In around six months’ time the Mortgage Credit Directive will be active and the expectation is that all intermediary firms will be fully compliant with the new rules.
Whereas many perceived the MMR to be mainly for lenders, with the MCD there are a number of areas where mortgage intermediary firms will have to make changes.
These are key parts of the service provision, including written disclosure, the replacement of the KFI by the ESIS or ‘KFI+’, the removal of transitional provisions for remortgages from other lenders, the alternative finance options and consideration of scope of service.
And the MCD comes with no transitional period for pipeline cases, with a cut-off point of 21 March 2016. Agreements made before this date will not be subject to the MCD. So firms do not get the grace period normally offered by the FCA to get their house in order. The MCD takes immediate effect.
As Ami boss Robert Sinclair recently noted, the smaller broker firms are likely to face the biggest challenges with this next major regulatory upheaval.
However, that is not to say there is not support and resource to draw on. Many distributors, like Paradigm, are helping firms through the process of compliance.