Under the changes to the Mortgage Credit Directive (MCD) if you want to describe your firm as an Independent Mortgage Intermediary after the implementation of MCD, you will need to demonstrate that you consider second charge lending as well as first charge.

A new rule, MCOB 4.4A.4R (3), states

• An MCD mortgage credit intermediary must only disclose that it is independent if its consideration of MCD regulated mortgage contracts across the market is unlimited. 

MCD regulated mortgage contracts includes second charge lending.

You may already have received an MCD data collection questionnaire from the FCA or will receive one shortly. You will need to complete this using the FCA Connect system.

One of the questions will ask if you intend to ‘do second charge mortgage business.’ As stated above, to use the term ’independent’ you will need to consider second charge loans as an option. To be independent your client files will need to evidence that second charge was considered and recommended if most suitable for the client. 

This applies to mortgage business only. The current independence rules for investment business remain unchanged.