities in relation to pre-2004 Consumer Credit Act (CCA) regulated first charge mortgages.

Prior to 31 October 2004, administering these mortgages was regulated under the CCA if they fell below the relevant CCA financial threshold. However, in November 2015, the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 3 2015) was passed, which will make the administration of these mortgages a “regulated mortgage activity” from 21 March 2016.

The government also plans to expand the definition of “advising on a regulated mortgage contract”and “arranging a regulated mortgage contract” to include advising/arranging on variations of pre-2004 CCA regulated first charge mortgages. Firms that conduct activities in relation to these mortgages will need to hold the appropriate mortgage permissions, in place of the pre-existing consumer credit permissions. The FCA will apply the existing ‘Mortgages and Home Finance: Conduct of Business Source Book’ to such firms. It also proposes that firms will be subject to other Handbook rules applicable to firms performing activities in relation to first charge back book mortgages, for example, its manuals for Supervision, Dispute Resolution, Complaints and Training and Competence.

This consultation paper will interest any firm currently performing activities in relation to pre-2004 CCA regulated first charge mortgages who will be subject to different rules relating to arrears and shortfalls. The FCA welcomes responses by Friday 18 December 2015.