Q&As

Would taking second charges from client directors (as an alternative to those directors providing personal guarantees) fall within the scope of the consumer credit regime and/or the Mortgage Credit Directive?

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Published on LexisPSL on 20/04/2017

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • Would taking second charges from client directors (as an alternative to those directors providing personal guarantees) fall within the scope of the consumer credit regime and/or the Mortgage Credit Directive?

In answering this Q&A, we have assumed that the proposed second charges mentioned are against the directors’ own residential property.

Under section 19 of the Financial Services and Markets Act 2000 (FSMA 2000) a person cannot carry out a regulated activity, or purport to do so, in the UK unless they are either an authorised person (ie authorised by the Prudential Regulation Authority and/or the Financial Conduct Authority (FCA)), or an exempt person (eg by being an appointed representative). For an overview of the regulated activities regime in the UK, see Practice Note: What are regulated activities?

As you can see in this Practice Note, activities are regulated if they are of a ‘specified kind’ (ie specified by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 (RAO 2001)) which is carried on by way of business. For more information about what it means to carry on a regulated activity by way of business in the UK, see Practi

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