Second Charge Lending

I am  hearing a number of things at the moment about second charge lending and so thought it might be  worth putting a few facts together.

Regulatory responsibility for second charge lending transfers to the FCA alongside other forms of consumer credit in April 2014, and that it will be treated initially in broadly the same manner as other forms of consumer credit lending (NOTE: Not first charge mortgage lending)

The initial transfer process and the requirements that will apply for second charge lending from April 2014 will be largely the same as those that will apply for other types of consumer credit lending. Existing firms with an OFT standard licence will need to notify the FCA of their desire to have an interim permission in order to continue second charge business from April 2014.  I am assuming that this is the interim permission that has recently been requested by most firms but I am not 100% confident of that point as I write this blog. I will get back on that point once I have established the details.

It is extremely likely that there will be further changes for second charge lending after the European Mortgage Credit Directive (MCD) is implemented and so this will invariably muddy the waters further.  The European Parliament approved the new rules on 10th December 2013 and so the impact of this must take effect in the UK by December 2015.

I have not yet looked at the MCD and I can feel another blog forming as I write - but not today! I think it is fair to say that it will have an impact on how second charge business is transacted but in reality it is not sensibly going to be  before December 2015, surely?