From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

Last reviewed: 6 October 2016

At a glance

  • The Mortgage Credit Directive (MCD) is European legislation designed to foster a single market for mortgages and to protect consumers. The European Commission published the final MCD text in February 2014.
  • MCD was implemented in the UK through rules set by the Financial Conduct Authority (FCA). The requirements took effect from 21 March 2016.
  • We believe implementing the MCD offers little or no specific additional benefit for consumers over and above the UK’s existing regulatory framework.
  • The main changes to mortgage lending resulting from the MCD are:
    • some buy-to-let mortgages will become regulated by the FCA.
    • there will be a phased move to a Europe-wide standardised set of disclosure information to customers, via a European Standardised Information Sheet (ESIS).
    • the requirements that relate to foreign currency loans will change.
    • lenders' sales processes and documentation will need to be reviewed for compliance.
  • The introduction of the MCD has two main implications from a conveyancing perspective:
    • The MCD introduces a reflection period of at least seven days, which is to give the consumer time to compare offers and assess their implications. The reflection period will need to be incorporated into the conveyancing process. 
    • The MCD requires the credit agreement to be “binding” for this period.

CML position

We believe the FCA has made helpful changes to its rules following its MCD consultation. 

We broadly welcome the UK government’s decision to include a provision for pipeline cases in the legislation, as this has the potential to smooth implementation of MCD.

We continue to work with members and the FCA to minimise disruption to consumers as a result of implementing the MCD in the UK.

Why this is important for lenders

The MCD took effect from 21 March 2016, and lenders were required to make substantial systems and process changes across a wide number of areas to comply with the MCD requirements.  The sales process has changed, as have the disclosure documents which lenders are obliged to give to consumers.

The MCD also makes specific requirements for buy-to-let (BTL) mortgages. Member states must introduce either the MCD requirements or an “appropriate national framework”. The UK government has chosen the latter course of action.

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The following content is available for Members only. If you are a member of this group please login or register to gain access.

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The following content is available for Members only. If you are a member of this group please login or register to gain access.

Register with CML

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