Paradigm Mortgage Services has published its second Mortgage Credit Directive (MCD) implementation update for advisory firms.
It has been put together by Christine Newell, mortgage technical director at the mortgage services proposition, and reviews a number of clarifications that have recently been made on the changes to intermediary processes which will be brought about by the Directive.
It details the main areas that firms need to consider and whether or not this will require a change to documentation or to the existing sales process. The update covers:
· Use of the word independent or unlimited product range.
· Buy-to-let and the introduction of regulated consumer buy-to-let.
· Disclosure rules if the client is borrowing more.
· Provision of a list of lenders and their procuration fees.
· Binding offers.
· The introduction of a reflection period.
· The replacement of the KFI with ESIS or KFI-plus.
· Issuing the ESIS or KFI-plus.
· Simplified financial promotions.
· Foreign currency mortgages.
· Tying or bundling of products.
· Removal of transitional arrangements.
· Disclosure of third-party commission.
Paradigm is also offering firms an eight-point MCD Action Plan which they can use to develop their understanding of their responsibilities under the Directive and how they might achieve compliance.
21 March 2016 also sees the introduction of full FCA regulation of the second charge mortgage market. All mortgage advisers need to make a decision about the scope of service they will offer and whether this will include advice on second charge products.
To that end, Paradigm has also created an MCD Flowchart for second charge mortgages which takes firms through the decision-making process and outlines what they need to do in order to meet the requirement of the Directive in this area.
All Paradigm member firms are able to secure the MCD help and advice they need, as well as access to forthcoming mortgage and protection events which will cover the MCD in detail, by visiting the dedicated web pages on the Paradigm website.
Bob Hunt, chief executive of Paradigm Mortgage Services, said: “This week marks the start of MCD implementation as we know it with firms able to begin operating voluntarily under the new regime. Over the weeks to come we can therefore expect more announcements from lenders about how they intend to take this forward – communication which should be followed closely by intermediary firms.
“At the same time, it is absolutely imperative that advisory practices begin to put in place not just their thinking with regard to MCD compliance, but also a focus on the decisions that need to be made and the practical steps to be taken.
“On these highly important regulatory matters, Paradigm is at the forefront of delivering support, help and guidance on what firms need to be doing. Our second MCD update from Christine Newell offers further information which is important as we now have more detail on what is required. Add to this our Action Plan and Second Charge Mortgage factsheet and our aim is support firms thoroughly in this area.
“Every single one of them is affected by the MCD and therefore with both our events and our range of compliance services we are dedicated to ensuring they meet all their regulatory targets within the necessary timescales and with the minimum of fuss.”