FCA and PRA issue mortgage reporting consultation paper

The financial conduct authority and the prudential regulation authority have launched a joint consultation paper regarding new reporting requirements for mortgage lenders and home finance administrators.

The purpose of the consultation is to gather more data for use by the FCA, PRA and the Bank of England at large, because the former two believe that there are a number of areas where more data is required.

Specifically, the PRA and FCA claim that, on top of data gaps identified in the mortgage market survey interim report, specific gaps in performance sales data restrict their ability to monitor the financial policy committee’s loan to income flow limit recommendation and its affordability test recommendation, making it difficult to assess mortgage market risks.

Furthermore, the FCA says that “gaps and inconsistencies” in forms and guidance for mortgage lending and administration return to mortgages sold to third parties and second charge mortgages make it challenging for firms to meet reporting obligations.

The bodies wish for mortgage lenders to submit PSD sales reports with: internal product transfers and further advances; containing data on any other outstanding debt secured on the property with the same lender; on second charge mortgages with information on outstanding debt secured on the property with other lenders; and with information on the contractual reversion rate offered.

The paper also expresses a desire for second charge administrations to submit an additional form on the number and value of loans administered, and for home finance administrators to be given clearer instructions as to what data on mortgages sold on needs to be submitted.

Feedback on these proposals should be submitted by Friday 22 March 2019, with a joint policy statement planned for publication in mid-2019. The bodies add that there will be an implementation period of a year following publication.

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