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ARTICLE · 09 NOVEMBER 2016

The High Net Worth Individuals Exemption

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The Mortgage Credit Directive, which was introduced as of March 2016, has limited the availability of the "HNWI exemption" for consumer credit agreements.

United KingdomFinance and Banking
Hannah Rowbotham
Hannah Rowbotham
John Dooley
John Dooley

The Mortgage Credit Directive, which was introduced as of March 2016, has limited the availability of the "HNWI exemption" for consumer credit agreements. The effect is that loans which previously fell within the exemption may no longer do so, and the lender must now be authorised before it can enter into such loans. We detail below the changes and those loans which will no longer be exempt.

1. What is the HNWI exemption?

Article 60H(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 as amended ("RAO") sets out the exemption for consumer credit agreements entered into with high net worth individuals (the "HNWI exemption").

The effect of this exemption is that those consumer credit agreements to which it applies shall not be a regulated agreement and as a result the lender (or owner under a consumer high agreement) does not need to comply with the Consumer Credit Act 1974 requirements.

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