2018年-FCA英国金融行为监管局_retirement_interest_only_mortgages_4页_203kb

Summary of Regulator Assessment: Qualifying Regulatory Provisions

Core Content

The document outlines the FCA's regulatory assessment regarding the introduction of retirement interest-only mortgages (RIOMs) under the Mortgage Credit Directive (MCD). Initially, these mortgages were reclassified as lifetime mortgages, subjecting them to equity release conduct requirements. This change created a barrier for standard mortgage lenders, who were historically involved in offering RIOMs, due to the additional compliance and training needed.

To address this, the FCA proposed to reclassify RIOMs under standard mortgage rules, while introducing specific disclosure requirements to protect consumers. This change aims to increase the availability of RIOMs for older consumers, particularly as demographic and economic changes suggest a growing demand.

Main Views and Key Information

Regulatory Changes

• Reclassification: RIOMs are brought back under standard mortgage rules.
• Disclosure Requirements:
  • Restrictions on other people living in the property.
  • Impact on tax and benefits.
  • Suitability assessment for tax and benefits implications.
  • Availability of lifetime mortgages as an alternative.

Affected Businesses

• Residential mortgage lenders and intermediaries will be affected.
• Only a small proportion of mortgage lenders are expected to sell RIOMs.
• 12 lenders with significant interest-only backbooks or interest in older borrowers are identified as the main potential sellers.
• Approximately 10,000 intermediaries could sell RIOMs.

Market Impact

• Estimated sales: £1.7bn per year by 2021/22, with no growth expected after that.
• Annual sales: Around 21,000 sales per year from 2021/22.
• Profit estimates:
  • Lenders: £67m in profits by 2026/27.
  • Intermediaries: £2.4m in profits by 2026/27.

Cost Estimates

• No one-off costs are expected due to the disclosures being similar to existing practices.
• Average additional cost per sale: £2.24.
• Total ongoing costs:
  • £14k in 2017/18.
  • £47k in 2026/27.

Impact Analysis

The proposed regulatory changes aim to remove barriers for standard mortgage lenders to offer RIOMs, thereby increasing market access and potentially boosting sales. The FCA estimates that the change will result in:

• Net benefits to firms through increased profits.
• Minimal compliance costs due to the ease of integrating new disclosures into existing systems.

The BIT score is calculated as -164.9, indicating a net negative impact on business. However, the FCA takes a conservative approach in estimating the number of firms entering the market and the size of the market, which may lead to an underestimation of the true benefits.

Additional Information

• The consultation paper can be referenced at: QCP Retirement interest-only mortgages.
• The assumptions for profit and cost calculations are based on:
  • Internal FCA sector knowledge.
  • Survey data from firms.
  • Average salaries and overheads from industry reports.

Summary Table