Firms that wish to carry out second charge mortgage business will be able to apply for permissions from 20 April 2015 as part of the implementation of the EU mortgage credit directive (MCD), the FCA has announced.

The FCA has published its policy statement Implementation of the Mortgage Credit Directive and the new regime for Second Charge Mortgages, Feedback to CP14/20 and Final Rules The paper considers the main issues raised in the September 2014 consultation on its proposed approach to implementing the MCD. There was unanimous support for the approach from respondents. 

The FCA confirmed that it would keep to its original timetable by implementing its advising and selling standards from 21 March 2016. 

The final rules bring ‘second-charge’ mortgages into line with the ‘first charge’ mortgages regime, by stating that interest rate stress tests will be applied, as well as mortgage advice and selling standards. The FCA will be contacting authorised first-charged firms in late 2015 / early 2016 to determine whether they will need to carry out second charge activities too.