Implementation of The Mortgage Credit Directive
The Mortgage Credit Directive (MCD) provides an EU wide framework of conduct rules for mortgage activities. The following is a summary of how we intend to meet these requirements before the implementation date of 21 March 2016.
Residential Mortgages
When will we start implementing MCD?
We will be introducing additional disclosures to ensure MCD compliance during February 2016. We’ll start issuing the updated KFI+ from this date onwards with a plan to switch to the ESIS before the regulatory deadline in 2019.
What about binding offers?
Our mortgage offer will remain binding on us, rather than the customer, and will be valid for 10 calendar days from the date of issue. This will allow for a client reflection period. However, if we receive the Certificate of Title within this period we will treat this as deemed acceptance of the offer and any remaining reflection period will be waived.
What’s the process for pipeline business?
For all cases that have been offered prior to our February MCD implementation date, and are not scheduled to complete before the 21 March 2016, we will be re-issuing a MCD compliant offer.
Will Foreign Currency Mortgages be offered?
No, we have already communicated our decision not to lend in this area for new business.
Buy to Let Mortgages
From March 2016, new non-regulated BTL loans may be referred to as either ‘Consumer BTL’ (CBTL) or ‘Investment Property Loans’ (IPL). Although the two loan types are similar, and our product terms identical, they will require different disclosures and additional questions will be asked during the application process in order for us to correctly identify the loan classification. A declaration will be required for IPL BTL cases to confirm the clients understand that this transaction remains unregulated. Lending policy will not change with regard to BTL applications.
CBTL will capture customers applying for a BTL mortgage on a property where they or their family previously resided. We’ll also include those who have inherited a property and are looking to let it and raise capital against it, assuming they are not existing landlords.
IPL will generally refer to existing landlords and those purchasing property specifically to let.
So in summary…
You can expect business as usual from the Coventry for intermediaries with the exception of a few small changes, implemented to help you do business with us easier:
• You will be asked a limited number of additional BTL questions in order for us to classify the loan type correctly
• We will ask you to complete a declaration on IPL cases to confirm you have explained the loan type to your client.
For more information visit the FCA website
