With another set of new rules just published (FCA’s implementation of the MCD), should lenders implement early or leave implementation until next March?

Under MMR we saw some lenders implement quietly and early and others leave changes until the last minute.  Many lenders saw keeping things under wraps as a competitive advantage.  The skill of the intermediary channel was that we adapted to any new requirements with speed, intelligence and with our natural focus on making it as simple for the consumer as possible.  The MCD changes will need more fundamental reforms to disclosure documents, additions to the KFI or its replacement, changes to the APR calculations and the introduction of binding offers and consideration periods.

With a six month window to make changes, some lenders might go early to ensure they have their IT changes secured before the customary end of year embargo on changes.  Others might wait for the embargo window to re-open and bring their changes in the 7 weeks from 1 February.  The only certainty is that brokers will have to simultaneously deal with old style KFIs, new KFI-plus documents and for some the ESIS.  We will also have to reach consensus on how to deal with the new Buy-to-Let regimes.  The loss of the transitional rules for new contracts is also a blow, making even more consumers mortgage prisoners, unless the industry adopts a more pragmatic approach.

There is a real need for lenders to look to open up the use of the transitional provisions to move borrowers from punitive contracts before we lose this facility in March 2016.

None of this will bring a better market for UK consumers and will increase bureaucracy.  Thus from the perspective of the broker and the consumer it would be better to implement as late as possible and all at the same time.  Broker firms will need to make decisions on whether to include second charges in their scope of service, and bring back new paper based disclosure documents including lists of which lenders they will consider.  There is a huge amount to be done, probably much more than for MMR, as much of that had been done in the intervening years from initial consultation.  We should not underestimate the level of change.