In 2017 there will be plenty of legal and regulatory change to keep those working in the mortgage market busy and on their toes.
Exercising its recently acquired competition powers the FCA has launched a targeted market study into the mortgage sector. During 2017 the FCA will examine the relationship between lenders, brokers, price comparison websites and estate agents. It will be looking at the unexpected consequences of the Mortgage Market Review; why intermediaries have such a strong position in the market and whether consumers have the necessary tools to get the best deal. The study is expected to last 12 months with an interim report expected in the summer of 2017. Throughout the study firms can expect to be asked by the FCA to produce information, attend meetings and make submissions. The FCA may propose both market wide and firm specific changes. It may also recommend an in-depth investigation by the Competition and Markets Authority.
The long running issue surrounding the inclusion of mortgage arrears in current monthly instalments is being addressed by the FCA in 2017. Firms have until 18 January to respond to the FCA's consultation. It is proposed that firms notify affected customers by 30 June 2017 and complete a remediation exercise by June 2018.
The UK's ageing population will also be on the FCA's agenda. It's much anticipated ageing population strategy is expected to be published in summer 2017, covering issues such availability of products, accessibility of advice and what happens when there is a change in circumstance in an elder borrower’s life. One to watch.
Looking to Scotland post Brexit there is the potential to have another Scottish Independence referendum. This might act as a deterrent to some lenders investing in Scotland as there is an unknown currency risk which they can't hedge. Would an independent Scotland stay in the pound, join the euro or have some other currency? That is all the more relevant when the securitisation and loan sale market has picked up as these mortgages are seen as more risky to a purchaser.
The Scottish Law Commission will also commence its much awaited review of the enforcement of heritable securities in 2017. Early indications are that the Commission will propose significant reforms, which should address the problems faced by lenders when enforcing their rights. This promises to be the most significant piece of law reform affecting secured lenders since the creation of standard securities as a legal concept in 1970.
The Court of Appeal decision in the case of Cardiff County Council v Lee has created uncertainty around the enforcement of suspended possession orders (SPO). It is hoped that the Civil Procedure Rule Committee will provide clarity as to whether an application to court is required to enforce a SPO and that a change to the court rules will introduced in January or February 2017. It is likely that an additional stage in mortgage possession proceedings will be introduced adding to the cost of those proceedings.
First published by Mortgage Finance Gazette, January edition.
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