In consultation paper (CP) FCA – 18/41 / PRA – 30/18 we proposed new reporting requirements which would apply to regulated mortgage lenders and home finance administrators. This policy statement summarises the feedback and our response to it.
Why we are changing
The FCA and PRA identified gaps in the data firms submit. This PS seeks to address this by increasing the data which mortgage lenders and administrators are required to submit via Product Sales Data (PSD) and to rectify some gaps and inconsistencies in the forms and guidance in Mortgage Lending and Administration Return (MLAR).
The changes will enable us to carry out supervisory, enforcement and policy work in a more informed and evidence based manner. It will provide a more complete view on which to base future market studies. This will enable us to more effectively identify and address harm to consumers and competition, and threats to market integrity.
The Bank of England will have an enhanced ability to monitor macro prudential risk in the housing market, helping ensure the stability of the economy and mortgage market.
The quality of MLAR data should improve. The improved clarity of the new guidance should mean regulators and firms will spend less time dealing with reporting queries. Oversight in particular of second charge loans will be enhanced.
Who this applies to
This PS is directly relevant to:
- mortgage lenders
- mortgage administrators
- entities which own mortgage books but which are not FSMA authorised
This PS is also relevant to stakeholders with an interest in the mortgage market, including:
- trade bodies
- charities and organisations representing consumer interests
This PS is about the information that we collect from certain regulated firms. It is unlikely to be of direct interest to consumers.
Background to the changes to mortgage reporting requirements
Our Mortgage Market Study Interim Report, published in May 2018, identified segments of the mortgage market where we do not currently collect data.
The PRA identified gaps in product sales data reporting (PSD001). This affects the PRA’s ability to monitor the Financial Policy Committee (FPC)’s Loan to Income (LTI) flow limit and stress test recommendations. These gaps also limit the PRA’s ability to assess possible risks in the mortgage market without making ad hoc data requests to firms and limit the FCA and PRA’s supervisory oversight.
There are also gaps and inconsistencies in the forms and guidance in MLAR about mortgages sold to third parties or securitised, and second charge mortgages. These have made it hard for firms to meet their reporting obligations and so limit our ability to monitor risks effectively.
These reporting changes are significant. To aid implementation we have brought them together into a single set of requirements via this policy statement.
If your firm is affected by these changes, you will need to ensure that you meet the requirements of the new rules so that your reporting is in line with the changes set out in this policy statement.
What we will do next
We plan to publish the technical documents (Data Reference Guide) in October 2019 and to make a GABRIEL testing environment available to firms from November 2019.
We will also review the FCA’s website FAQs and make any necessary changes.