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FCA considers BTL approach for solo-regulated firms

The FCA has confirmed that it is considering its approach to buy-to-let lending for solo-regulated firms, who are not subject to PRA rules.

Speaking at the Association of Short-term Lenders conference in London, FCA technical specialist Lorna O’Brien said the regulator is considering to what extent poor underwriting standards by solo-regulated firms would impact consumers.

“We’re considering to what extent poor underwriting standards by solo-regulated firms might compromise our objectives, in particular our objective to protect and enhance the integrity of the UK financial system,” said O’Brien.

“We’re mindful of risks that poor standards of lending could emerge in firms not subject to the PRAs requirements, so we will be actively monitoring the sector to decide whether there’s any case for intervention.”

The PRA regulates mortgage lenders that also take deposits, and the FCA regulates all other lenders.

The next stage of PRA changes come in from October 1 and require lenders to apply more prudent underwriting standards for portfolio landlords; those with four or more mortgaged properties.

O’Brien also spoke about the ongoing mortgage market study, and said findings from the report are currently being put together.

“The next steps will be to publish an interim report, setting out the analysis and preliminary conclusions and there will then be an opportunity to engage before the full report is published next year,” she said.

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