Heading towards the MCD - an opportunity for lenders to review their approach

15 April 2015

There are only 12 months to go before the EU Mortgage Credit Directive comes into force. Lenders still waiting on the FCA’s final rules before making any changes risk being left chasing the pack, according to Capita Mortgage Software Solution's CEO, Chris Thompson.

Although the FCA is expected to publish its report by the end of March 2015, lenders should have already been planning and making changes where it is expected that final rules won’t vary from draft proposals. If lenders are preparing appropriately then they should be able to meet the deadline, but with the scale of change involved and the tight deadline, poorly prepared lenders may find themselves rushing to comply.

Key changes are yet to be confirmed by the FCA, but their aim will be to drive fundamental changes to the mortgage sales process, including a new reflection period and issue of a ‘binding’ offer. Further changes include the replacement of the Key Features Illustration (KFI) with a European Standardised Information Sheet (ESIS), additional pre-sales disclosures including a second Annual Percentage Rate of Charge (APRC), and data sharing with other charge holders during the repossession process. Lenders will therefore need to make significant changes to systems, processes and procedures and provide staff training to comply with the new requirements.