Treasury has published the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2016 for approval by both Houses of Parliament. Treasury wants to make various changes to the regulatory perimeter, including:

  • extending the scope of the regulated activities peer-to-peer lending platforms and providing advice on lending through such platforms. The regulated activity of operating an electronic system in relation to lending will be carried on regardless of whether the person operating the system (or a person acting on instructions) collects only the interest or capital due under the agreement or both. It will also be a regulated activity to facilitate another person transferring their rights under a relevant agreement to a third person. Also, the regulated activity of advising will include: (a) giving advice to a lender or potential lender on the merits of entering into, or assuming rights under, a relevant agreement through an electronic system; (b) providing instructions to the operator of such a system; (c) enforcing or exercising such a lender’s rights; and (d) assigning rights under such an agreement;
  • supplementing the UK implementation of the Mortgage Credit Directive (MCD) so that the regulated activities of arranging and advising on regulated mortgage contracts (RMCs) entered into before 31 October 2004 and which are regulated as consumer credit agreements before 21 March 2016 are included within the activities from that date. There is a transitional period during which first charge mortgages of that type can continue to be regulated as consumer credit agreements. Also, the definition of RMC will include agreements entered into before 21March 2016 only if they were regulated as such when entered into, or if they were regulated credit agreements which are becoming regulated mortgage contracts as a result of MCD implementation;
  • clarifying the regulatory position of credit provided to consumers before 1 April 2014 to make it clear that the regulatory position is determined primarily by reference to the position when the agreement was entered into; and
  • amending the Small and Medium Sized Business (Finance Platforms) Regulations 2015 so that the obligation of a designated bank to refer an unsuccessful finance application by a small or medium sized business to a designated finance platform does not apply where the application was made on behalf of the business by a broker.

(Source: Parliament Publishes Lending Order)