Dec 15 – Coming, ready or not

I am continually being asked if the second charge industry is going to be MCD ready for March 2016. Currently most broker firms are gaining their FCA Consumer Credit authorisation with the final hurdle of a mortgage upgrade to clear. Lenders appear to be packing in for a late run. It is getting late in the day for lenders to be communicating their affordability and stress test models as brokers will need to train these in before launch. As there is no transitional rule, we must hope that many lenders can go early to avoid pipeline issues. The task for brokers is much greater with the move to a fully advised set of mortgage rules which have evolved over the last 12 years. The practical aspects of scope disclosure, range of lenders and remuneration declarations and the move to an ESIS with a consideration period is a far cry from the existing model. With the need to undertake more complete fact finds, with a more robust assessment of income and expenditure will change all participants interview models. What is certain is that the FCA will be undertaking early thematic work to test how well firms are applying the new suitability and affordability requirements. Some first charge firms found the last thematic difficult, so we should not expect a soft ride.