A non-FSMA regime for ‘Consumer Buy-to-Let’ mortgage intermediation, lending, administering and advising will also be introduced. BTL mortgage activities, other than broking, will fall outside of the scope of the consumer credit regime.
CBTL is a subset of the BTL market which applies when a BTL customer is not acting wholly or predominantly for business purposes. For example, when a property is inherited but cannot immediately be sold, thus the decision is made to rent the property out.
CBTL will be regulated by the FCA. Although the legislation states that Business, or Commercial, Buy-to-Let will not be regulated, firms carrying out other regulated credit activities - such as debt counselling - will need to ensure they have the appropriate permissions and are authorised by the FCA under the consumer credit regime.
Firms who carry out CBTL activity will need to be appropriately authorised and the forms they’ll need in order to facilitate registration are available on the FCA's website (www.fca.org.uk). As you might expect, the FCA is encouraging firms to apply as soon as possible after registration opens, and I would urge you to do the same. Firms that want to lend, administer, intermediate, arrange or provide advisory services in relation to CBTL from the 21st of March 2016, when the MCD comes into force, will need to be registered by the FCA in order to do so.
There will be no automatic registration. The FCA can only register a firm if it applies to them for registration.
A streamlined application process is available to those firms that already hold Part 4A permissions, or interim permissions for consumer credit, and where a previous CBTL registration has not been revoked. This streamlined online process will only require firms to confirm that they wish to register and pay the relevant fee (£100 for firms who are already authorised).
• Firms holding Part 4A permissions will be able to complete the process following a standalone online form through the FCA Connect system.
• Firms holding interim permissions will be asked these questions on their consumer credit application form.
The FCA aims to start accepting applications later this summer to allow firms at least six months to register in advance.
Details of firms’ CBTL registration status will be held by the regulator on the FCA Register. Lenders will not be required to use the FCA Register to check whether an intermediary holds the relevant permissions for CBTL activity; however it is likely that most of them will choose to make this check. Once a firm is registered on the FCA Register for CBTL activity, it will no longer need consumer credit permission.
The FCA has suggested that the periodic fees for CBTL will be £250 for intermediaries (advisers and arrangers) and £500 for lenders and administrators. There will be a separate fee to cover the cost of the Financial Ombudsman Service. It is anticipated that there will be a flat-rate ombudsman service CBTL general levy for 2016/17 which will not exceed £100 per registered firm. Definitive rates will be consulted on in early 2016 as part of the normal consultation process on fees and levies.
This is just a quick overview of some of the headlines of the upcoming MCD regulatory changes. I would, as always, advise that you read through the FCA’s guidance in full for a more comprehensive picture.
