Regulation Matters January 2020


Mortgage Prisoners AT A GLANCE

On 28th October 2019, the FCA announced new rules, which came into effect immediately. Under the new rules, a modified (relaxed) affordability assessment process can be used by lenders where: • The borrower has an existing mortgage (or more than one) – with any lender(s) • The proposed new loan is not increasing the amount borrowed (except for fees – both lender and intermediary - added to the new loan) • There has been no ‘payment shortfall’ outstanding in the last year • The new loan will cost less than the existing one (taking into account fees) – strict tests are to prescribed to establish that the new loan is more affordable than the existing The new loan can be different in some very limited respects; e.g. • The term could be different (e.g. longer) • The switch can involve moving from interest-only to repayment (provided the payments are more affordable) but not vice versa Where the relevant conditions are met, the lender is permitted to conclude that the new mortgage is affordable without looking into income/expenditure, as would be required under the standard affordability assessment requirements. Lenders and the regulated administrators of mortgages owned by unregulated lenders must also communicate to relevant borrowers the fact that these new rules might make it easier to switch to a more affordable loan, possibly with a new lender.

Want to know more? Turn to page 9 for a more detailed summary, including recommended actions.

Off Payroll Workers


Off-payroll working rules (sometimes known as IR35) change on 6th April 2020 and are applied differently. From this date, all public authorities and medium and large sized firms will be responsible for deciding the employment status of workers. The definition of a medium or large sized firm is where a firm meets at least two of the conditions set out below: • You have an annual turnover of more than £10.2 million • You have a balance sheet total of more than £5.1 million • You have more than 50 employees Firms who are affected and who engage with workers who are not on payroll will need to assess whether that should change after 6th April 2020.

Want to know more? Turn to page 10 for a more detailed summary, including recommended actions.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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