Although the FCA is expected to publish its report by the end of March 2015, lenders should have already been planning and making changes where it is expected that final rules won’t vary from draft proposals. If lenders are preparing appropriately then they should be able to meet the deadline, but with the scale of change involved and the tight deadline, poorly prepared lenders may find themselves rushing to comply.
Key changes are yet to be confirmed by the FCA, but their aim will be to drive fundamental changes to the mortgage sales process, including a new reflection period and issue of a ‘binding’ offer. Further changes include the replacement of the Key Features Illustration (KFI) with a European Standardised Information Sheet (ESIS), additional pre-sales disclosures including a second Annual Percentage Rate of Charge (APRC), and data sharing with other charge holders during the repossession process. Lenders will therefore need to make significant changes to systems, processes and procedures and provide staff training to comply with the new requirements.
The overlap with the MMR puts UK lenders at a significant advantage compared to some European countries which currently have different regulation. The FCA purposely developed the MMR in view of the forthcoming Directive and therefore has aligned the regulation as much as possible. However, the European Directive will introduce some additional requirements when it is implemented in March 2016.
Lenders investing in new technology to support the EMCD are likely to benefit from enhanced process governance and efficiencies.
At Vertex we have already started our project to implement the required changes to systems, processes, procedures and the associated training for staff and will be ready long before the deadline. We have formulated requirements, solutions and high level plans based on our interpretation of the draft rules.
Publication of the final rules will be the catalyst to fully mobilise and run workshops where we can tailor our solutions to meet our clients’ requirements.
Vertex is making a significant investment to ensure our core systems, processes and people are fully compliant with the EMCD. Lenders should use the changes as an opportunity to review their approach to their sales and servicing capabilities. The potential cost of implementing the EMCD changes on to existing systems and operations, could be better invested in new, fully compliant systems with the benefits of being, fully digital, flexible and with much improved customer journeys.
