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Any credit agreement intended to be regulated by the FSMA might instead be wholly or partly
regulated by the CCA or treated as such or unregulated, and any credit agreement intended to be
unregulated might instead be regulated by the FSMA, because of technical rules on (a) determining
whether the credit agreement falls within the definition of "regulated mortgage contract" and (b)
changes to credit agreements. The Financial Services and Markets Act 2000 (Consequential
Amendments) Order 2005 came into force on 16 November 2005. This Order, which amends sections
82 and 146 of the CCA, is intended to remove the possibility that a mortgage agreement could fall to be
regulated in certain circumstances under both FSMA and the CCA.
Under Section 150 of the FSMA, a borrower is entitled to claim damages for loss suffered as a result of
any contravention by an authorised person of an FSA rule. In the case of such contravention by an
originator, a borrower may claim such damages against the originator, or set-off the amount of such
claim against the amount owing by the borrower under the loan agreement or any other loan agreement
that the borrower has taken from the originator. Any such set-off may adversely affect the ability of
the Issuer to make payments to Noteholders.
To avoid dual regulation, it is intended that regulated mortgage contracts will not be regulated by the
CCA. This exemption only affects credit agreements made on or after N(M), and credit agreements
made before N(M) but subsequently changed such that a new contract is entered into on or after N(M)
which constitutes a regulated mortgage contract.
A court order will be necessary to enforce a land mortgage securing a credit agreement to the extent
that it is a regulated mortgage contract to the extent that it would otherwise be regulated by the CCA or
be treated as such. In dealing with such application the court has the power, if it appears just to do so,
to amend a credit agreement or to impose conditions upon its performance or to make a time order (for
example, giving extra time for arrears to be cleared).
The FSA Mortgages: Code of Business Sourcebook (the "MCOB") sets out its conduct of business
rules in respect of regulated mortgage activities. These rules cover, inter alia, pre-contract, start of
contract and post-sale disclosures (annual statements), rules on contract changes, charges, arrears and
repossessions and certain pre-origination matters, such as financial promotions, and pre-application
illustrations. MCOB came into force on N(M). The FSA wrote in November 2005 to a number of
mortgage providers to ask for explanations, to be provided before the end of 2005, of their calculations
of the amounts of early redemption charges that are contractually applicable in the event of an early
redemption.
Rules also came into force on N(M) relating to the prudential and authorisation requirements placed on
authorised persons in respect of regulated mortgage activities, and regulating and extending the
appointed representatives regime, which previously applied to investment businesses, to cover
mortgages on and from that date.
The Seller's mortgage lending business and the Servicer's mortgage administration business constitute
regulated activities.
It is likely that the Issuer's business would not constitute a regulated activity, if the Issuer and Trustee
arranged for mortgage administration to be carried out by an administrator having the required
permission.
The Seller has received all requisite authorisations and permissions from the FSA to carry on all of its
activities which were regulated activities on and from N(M).
Non-Status Lending Guidelines for Lenders and Brokers and Responsible Lending