(This note is not part of the Order)

For the purposes of its functions in relation to financial stability under the Bank of England Act 1998 (c.11) ("the Act"), the Financial Policy Committee ("the FPC") has power under section 9H of the Act to give directions to the Prudential Regulation Authority and the Financial Conduct Authority ("the regulators"), but only in relation to macro-prudential measures prescribed by the Treasury under section 9L of the Act.

Article 3 of this Order prescribes two macro-prudential measures for these purposes.

The first is a measure limiting the proportion of new buy-to-let mortgages which have a loan-to- value ratio above a specified amount. The second is a measure limiting the proportion of new buy- to-let mortgages which have an expected interest coverage ratio below a specified amount. Each measure applies where the FPC considers it to be proportionate on the basis of a cost-benefit analysis.

Article 4 applies where the FPC gives a direction in relation to a measure prescribed by article 3 and later revokes and replaces that direction with a subsequent direction which includes different specified amounts. In issuing any new rules to implement the subsequent direction, a regulator need not comply with certain procedural requirements under the Financial Services and Markets Act 2000, but must instead undertake and publish a cost-benefit analysis of the rule change.