Citation and Commencement

1. This Order may be cited as the Bank of England Act 1998 (Macro-prudential Measures) Order 2015 and comes into force on 6th April 2015.

Interpretation

2. —(1) In this Order—

“ annual income ” means the amount of the annual income (gross or net of tax and national insurance) verified by the lender when deciding to provide credit to the borrower;

“ borrower ” means an individual who receives credit; and includes an individual acting jointly with others, and an individual acting as a trustee who receives credit jointly with other trustees;

“ cost benefit analysis ” means—

“ credit ” includes a cash loan, and any other form of financial accommodation;

“ debt-to-income ratio ” means the ratio, calculated by the lender when deciding to enter into a relevant mortgage contract, of the borrower's total relevant debt to the borrower's annual income;

“ excluded mortgage contract ” means—

“ FCA ” has the meaning given by section 1A of the Financial Services and Markets Act 2000 ;

“ Financial Policy Committee ” has the meaning given by section 9B of the 1998 Act ;

“ lender ” means a person providing credit by way of business;

“ loan-to-value percentage ” means, in relation to a provision of credit by a lender to a borrower, the aggregate amount of outstanding credit provided under all relevant mortgage contracts relating to the same land immediately after the last amount of credit is provided, as a percentage of the total value of the land as assessed by the lender for the purposes of deciding to provide credit to the borrower;

“ mortgage ” includes a charge and (in Scotland) a heritable security;

“ mortgage contract ” means a contract under which—

“ PRA ” has the meaning given by section 2A of the Financial Services and Markets Act 2000 ;

“ regulated persons ” has the meaning given by section 9H(2) of the 1998 Act ;

“ related person ” means, in relation to a borrower, or in the case of credit provided to trustees, a beneficiary of the trust —

“ relevant credit agreement ” means—

“ relevant mortgage contract ” means a mortgage contract other than an excluded mortgage contract;

“ remortgage ” means a mortgage contract under which the amount of credit provided by the lender to the borrower does not exceed that outstanding to the lender, or to a different lender, under:

which relates to the same land;

“ the 1998 Act ” means the Bank of England Act 1998;

“ total relevant debt ” means the total amount of outstanding credit provided to a borrower pursuant to—

(2) For the purposes of assessing the amount of credit provided under a remortgage contract, the lender may disregard a reasonable sum in respect of any of the following fees or costs—

(a) arrangement fees;

(b) professional fees and costs;

(c) redemption fees for redeeming a previous mortgage contract which relates to the same land;

(d) administration costs.

(3) Any reference to ‘specified’ in the first column of the table in article 3 of this Order means specified by the Financial Policy Committee in a direction made under section 9H of the 1998 Act by reference to this Order.

Macro-prudential measures

3. The measures listed in the first column of the table (and any measures falling within a listed measure) are prescribed in relation to the regulator specified in the second column of the table.

Disapplication of procedural requirements

4. —(1) Paragraph (2) applies if—

(a) the Financial Policy Committee has given a direction to the PRA or the FCA under section 9H of the 1998 Act which specifies a loan-to-value percentage or a debt-to-income ratio (“the first direction”);

(b) the Financial Policy Committee subsequently revokes the first direction; and

(c) within a reasonable period of time after the revocation of the first direction, the Financial Policy Committee gives another direction to the PRA or the FCA under section 9H of the 1998 Act (“the subsequent direction”) which is in substance identical to the first direction except in relation to the values specified in the direction.

(2) To the extent that the subsequent direction is implemented by way of rules pursuant to Part 9A or section 192XA of the Financial Services and Markets Act 2000 then—

(a) sections 138I, 138K, and 139A(3) of the Financial Services and Markets Act 2000 do not apply to the FCA, but the FCA must undertake and publish, at the same time as the subsequent direction is implemented, a cost benefit analysis relating to changes implemented pursuant to the subsequent direction; and

(b) sections 138J and 138K of the Financial Services and Markets Act 2000 do not apply to the PRA, but the PRA must undertake and publish, at the same time as the subsequent direction is implemented, a cost benefit analysis relating to changes implemented pursuant to the subsequent direction.

Review

5.—(1) The Treasury must from time to time—

(a) carry out a review of the regulatory provision contained in this Order, and

(b) publish a report setting out the conclusions of the review.

(2) The first report must be published before the end of the period of five years beginning with the day on which this article comes into force.

(3) Subsequent reports must be published at intervals not exceeding five years.

(4)Section 30(4) of the Small Business, Enterprise and Employment Act 2015 requires that a report published under this article must, in particular—

(a) set out the objectives intended to be achieved by the regulatory provision referred to in paragraph (1)(a);

(b) assess the extent to which those objectives are achieved;

(c) assess whether those objectives remain appropriate; and

(d) if those objectives remain appropriate, assess the extent to which they could be achieved in a way which involves less onerous regulatory provision.

(5) In this article, “regulatory provision” has the meaning given in sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015 (see section 32 of that Act).