CP14/28: MIPRU Simplification

This paper sets out our proposed changes to our Handbook to make it simpler for certain mortgage firms to calculate their capital requirements.

Why are we issuing this consultation paper?

The first phase of the revision of chapter 4 of the Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU 4) was implemented on 26 April 2014, following the Mortgage Market Review (MMR).  This has resulted in non-bank lenders (NBLs) becoming subject to the same capital requirements for mortgage lending as banks and building societies.  

We are now consulting on proposed, simplified rules and guidance in this second phase of the revision of MIPRU 4, as part of the commitment made in the Policy Statement (PS12/16) on the MMR.  The proposals will:

  • incorporate in MIPRU 4 the relevant rules and guidance appearing in BIPRU, thereby making MIPRU 4 a standalone chapter, and stripping out any that are not relevant for NBLs
  • simplify any remaining complex and lengthy rules and guidance

This second phase will therefore simplify first-phase rules for calculating credit risk capital requirements, whilst very largely maintaining the current policy position.


Who should read this paper?

It is of interest to non-bank lenders, i.e. firms that undertake home financing and/or home finance administration (with assets on the balance sheet) that is connected to regulated mortgage contracts, termed ‘non-bank lenders’ (NBLs).

Next steps

We want to know what you think of our proposals and would welcome comments using our online response form by 19 January 2015.

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