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Member Briefing: Regulation of Second-charge Mortgages

Date: 29/03/16

Regulation of Second-charge Mortgages

The Mortgage Credit Directive (MCD) took effect in the UK from Monday last week (21st March). This requires that only fully FCA-regulated bodies can issue new second-charge mortgages, and all existing regulated second-charge mortgages (i.e. those with more than 4 payments) in house builders’ back books must be administered by an FCA-regulated body.

House builders’ HomeBuy Direct and FirstBuy loans are regulated loans and must therefore be administered by an FCA-regulated body. We understand most are still administered by Metropolitan Housing Association operating under the name HOP.

I have just been advised that Metropolitan/HOP was approved by the FCA last week, and is therefore able to administer house builders’ second-charge loans under these two schemes. However, following a re-tendering of the post-sales administration of these schemes, a new organisation has been appointed by the HCA. I have been asked not to publish the name until all the details are finalised, but the new organisation is also fully FCA authorized. There will be a transition/hand-over period from HOP to the new organisation. In the meantime, the HCA says it is ‘business as usual’ with HOP. The HCA will in due course advise house builders of the transition arrangements and, if necessary, HBF will issue a further briefing.


John Stewart

Director of Economic Affairs