Regulation
MCD 2016
The Mortgage Credit Directive (MCD) is the 2016 EU-derived regulation that brought secured loans (second charge mortgages) under FCA mortgage rules, alongside first-charge mortgages.
Before March 2016, secured loans in the UK were regulated as consumer credit, while first-charge mortgages were regulated as mortgages. The MCD merged the two — every loan secured against UK residential property is now regulated as a mortgage under the FCA's MCOB rulebook.
The reclassification was, for borrowers, an upgrade. Secured loans now come with mandatory ESIS illustration documents, a minimum 7-day reflection period, formal affordability assessments, and access to the Financial Ombudsman Service — protections that didn't all apply pre-2016.
Practically, the MCD also unified the language. You'll see the same product called a 'secured loan' on consumer-facing websites and a 'second charge mortgage' in regulatory documents. Both terms describe the same FCA-regulated product.