DSW Mortgage Credit Directive Brochure

d o r a n s co t t w i l l i a m s

Mortgage Credit DirectiveDSW Support Programme

management & training consultants“we will know a way or create one”


Mortgage Credit Directive Brochure

Introduction

The Mortgage Credit Directive (MCD) comes into force on 21 March 2016 and introduces an EU-wide framework of conduct rules for mortgage firms, closely aligned with the UK’s existing mortgage regulation and applying to both first and second charge mortgages.

As a result, second charge mortgage regulation will move to the Financial Conduct Authority’s (FCA) mortgage regime, formulated as a result of the Mortgage Market Review (MMR). This means that, to continue secured lending after 21 March 2016, lenders, administrators and brokers have to be authorised and hold the correct mortgage permissions.

The FCA has also been given certain powers to register and supervise firms carrying out ‘Consumer Buy to Let’ activity.

What Type of Firm are You?

Firm Type 1A firm doing 2C business

and holds required mortgage permission*

Firm Type 2A firm doing 2C business and other credit activities

and does not hold required mortgage permission*

Firm Type 3A firm whose only credit

activity is 2C business and does not hold required mortgage permission*

Firm Type 1AA firm does 2C

business and no other credit activities.

Firm Type 1BA firm does 2C

business and other credit activity

*Permissions relevant to RMCs

• Arranging on RMCs• Making

Arrangements• Advising on RMCs• Entering into RMCs• Administering

RMCs

Key:IP - Interim PermissionAP - Application PeriodVoP - Variation of Permission2C - Second Charge MortgagesRMC - Regulated Mortgage Contracts

https://www.fca.org.uk/firms/firm-types/mortgage-brokers-and-home-finance-lenders/mcd



“We are delighted to share with you a brief introduction to DSW as a training and consultancy company who can help support your business comply with the Mortgage Credit Directive effective from 21 March 2016.

We have a wealth of experience in designing and delivering regulatory led learning programmes across the financial services sector, especially in the mortgage market having worked with a number of leading mortgage lenders ahead of the recent Mortgage Market Review (MMR).

We are very proud of our reputation for delivery, this has been built over many years, we specialise in supporting professional qualifications, people development, consultancy and regulatory change.

Whether you are looking at external support to consult, design or deliver; we are confident that we will be able to support your change programme as you look to launch your new mortgage operating model.”

Simon Funge - Client Relationship Director

Simon Funge

Who is Affected by MCD?

First Charge Lenders

The existing mortgage framework demonstrated under MCOB (and the changes of MMR) already provides first-charge residential mortgage lenders with many of the consumer protection guidelines that the MCD wishes to introduce. There are a number of mandatory obligations that are likely to impact on a mortgage lender’s operating model. Examples of these include the introduction of a cooling off period and the ESIS which will replace the existing KFI documentation.

Second Charge Lenders

The Mortgage Market Review (MMR) led to major changes in FCA regulation, designed to ensure that the mortgage sector is sustainable and works better for consumers. Consequently the changes in business practices within the sector were significant and wide-ranging.

The changes involve a move from the Consumer Credit Legislation, under the OFT, to the FSMA requirements, extended by the European Directives, with regulatory responsibility being overseen by the FCA. Many firms will have interim authorisation as their consumer credit licenses are transferred across, for the FCA to approve, or potentially reject. Subsequently, all such firms will need to become fully authorised and enhance their business models, processes and procedures.



DSW Training and Consultancy Support for MCD

MCD changes can be complex and significant, at times it can be helpful to get a second opinion. DSW have a pool of regulatory experts who can review your existing and new processes and will support operational transition, ensuring that your unique culture and vision are embedded into your mortgage operating model. DSW believe this can be completed by working with your internal subject matter experts and together creating an appropriate operating model and learning solution.

DSW’s Mortgage Experience

DSW have already supported a number of large UK retail banks, consumer credit firms, wealth managers and challenger banks in their preparation and implementation of MMR and more recently MCD; supporting a variety or roles from advisers to operational teams and risk functions.

We have acquired a wealth of knowledge and experience in understanding the challenges of regulatory change in this market and are fully aware of how MCD changes are likely to impact on your business.

It is important that each member of staff understands the significant changes within their business area to allow them to better service customers in a more professional manner.

Christopher Woolard, FCA Director of Policy, Risk and Research emphasised this in a recent FCA press release:

‘We recognise that second charge mortgages are beneficial for some customers but we are concerned that consumers can be put at risk by poor sales practices and ineffective affordability assessments. Given the risk of consumer detriment, we want to embed good practice and we believe that applying our mortgage rules is the best way to do this.’

MCD Key Action Points

At the highest level firms within this sector will need to:

ensure their focus is on achieving fair customer outcomes

create comprehensive business plans, frameworks and systems and controls to evidence effective Governance, Risk and Compliance

consider the drivers of Conduct Risk when formulating business processes, policies and procedures, across all areas of the business operation

ensure that ‘from the top down’, business culture aligns with treating customers fairly

evidence that all staff have been appropriately trained

Experts in Regulatory Training and Consultancy



DSW Can Support Your Business

Training Resource

DSW can supply you with external MCD subject matter experts and skilled learning design and deliverers.

