Treasury consults on MCD implementation: Treasury is consulting on UK implementation of the Mortgage Credit Directive (MCD), which it must do by 21 March 2016. Treasury is aiming to produce final rules a year in advance. The consultation points out the significant reforms the UK has already undertaken in the form of the Mortgage Market Review (MMR) and says the government does not believe the MCD offers many additional benefits to UK consumers but will entail significant costs for the industry. It also feels there is little opportunity to use the MCD passport to access other markets, as the MCD has not addressed the main hurdles for accessing these markets. Accordingly, its stance in negotiations was to try to steer the MCD to resemble the current UK regulatory regime so far as possible. As a result, Treasury feels that copy-out is not the correct approach to implementation, and that the better route is primarily through amendment to FCA rules. The main changes FCA will need to make are:
- to accommodate second-charge mortgage lending within the mortgages regime rather than the consumer credit regime (and to treat any lending to consumers as consumer credit, even if it is unsecured or is secured on something other than the relevant property). Treasury will move all second-charge lending across to the new regime, including loans existing before March 2016, and FCA will take measures to mitigate against the loss of certain protections consumers had under the consumer credit regime that they will no longer have. Second-charge mortgage firms will need the same FCA permissions as currently apply to first-charge mortgage firms, instead of having a full consumer credit permission, and Treasury is seeking to assess the likely costs of this. Treasury also intends to keep existing exemptions relating to second-charge lending insofar as they are not inconsistent with the MCD;
- to adjust to a new definition of "regulated mortgage contract" that Treasury will implement; and
- in relation to buy-to-let mortgages. The UK had previously decided not to regulate buy-to-let mortgages and so intends to take advantage of the option in the MCD to exempt this market from regulation. But it must nevertheless put in place an alternative framework to appropriately protect consumers, and Treasury is consulting on its plans for this. It will need to legislate to bring mortgages within the scope of FCA regulation when a borrower or relative occupies less than 40% of the property and lets out the rest. So far as possible, and for buy-to-let arrangements that do not need to come within regulation, Treasury will copy out the relevant sections of the MCD to apply to consumers. It proposes that FCA supervise the new framework.
Treasury will also need to amend primary and secondary legislation in respect of variation and cancellation of permissions, cross-border activities and appointed representatives carrying out mortgage-related activities. (Source: Treasury Consults on MCD Implementation)
Treasury responds on green deal information changes: Treasury has published its feedback and the final legislative changes to amend the Consumer Credit (Information Requirements and Duration of Licences and Charges) Regulations 2007 in respect of statements given in relation to green deal plans. The changes take effect from 26 September. (Source: Treasury Responds on Green Deal Information Changes)
Treasury updates sanctions: Treasury has updated the sanctions lists in relation to al-Qaida. (Source:Treasury Updates Sanctions)