2017年-FCA英国金融行为监管局_minor_changes_to_equity_release_rules_4页_340kb

Summary of Regulator Assessment: Minor changes to our equity release rules CP16/21

Core Content

The document outlines a proposed regulatory change by the Financial Conduct Authority (FCA) to the Mortgages and Home Finance: Conduct of Business (MCOB) sourcebook. The proposal aims to address concerns that the responsible lending rules introduced as part of the Mortgage Market Review (MMR) had restricted the development and take-up of lifetime mortgages that allow customers to make regular interest payments but switch to interest roll-up at any point. This change would remove the requirement for affordability assessments for such products, and amend product disclosure requirements to ensure clarity and fairness.

Main Points

• Purpose of the Proposal: To reintroduce lifetime mortgages that allow customers to make regular interest payments and switch to interest roll-up at any time, thereby expanding the market for such products.
• Affected Area: The entire UK.
• Regulatory Sourcebook: MCOB.
• Consequential Changes: Updates to the Glossary and Supervision manual (SUP) to ensure consistent description of interest roll-up lifetime mortgages and updated mortality data for estimating loan terms.
• Market Impact: The pre-MMR lifetime mortgage market had 15% of products that allowed interest payments with an option to switch to interest roll-up. Post-MMR, this type of product ceased due to affordability assessments.

Key Information

• Number of Affected Firms: 11 lifetime mortgage providers.
• Implementation Date: 26 January 2017.
• Duration of Policy: 10 years.
• Net Present Value (NPV): £34.66 million.
• Net Cost to Business: £3.6 million.
• BIT Score: -18.0.

Costs and Benefits Breakdown

Costs

Benefits

Additional Details

• KFI Amendment Costs: Four out of five firms provided estimates, ranging from £0 to £24,000, with an average of £10,950.
• Estimated Additional Lending: Based on firm projections, the additional lending volume is expected to be £64m in 2017, increasing to £194m in 2021 and remaining constant thereafter.
• Profit Estimation: Assuming a 10% profit margin on the loan value, and amortizing profits over 25 years with a 3.5% cost of capital, the estimated profits are £0.4m in 2017 and rise to £8.3m in 2026.
• Cost Savings from Disapplying Affordability Assessments: Estimated at £9.61 per transaction, leading to an overall cost saving of £251,819 over the ten-year period.
• Mortality Data Update: Minimal cost as it does not require system changes.

Additional Information for BIT Score Validation

• Consultation Paper: CP16/21 - Minor changes to our equity release rules

This assessment reflects the FCA's effort to balance consumer protection with market development, acknowledging the previous restrictions caused by affordability assessments and seeking to reintroduce flexibility in product design.