The Financial Conduct Authority (FCA) has revealed that putting an adviser’s service disclosure document in front of a client in a durable medium, and pipeline business issues around the 21 March 2016 implementation date, are major areas to be covered by firms in the lead up to the Mortgage Credit Directive (MCD).
Speaking at the Financial Services Expo (FSE) London in Old Billingsgate, The FCA’s technical mortgage specialist, Keith Hale, outlined a number of key areas which advisers would have to be fully aware of in order to continue trading compliantly.
Firstly, there was putting the service disclosure document in front of the client. “The Directive requires additional service disclosure and it has to be in a durable medium,” said Hale. He outlined how this could be a problem for those speaking to a client on the phone as the durable medium disclosure must be with the client before an adviser can move forward with any intermediation service.
“One way this could be done is to ask for the client’s email and send the disclosure document across while you are on the phone to them,” he said. “You must send the document before you move forward… if you can’t get it across to the client during the conversation, you have to stop that conversation.”
Hale also outlined another area where advisers will need to plan ahead particularly as the MCD will be implemented immediately on the 21 March next year with no overhang. Those cases which have not completed by the implementation date will have to be done under the new rules. “Advisers need to consider their pipeline because the Directive kicks in on 21 March,” he said. “How long will it take to complete the deal? If it’s likely to be post-21/3 then it needs to be done under the new rules.”
Hale also suggested that the FCA would not consider a situation whereby a case had started pre-MCD but had to be rebroked and re-underwritten post-MCD a ‘good consumer outcome’.