The FCA has published a Policy Statement on the future regulatory treatment of CCA regulated first charge mortgages. This is particularly relevant to firms currently administering, or advising on or arranging variation on a book of pre-2004 first charge CCA mortgages.

On 21 March 2016, the FCA published final rules which are now in force. However, the rules will only apply when the affected loans become regulated mortgage contracts on 21 March 2017, unless the firm in question takes steps to apply the relevant rules before that date.

Mortgages entered into before 31 October 2004 (those which did not exceed certain financial thresholds at the time), will become regulated mortgage activities and must therefore comply with the FCA’s Mortgages and Home Finance Conduct of Business sourcebook by 21 March 2017. Firms will however have the option to adopt the new rules from 21 March 2016 if they wish. Previously, these mortgages were regulated under the CCA and the Consumer Credit sourcebook.

Consumers holding these mortgages will be entitled to different regulator protections. Such protections include new safeguards for arrears and payment shortfalls and an enhanced form of annual statement.

The FCA has advised that once the legislation takes effect, firms should check that the appropriate permissions are in place and consider how their business will be affected by the new rules.