UK Implementation Of The Mortgage Credit Directive
HM Treasury and the Financial Conduct Authority ("FCA") have in recent months published documents to implement the EU Mortgage Credit Directive ("MCD") in the UK. These are (i) HM Treasury's Mortgage Credit Directive Order (SI 2015/910) (the "MCD Order") and (ii) the FCA's Policy Statement 15/9 ("PS 15/9"). In this article we summarise the main changes from the existing regime on mortgage contracts.
The MCD Order
The MCD Order makes the following changes to the existing regime on mortgage contracts:
The MCD Order establishes a new regime for consumer buy to let mortgages
A new regime for the regulation of consumer buy-to-let (CBTL) mortgages will apply to "CBTL firms", including those administering CBTL mortgages, credit intermediaries and advisory service providers. These firms will be subject to a number of requirements, such as the need to register with the FCA (even where they are already FCA authorised) and will be subject to new conduct of business and information disclosure requirements (as set out in Schedule 2 to the MCD Order). However, buy-to-let mortgages where the borrower is not a consumer (i.e. the borrower is acting by way of business) will not be caught. The applicable conditions for this are that the borrower intends to use the mortgage to purchase property with the intention of letting it out, has previously purchased the property with the intention of letting it out and...
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