Mortgage Credit Directive

The Mortgage Credit Directive (MCD) is an EU framework of conduct rules for mortgage firms. We implemented these rules in the UK on 21 March 2016.

The MCD applies equally to first and second charge mortgages, so second charge mortgage regulation has moved from our consumer credit regime into our mortgage regime.

So, to do second charge mortgage business, lenders, administrators and brokers must be authorised and hold the correct permissions.

We also have powers to register and supervise firms carrying out consumer buy-to-let (CBTL) activity, as defined in the government’s legislative framework (see the Mortgage Credit Directive Order 2015 [1]).

Read how the changes will affect your firm from the links on the right.

Data reporting

The transfer of second charge regulation to our mortgage regime and the introduction of the legislative framework for CBTL activity have resulted in new data reporting requirements. These are set out in more detail in our policy statement PS15/9 [2].  In summary, these are as follows:

Mortgage Lending and Administration Return (MLAR)

Second charge lenders and administrators will need to submit aggregated data on their regulated activities, including second charge regulated mortgage contracts, from 21 March 2016. The requirements are set out in the Handbook – see SUP 16.12 [3].18BR, SUP 16.12 [3].18CR, SUP 16 Annex 19AR [4], Annex 19AAR and Annex 19BG.

Retail Mediation Activities Return (RMAR)

From 21 March 2016, second charge intermediaries need to submit aggregated data on their regulated activities. See SUP 16.12 [5].28AR, SUP 16 Annex 18AR [6] and Annex 18BG [7].

Make changes to MCD data

Authorised firms can change their MCD data using the MCD and/or CBTL notification form [8] (DOC)

CBTL

CBTL lenders need to submit aggregated data on their CBTL lending, arrears and complaints activity from 1 April 2016.  See SUP 16.21 [9], SUP 16 Annex 39AD [10] (PDF) and Annex 39BG [11]. 

Data can be submitted in multiple ways via Gabriel, our regulatory reporting system. Firms can submit MLAR, RMAR and CBTL returns by inputting data into the specific online forms that will be available in Gabriel. If your firm prefers to submit by web upload or direct communications (eg via XML files) the technical documents for MLAR, RMAR, and CBTL returns are available on our website. Gabriel data reference guides [12].

Product sales data (PSD)

As confirmed in PS15/9, we are introducing PSD reporting for second charge firms a year later than originally intended. In practice, this means firms will have to submit PSD returns on second charge mortgages entered into from 1 April 2017.  The supporting technical documents are now available: PSD reference guide [13]

Annual percentage rate of charge (APRC) simulator

The APRC is the total cost of the credit to the consumer, expressed as an annual percentage of the total amount of credit.  For loans covered by MCD, firms need to use a new method for calculating the APRC. 

The European Commission has an MCD APRC simulator that includes examples and instructions. This may be useful if you are a mortgage lender, as it will enable you to review your calculation method.

Explore the APRC simulator [14]

Passporting

If your UK-authorised firm wants to conduct mortgage activities in an EEA state, you can apply for a 'passport' to do this, under the Mortgage Credit Directive.

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Mortgage Credit Directive [17]
New rules for first charge mortgage advisers [18]
New rules for first charge mortgage lenders and administrators [19]
New rules for second charge mortgage advisers [20]
New rules for second charge mortgage lenders and administrators [21]
Consumer buy-to-let mortgages [22]
Changes to shared equity and second charge schemes [23]
Intermediary service disclosure [24]
Independence and binding offers [25]
Second charge mortgages: service and product disclosure [26]
Foreign-currency lending [27]
Second charge mortgage back book: retained Consumer Credit Act provisions [28]
Main publications
Consultation paper 15/36: Future regulatory treatment of CCA-regulated first charge mortgages [29]
Policy statement 16/7: Future regulatory treatment of CCA-regulated first charge mortgages [30]
Consultation paper 16/2: MCD - minor changes to rules and guidance [31]
Handbook notice 31 [32]
Consultation paper 15/3: Consultation on rules for consumer buy-to-let [33]
Policy statement 15/11: Final rules for consumer buy-to-let [34]
Consultation paper 14/20: Consultation on rules for first and second charge mortgages [35]
Policy statement 15/9: Final rules for first and second charge mortgages [36]
Source URL: https://www.fca.org.uk/node/7486
First published: 
21/03/2016
Last updated: 22/08/2017