Expert Consultancy

Through its partnership with Global Risk Consultancy, Crowe Horwath (see page 6) DSW can help you maintain effective compliance, transform your governance or manage risks.

Regulatory Change

DSW provide purposed designed learning programmes tailored to your business in line with the MCD regulatory requirements.

Project Management

DSW is a preferred external learning partner for many major clients for who we design and deliver learning programmes of all scales. We can plan and execute full projects to ensure compliant delivery.

Skills Development

DSW provide a range of skill development and learning support. Example roles and subject areas include: Financial and Mortgage Advice | Sales | Customer Service | Debt Collection and Recovery | Negotiation Skills | All forms of Leadership and Management Development.

Key MCD Responsibilities

To comply with MCD firms will have to demonstrate that they are:

fully considering the ability of the customer to afford any loan offered, both at the time of the advance and beyond

providing appropriate advice to customers when making an ‘interactive’ sale

ensuring that all sellers hold a relevant mortgage qualification

applying a training and competence structure that develops not only technical knowledge and understanding but also demonstrates the application of skills for the benefit of customers

providing all customers with the required documentation, at the required time, during the sales process and beyond

ensuring sufficient record keeping in order to evidence compliance throughout any customer relationship

developing a remuneration strategy that puts the customer at the heart of sales and service behaviour

Professional Qualifications

DSW have years of experience in providing study and exam support through the Chartered Insurance Institute, Institute of Financial Services and the Chartered Banker Institute. Let DSW support your staff who need to become qualified.



Consultancy Support

To strengthen DSW’s MCD offering we have partnered with a specialist global risk consultancy who specialise in helping firms:

Maintaining efficient and effective compliance

- FCA / PRA guidelines- new product launch- know your customer- anti-money laundering and anti-corruption

Transform their governance- GRC integration and GRC information systems - change management and sustainability

Include risk in their decision making- enterprise risk management - information systems risk management- risk mapping and ERM maturity- internal control and management information

MCD: Maximum Harmony or Discord

Be Careful you Don’t Play the Right Notes in the Wrong Key

Given current market conditions there is a great opportunity to grow businesses in the Second Charge and Secured Loan sector and share in a £6bn market. However, recent legislative changes driven from Europe have introduced some fundamental changes across the mortgage market and provided a new set of regulations and standards that the FCA will be effecting and then monitoring.

At the end of the day, the changes are rather more complicated to address for some, as many players are now being brought under the FCA regime, many from the OFT camp. Their basic position is straightforward: evidence is required to demonstrate that nobody takes out a loan that is unaffordable, but then wider expectations also apply. Then the penalties for getting it wrong are significant. The old consumer credit regime changing to the new mortgage regulation is more than just a key change........

To read more on Crowe Horwath’s exclusive insight into the Mortgage Credit Directive please click here.

Statistics

Member firms & associates 200

Countries 120

Offices 684

Partners 3,300

Partners & staff 29,000

Revenue £2.4bn

Independent and global, with a single management team.

Seasoned practitioners with strong insights, recognised by the market

Solutions aimed at embedding risk management principles into a client’s governance, culture and operations.

http://dswlearning.co.uk/download-crowe-horwath.html



A Partner you Can Trust

DSW Consulting has delivered thousands of days of training, design, delivery and consultancy to the financial services and banking sector since its formation in 1999, including over 12,000 in each of the last 3 years.

We are widely considered as learning and development specialists and have established mature relationships with all of the professional awarding bodies and many blue chip organisations.

A comprehensive understanding of regulation in our core markets means that we are fully aware of the implications and associated business challenges involved. This sector insight, together with our suite of business transformation tools has seen us build an envied track record of success.

Our industry-recognised 5 Stage Learning Journey© has proved to be one of the most successful methods of ensuring learning meets both regulatory and academic standards.

We are proud and privileged to be training partner to the Chartered Insurance Institute, delivering its scheduled programme of face-to-face Financial Services and General Insurance revision and training courses in the north of England and Scotland. Alongside this, DSW authored, designed, and is subsequently delivering the CII’s Conduct Risk Learning Programme.

Next Steps

To find out more about our support programmes for MCD or any other areas support please contact us using the details below:

Simon FungeClient Relationship Director 01302 260 584 07766 071 005 [email protected] https://uk.linkedin.com/in/sfunge

Tim HattersleyLearning and Development Director 01302 260 582 07770 554 498 [email protected] https://uk.linkedin.com/in/thattersley

Simon Funge

Tim Hattersley

DSW House, Unit 3, Hayfield Business Park, Field Lane, Auckley, Doncaster, dn9 3fl

t: 01302 760 008 f: 01302 771 084 e: [email protected]

www.dsw.uk.net

©DSW 2015All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying,

recording or otherwise without the prior written permission of the publisher, dsw. This brochure may not be lent, resold, hired out or otherwise disposed of by trade in any binding or cover than that in which it is published, without prior consent from dsw. The law of copyright and its related rights in the UK applies and can be found in the copyrights sections

in the Copyrights, Designs and Patents Act 1998 (as amended). Company Registered in England No 03803848

d o r a n s c o t t w i l l i a m s

DSW Mortgage Credit Directive Brochure

Documents

Transcript of DSW Mortgage Credit Directive Brochure