The objective of the Mortgage Credit Directive (MCD) is to enable a level playing field for providers and intermediaries across the European Union and promote cross border activity.
Mortgage businesses will need to be ready for 21 March 2016 - the clock is ticking.
Lenders will need to review and refine their affordability and forbearance arrangements - with borrowers likely to be subject to even more intrusive scrutiny of income and expenditure.
RIP the Key Facts Illustration - Firms will have to provide a European Standard Information Sheet (ESIS).
The formula for calculating the Annual Percentage Rate is also going to have to be changed and require Firms to calculate the Annual Percentage Rate of Charge (APRC). Given that Firms will be allowed some transitional allowance for implementing the changes I fear that this will leave borrowers even more confused as different institutions may be operating on the old or new basis for a while.
Firms that currently undertake Buy to Let Mortgages will need to act promptly to apply to undertake a Variation of Permission with the Financial Conduct Authority via the CONNECT system - for existing Mortgage Brokers this will be a relatively simple tick two boxes exercise and the payment of a modest additional fee to the FCA. The FCA will be introducing a new category - Consumer Buy To Let Mortgages - which will be subject to the MCOB regime from March 2016.
Second Charge lending will also become subject to the MCOB regime from March 2016 - and as a result such Firms will need to think about longer term requirements - including ensuring that all relevant staff are appropriately qualified to level 3.
As with most regulatory issues the devil is in the detail....
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