United Trust Bank comments on the FCA’s impact statement on the costs of implementing MCD

29 March 2017

Buster Tolfree, United Trust Bank Commercial Director – Mortgages, comments on the Financial Conduct Authority (FCA) impact statement on the cost of implementing MCD in the second charge market.

“We designed United Trust Bank’s second charge loan offering with MCD firmly in mind so the FCA’s figures estimating the high cost of MCD to the second charge industry have not come as a surprise. When the transition came in spring 2016 we were very well prepared, and in the weeks that followed, our market share grew substantially as a result of brokers looking to lenders with the best and most well-thought through processes in the new MCoB world.

“As well as helping us to build a new business quickly, there’s no doubt in my mind that MCD has been a positive move for consumers and the industry as a whole. Preparing for MCD required a significant investment of time and resources by lenders and brokers alike, but it has laid firm foundations for the future growth of the sector. Second charges are no longer the mystic art they were perceived to be before MCD, and the process now matches first charges exactly. The IT changes especially presented some challenges to new entrants but ultimately all participants in the second charge market will benefit from MCD despite the additional set up and ongoing cost burden presented by the greater regulation.

“As such we should not be concerned about the FLA’s figures in February reporting a 1% year on year reduction in second charge mortgage business. I fully expect to see notable year on year growth figures in the next two months as a direct result of the post MCD dip between March and May 2016.

“Furthermore, with the market looking to approach £1bn again this year, healthy competition amongst lenders, great rates for borrowers and consumer confidence and awareness of the product continuing to improve, I believe the second charge mortgage sector has a bright future.”