Links

  • [1] http://www.legislation.gov.uk/ukdsi/2015/9780111127742
  • [2] https://www.fca.org.uk/news/ps15-9-implementation-of-the-mortgage-credit-directive
  • [3] https://www.handbook.fca.org.uk/handbook/SUP/16/12.html
  • [4] https://www.handbook.fca.org.uk/handbook/SUP/16/Annex19A.html
  • [5] http://www.handbook.fca.org.uk/handbook/SUP/16/12.html
  • [6] https://www.handbook.fca.org.uk/handbook/SUP/16/Annex18A.html
  • [7] https://www.handbook.fca.org.uk/handbook/SUP/16/Annex18B.html
  • [8] https://www.fca.org.uk/publication/publications/mcd%20and%20or%20cbtl%20notification%20form.doc
  • [9] https://www.handbook.fca.org.uk/handbook/SUP/16/21.html
  • [10] https://www.handbook.fca.org.uk/form/sup/sup_chapter16_annex39ad_20160321.pdf
  • [11] https://www.handbook.fca.org.uk/handbook/SUP/16/Annex39B.html
  • [12] https://www.fca.org.uk/firms/gabriel/data-reference-guides
  • [13] https://www.fca.org.uk/firms/regulatory-reporting/product-sales-data-reporting
  • [14] http://ec.europa.eu/finance/finservices-retail/credit/mortgage/
  • [15] https://www.fca.org.uk/print/firms/mortgage-credit-directive
  • [16] mailto:?Subject=Mortgage Credit Directive at FCA&Body=I saw this on the FCA website and thought you might be interested %0Ahttps://www.fca.org.uk/firms/mortgage-credit-directive
  • [17] https://www.fca.org.uk/firms/mortgage-credit-directive
  • [18] https://www.fca.org.uk/firms/mortgage-credit-directive/new-rules-first-charge-mortgage-advisers
  • [19] https://www.fca.org.uk/firms/mortgage-credit-directive/new-rules-first-charge-mortgage-lenders-administrators
  • [20] https://www.fca.org.uk/firms/mortgage-credit-directive/new-rules-second-charge-mortgage-advisers
  • [21] https://www.fca.org.uk/firms/mortgage-credit-directive/new-rules-second-charge-mortgage-lenders-administrators
  • [22] https://www.fca.org.uk/firms/mortgage-credit-directive/consumer-buy-let-mortgages
  • [23] https://www.fca.org.uk/firms/mortgage-credit-directive/changes-shared-equity-second-charge-schemes
  • [24] https://www.fca.org.uk/firms/mortgage-credit-directive/intermediary-service-disclosure
  • [25] https://www.fca.org.uk/firms/mortgage-credit-directive/independence-binding-offers
  • [26] https://www.fca.org.uk/firms/mortgage-credit-directive/second-charge-mortgages-service-product-disclosure
  • [27] https://www.fca.org.uk/firms/mortgage-credit-directive/foreign-currency-lending
  • [28] https://www.fca.org.uk/firms/mortgage-credit-directive/second-charge-mortgage-back-book-retained-consumer-credit-act
  • [29] http://www.fca.org.uk/your-fca/documents/policy-statements/ps16-07
  • [30] http://www.fca.org.uk/news/cp15-36-future-regulatory-treatment-of-cca-regulated-first-charge-mortgages
  • [31] http://www.fca.org.uk/your-fca/documents/consultation-papers/cp16-02
  • [32] http://fca.org.uk/your-fca/documents/handbook-notices/fca-handbook-notice-31
  • [33] http://www.fca.org.uk/news/cp15-03-buy-to-let-mortgages
  • [34] https://www.fca.org.uk/news/ps15-11-buy-to-let-mortgages-implementing-mortgage-credit-directive-order-2015-feedback-on-cp15-3-final-rules
  • [35] http://www.fca.org.uk/news/cp14-20-mcd
  • [36] http://www.fca.org.uk/your-fca/documents/policy-statements/ps15-09

Mortgage Credit Directive

The Mortgage Credit Directive (MCD) is an EU framework of conduct rules for mortgage firms. We implemented these rules in the UK on 21 March 2016.

