Many of the elements of the MCD are already practiced within the Group’s brands (Lloyds Bank, Bank of Scotland, Halifax, BM Solutions, and Scottish Widows Bank), but there are a number of changes required to ensure full compliance with all the requirements by March next year.
One of the changes introduced by the new regulatory requirements will be to warn customers of the risks of the exchange rate changes on their borrowing. Lloyds Banking Group is a UK focused bank and foreign currency loans (where the customer’s income is not in Sterling) account for a small fraction of overall lending. As such the Group has already confirmed it ceased lending to borrowers using foreign currency income to support a new mortgage or remortgage application across all its brands, from 28 September.
The remaining key changes for Lloyds Banking Group are:
- The European Standardised Information Sheet (ESIS) to replace the Key Facts Illustration (KFI) – For Halifax Intermediaries and Scottish Widows Bank, the key change will be the introduction of a new Mortgage Illustration, which will be in a fully compliant ESIS format. Halifax Intermediaries Online and the SWB Online Mortgage Service will be updating to generate this new illustration ahead of March 2016. The third party mortgage sourcing systems have been engaged to ensure their illustrations replicate these changes.
- As BM Solutions currently only offers unregulated mortgages there is no requirement to introduce an ESIS style illustration. However, some minor changes to the BM illustration will be made, in line with the new HM Treasury rules which apply to Consumer Buy to Let. BM Solutions will accept Consumer Buy to Let applications as part of the new regulatory framework introduced by MCD. In addition, the One Minute Mortgage will be updated to enable identification of Consumer Buy to Let customers at point of sale early next year.
Brokers have now been notified they will need to have the appropriate permissions and be fully registered with the Financial Conduct Authority to conduct consumer buy-to-let business.
Internal training on the changes brought in by the MCD will be completed before the end of 2015. And from January 2016 National Account and Business Development Managers will be running MCD workshops across the UK to provide mortgage advisers with full details of the changes for Lloyds Banking Group’s intermediary brands.
