FCA corrects errors in new MCD rules

The Financial Conduct Authority (FCA) has published its quarterly consultation paper (no. 9), CP15/19. This proposes to make a number of minor amendments to its final rules in PS15/9 implementing the Mortgage Credit Directive (MCD) and bringing second charge mortgages within mortgage regulation. The areas concerned are:

(1) the ability to use either the MCD or existing MCOB calculation method for the additional Annual Percentage Rate of Charge (APRC) when firms choose to use the key facts illustration (KFI) and "top up"  with required information during the transition period;

(2) in respect of second charge mortgages entered into before 21 March 2016 to clarify that new MCOB 1.2.20R, in PS15/9, is not an exhaustive list of the MCOB provisions which apply to such second charges, but is merely illustrative; and

(3) to restrict (as was originally intended) transitional periods in which to comply with enhanced training and competence requirements to existing firms.

Financial Conduct Authority, 8 June 2015 

FCA policy statement on consumer buy-to-let mortgages and the implementation of the Mortgage Credit Directive Order 2015

The FCA has published a policy statement, PS15/11, with feedback and final rules on its approach to implementing a legislative framework for consumer buy-to-let (CBTL) mortgages which comes into force on 21 March 2016. The FCA's final rules concern the registration, supervision, handling of complaints and the taking of enforcement action. Amendments are being made to the Supervision manual, the Decision, Procedure and Penalties manual, the Complaints sourcebook, the Enforcement Guide and the Perimeter Guidance manual. These rules are substantially the same as those consulted upon in CP15/3. Helpfully, the FCA have provided a specimen of the application form for firms wishing to offer services in relation to CBTL. The FCA aims to start accepting applications for registration this summer in readiness for next spring. A further policy statement will be published later this month with details of the fees that firms are to be charged. Firms are also encouraged to respond to the FCA's March 2016 fees consultation, concerning periodic fees, and the Financial Ombudsman Service' general levy payable by CBTL mortgage firms. Going forward, information for firms needing to register for CBTL mortgage activity will be published on the regulator's MCD webpage.

Financial Conduct Authority, 5 June 2015


CMA publishes working paper and case studies in retail banking market investigation

The Competition & Markets Authority (CMA) has published a working paper as part of its retail banking market investigation on the obstacles that prospective market entrants face.  The CMA has also published two additional case studies that can be accessed along with the other relevant case studies on the retail banking market investigation webpage. The paper explains that case studies on market entry and expansion provide useful insights into the practical difficulties that firms can face trying to enter or expand into particular markets. Interested parties are invited to comment but no closing date has been given.

Competition & Markets Authority, 5 June 2015


EBA consultation on draft guidelines on passport notifications for credit intermediaries under the MCD

The European Banking Authority (EBA) has published a consultation (EBA/CP/2015/11) on draft guidelines on passport notifications for credit intermediaries under the Mortgage Credit Directive 2014/17/EU (MCD). The EBA proposes to formalise passport notifications to ensure that the MCD's provisions on passport notifications are applied consistently across the EU. The paper sets out draft Guidelines on passport notifications and a draft template notification form. Closing date for comments is 4 July 2015.

European Banking Authority, 4 June 2015


Unfair relationships and PPI

In the recent case of Axton and another v GE Money Mortgages Ltd, the appellant borrowers took out a number of loans through GE and purchased PPI for all the loans through the Money Group. They subsequently discovered that the premiums were higher than comparable policies. The High Court considered that as GE had limited involvement with the PPI there was an insufficient relationship to set aside the loan on the basis there existed an unfair relationship under sections 140A and 140B of the Consumer Credit Act 1974.

Axton and another v GE Money Mortgages Ltd and another [2015] EWHC 1343