UK Financial Regulatory Developments - March 2016 #18

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FCA finalises CCA first charge mortgage rules

FCA has published its policy statement and final rules following its consultation (see FReD 13 November 2015) on the treatment of first charge mortgages that are regulated by the Consumer Credit Act 1974 (CCA) and FCA’s Consumer Credit sourcebook (CONC) and sets out its final rules in the Mortgage Contracts (Legacy CCA) Instrument 2016. This instrument took effect on 21 March but will only apply when the affected loans become regulated mortgage contracts on 21 March 2017. This is the case unless the firm in question takes steps to apply the relevant rules before that date. The changes amend several parts of the Handbook, including the Mortgage and Home Finance: Conduct of Business Sourcebook (MCOB), Prudential Sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries (MIPRU) and Supervision Manual (SUP) as well as the Perimeter Guidance (PERG). (Source: FCA publishes policy on CCA first charge mortgages)

 

FCA updates MCD pages

FCA has updated its website to create a page with links to its MCD materials. (Source: FCA updates MCD pages)

 

FCA sets up Insight webpage

FCA has created a new “Insight” webpage, on which it has placed various independent reports it has commissioned. It says the views are not its views and should not be taken as such, but it publishes the papers to stimulate debate. (Source: FCA sets up Insight webpage)

 

Government finalises PSC Regulations

The Government has published the Register of People with Significant Control Regulations 2016. There are no substantive changes to the content of the Regulations since the draft legislation produced in January (see FReD 29 January). (Source: Government finalises PSC Regulations)

 

Treasury makes RAO changes for consumer lending

Treasury has made the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2016, amending the 2001 Regulated Activities Order (RAO). The changes:

  • extend the scope of the regulated activities of arranging and advising on regulated mortgage contracts (RMCs) so that mortgages entered into before 31 October 2004 and which are regulated as consumer credit agreements before 21 March 2016 are included within the activities from that date. First charge mortgages of that type can continue to be regulated as consumer credit agreements during a transitional period;
  • amend the regulated activity of operating an electronic system (a P2P lending platform) in relation to lending so that a person will carry it on regardless of whether they are operating the system (or a person acting on instructions), collecting the interest or capital due under the agreement or both. Where a person is carrying on that activity, facilitating another person transferring their rights under an agreement to a third person is also a regulated activity;
  • amend the regulated activity of advising on investments to include (a) giving advice to a lender or potential lender on the merits of entering into, or assuming rights under, a relevant agreement through a P2P lending platform; (b) providing instructions to the operator of such a system; (c) enforcing or exercising such a lender’s rights; and (d) assigning rights under such an agreement;
  • clarify the regulatory position of a consumer credit or consumer hire agreement entered into before 1 April 2014 such that it is clear that the regulatory position is determined primarily by reference to the position when the agreement was entered into; and
  • clarify that agreements entered into before 21 March 2016 will only be RMCs if they were regulated as such when entered into, or if they were regulated credit agreements which are becoming RMCs because of the order that implemented the MCD.

It also amends the Small and Medium Sized Business (Finance Platforms) Regulations 2015 so that finance applications made by brokers are out of scope of those regulations. Other amendments relate to the position of local authorities and are consequential on the major changes. The provisions relating to FCA rules, guidance and directions came into force on 17 March, whilst others came into force on 20 or 21 March, and the rest will come into force on 6 April. (Source: Treasury makes consumer lending order and explanatory memorandum)

 

Treasury updates sanctions

Treasury has updated the sanctions lists in respect of the Ukraine. (Source: Treasury updates sanctions)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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