The MCD applies equally to first and second charge mortgages, so second charge mortgage regulation has moved from our consumer credit regime into our mortgage regime.

So, to do second charge mortgage business, lenders, administrators and brokers must be authorised and hold the correct permissions.

We also have powers to register and supervise firms carrying out consumer buy-to-let (CBTL) activity, as defined in the government’s legislative framework (see the Mortgage Credit Directive Order 2015 [1]).

Read how the changes will affect your firm from the links on the right.

Data reporting

The transfer of second charge regulation to our mortgage regime and the introduction of the legislative framework for CBTL activity have resulted in new data reporting requirements. These are set out in more detail in our policy statement PS15/9 [2].  In summary, these are as follows:

Mortgage Lending and Administration Return (MLAR)

Second charge lenders and administrators will need to submit aggregated data on their regulated activities, including second charge regulated mortgage contracts, from 21 March 2016. The requirements are set out in the Handbook – see SUP 16.12 [3].18BR, SUP 16.12 [3].18CR, SUP 16 Annex 19AR [4], Annex 19AAR and Annex 19BG.

Retail Mediation Activities Return (RMAR)

From 21 March 2016, second charge intermediaries need to submit aggregated data on their regulated activities. See SUP 16.12 [5].28AR, SUP 16 Annex 18AR [6] and Annex 18BG [7].

Make changes to MCD data

Authorised firms can change their MCD data using the MCD and/or CBTL notification form [8] (DOC)

CBTL

CBTL lenders need to submit aggregated data on their CBTL lending, arrears and complaints activity from 1 April 2016.  See SUP 16.21 [9], SUP 16 Annex 39AD [10] (PDF) and Annex 39BG [11]. 

Data can be submitted in multiple ways via Gabriel, our regulatory reporting system. Firms can submit MLAR, RMAR and CBTL returns by inputting data into the specific online forms that will be available in Gabriel. If your firm prefers to submit by web upload or direct communications (eg via XML files) the technical documents for MLAR, RMAR, and CBTL returns are available on our website. Gabriel data reference guides [12].

Product sales data (PSD)

As confirmed in PS15/9, we are introducing PSD reporting for second charge firms a year later than originally intended. In practice, this means firms will have to submit PSD returns on second charge mortgages entered into from 1 April 2017.  The supporting technical documents are now available: PSD reference guide [13]

Annual percentage rate of charge (APRC) simulator

The APRC is the total cost of the credit to the consumer, expressed as an annual percentage of the total amount of credit.  For loans covered by MCD, firms need to use a new method for calculating the APRC. 

The European Commission has an MCD APRC simulator that includes examples and instructions. This may be useful if you are a mortgage lender, as it will enable you to review your calculation method.

Explore the APRC simulator [14]

Passporting

If your UK-authorised firm wants to conduct mortgage activities in an EEA state, you can apply for a 'passport' to do this, under the Mortgage Credit Directive.

Print page [15]
  • Send by email [16]
Share page
Mortgage Credit Directive [17]
New rules for first charge mortgage advisers [18]
New rules for first charge mortgage lenders and administrators [19]
New rules for second charge mortgage advisers [20]
New rules for second charge mortgage lenders and administrators [21]
Consumer buy-to-let mortgages [22]
Changes to shared equity and second charge schemes [23]
Intermediary service disclosure [24]
Independence and binding offers [25]
Second charge mortgages: service and product disclosure [26]
Foreign-currency lending [27]
Second charge mortgage back book: retained Consumer Credit Act provisions [28]
Main publications
Consultation paper 15/36: Future regulatory treatment of CCA-regulated first charge mortgages [29]
Policy statement 16/7: Future regulatory treatment of CCA-regulated first charge mortgages [30]
Consultation paper 16/2: MCD - minor changes to rules and guidance [31]
Handbook notice 31 [32]
Consultation paper 15/3: Consultation on rules for consumer buy-to-let [33]
Policy statement 15/11: Final rules for consumer buy-to-let [34]
Consultation paper 14/20: Consultation on rules for first and second charge mortgages [35]
Policy statement 15/9: Final rules for first and second charge mortgages [36]
Source URL: https://www.fca.org.uk/node/7486
First published: 
21/03/2016
Last updated: 22/08/2017