MCOB 1
Application and purpose
MCOB 1.1
Application and purpose
- 01/12/2004
Application
MCOB 1.1.1
See Notes
- 31/10/2004
Purpose
MCOB 1.1.2
See Notes
- 06/04/2007
- Past version of MCOB 1.1.2 before 06/04/2007
MCOB 1.2
General application: who? what?
- 01/12/2004
MCOB 1.2.1
See Notes
- (1) This sourcebook applies to every firm that:
- (a) carries on a home finance activity (subject to the business loan application provisions); or
- (b) communicates or approves a financial promotion of qualifying credit, of a home purchase plan, of a home reversion plan or of a regulated sale and rent back agreement.
- (2) Where a firm has outsourced activities to a third party processor, any rule in MCOB which requires the third party processor, when acting as such, to disclose its identity to a customer must be read as requiring disclosure of the identity of the firm (or appointed representative, as appropriate) which is taking responsibility for the acts and omissions of the third party processor when carrying on the outsourced activities.
- 30/06/2010
- Past version of MCOB 1.2.1 before 30/06/2010
MCOB 1.2.1A
See Notes
Firm types and the home finance activities
MCOB 1.2.2
See Notes
- (1) This sourcebook applies to activities carried out in respect of four types of product: regulated mortgage contracts (which includes lifetime mortgages), home purchase plans, home reversion plans and regulated sale and rent back agreements. Together, these products are referred to as home finance transactions.
- (2) Lifetime mortgages and home reversion plans are together referred to as equity release transactions.
- (3) The application of most of this sourcebook is expressed by reference to four types of firm: lenders/providers, administrators, arrangers, and advisers. Arrangers and advisers are together referred to as intermediaries. This includes those firms that provide business loans to customers under a regulated mortgage contracts (see MCOB 1.2.3 R to MCOB 1.2.9 G). A single firm may fall into more than one of these types. PERG 4 contains detailed guidance on regulated mortgage activities and PERG 14 contains detailed guidance on home purchase activities, reversion activities and regulated sale and rent back activities.
- 30/06/2010
- Past version of MCOB 1.2.2 before 30/06/2010
Business loans: application of MCOB
MCOB 1.2.3
See Notes
In relation to a regulated mortgage contract for a business purpose
- (1) MCOB applies if the customer is not a large business customer; and
- (2) if MCOB applies, a firm must either:
- (a) comply with MCOB in full (disregarding the tailored provisions for regulated mortgage contracts for a business purpose in the remainder of MCOB); or
- (b) comply with MCOB taking account of those tailored provisions, including MCOB 1.2.7 R.
- 31/10/2004
MCOB 1.2.4
See Notes
- 06/04/2007
- Past version of MCOB 1.2.4 before 06/04/2007
MCOB 1.2.5
See Notes
- (1) In order for a loan to fall within the definition of a regulated mortgage contract, at least 40% of the total of the land to be given as security must be used as or in connection with a dwelling. Therefore, the variation in approach provided for in MCOB 1.2.3 R(2) can only apply where the loan being used for a business purpose is secured against a property at least 40 per cent of which is used as a dwelling. It cannot apply to a loan secured on property that is used solely for a business purpose.
- (2) Whether a regulated mortgage contract is for a business purpose will be a matter of fact to be determined by a firm depending on the individual circumstances of each case. In the FSA's opinion, a regulated mortgage contract secured, for example, on the borrower's own home, but used to finance the purchase of a single buy-to-let property will not be for a business purpose.
- 31/10/2004
MCOB 1.2.6
See Notes
- 31/10/2004
Business loans: additional requirements if tailored route is used
MCOB 1.2.7
See Notes
In relation to a regulated mortgage contract for a business purpose, if a firm has opted for the tailored route, it must adopt the following modifications to the sourcebook:
- (1) (except in relation to sections 6 and 8 of any initial disclosure document or sections 5 and 8 of any combined initial disclosure document) substitute an alternative description of the facility provided under the regulated mortgage contract for 'mortgage' where that term is used in any disclosure;
- (2) substitute the term 'illustration' for 'key facts illustration' when opting to use the tailored business loans rules in MCOB 4.9, MCOB 5.7, MCOB 6.7 or MCOB 7.7; and
- (3) limit disclosure to facilities provided under the regulated mortgage contract.
- 06/04/2007
- Past version of MCOB 1.2.7 before 06/04/2007
MCOB 1.2.8
See Notes
- (1) Firms are reminded of the requirement in MCOB 2.2.6 R that any communication should be clear, fair and not misleading when substituting an alternative for the term 'mortgage' in accordance with MCOB 1.2.7 R(1).
- (2) Possible alternatives to the term 'mortgage' include, for example, 'secured business overdraft', 'secured loan' or 'secured business credit'.
- 31/10/2004
MCOB 1.2.9
See Notes
- 31/10/2004
Home purchase plans
MCOB 1.2.9A
See Notes
- 06/04/2007
Authorised professional firms
MCOB 1.2.10
See Notes
MCOB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities except for:
- (1) MCOB 2.2 (Communications);
- (2) MCOB 3 (Financial promotion); and
- (3) initial disclosure requirements but only as regards providing the information contained in section 7 (What to do if you have a complaint) and section 8 (Are we covered by the Financial Services Compensation Scheme?) of an initial disclosure document or combined initial disclosure document (see MCOB 4.4 and MCOB 4.10).
MCOB 1.2.11
See Notes
Authorised professional firms should be aware of the following:
- (1) PROF 5 (Non-mainstream regulated activities); and
- (2) MCOB 3.1.9 R (Authorised professional firms) and the exception in article 55 of the Financial Promotion Order (Communications by members of the professions) which applies in relation to financial promotion of qualifying credit or of a home reversion plan of authorised professional firms under MCOB 3.2.5 R(3) (Exemptions).
Pre-contractual arrangements by a home finance provider
MCOB 1.2.12
See Notes
In MCOB the activities of a home finance provider which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts or plans to which the arranger is a party), are to be treated as arranging and therefore also as home finance activities.
MCOB 1.2.13
See Notes
The effect of article 28A of the Regulated Activities Order would normally mean that arrangements made by a party to a home finance transaction would not fall within the home finance activity of arranging. So in a direct sale, a home finance provider would not be carrying on the regulated activity of arranging but, where the transaction proceeds to completion, would instead be involved in a regulated activity comprising entering into a home finance transaction. However, the provisions in MCOB on arranging home finance transactions are applied to pre-contractual arrangements by a home finance provider.
MCOB 1.3
General application: where?
- 01/12/2004
Location of the customer
MCOB 1.3.1
See Notes
Except as set out in this section, MCOB applies if the customer of a firm carrying on home finance activities is resident in:
- (1) the United Kingdom; or
- (2) another EEA State, but in this case only if the activity is carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom;
- 06/04/2007
- Past version of MCOB 1.3.1 before 06/04/2007
Financial Promotion
MCOB 1.3.2
See Notes
- 31/10/2004
Electronic commerce activities and communications
MCOB 1.3.3
See Notes
- 01/11/2007
- Past version of MCOB 1.3.3 before 01/11/2007
Distance contracts entered into from an establishment in another EEA State
MCOB 1.3.4
See Notes
- (1) The rules in (2) do not apply to a firm with respect to a regulated mortgage activity or a home purchase activity exclusively concerning a distance contract if the following conditions are satisfied:
- (a) the firm carries on the activity from an establishment maintained by the firm in an EEA State other than the United Kingdom; and
- (b) either the EEA State:
- (i) has implemented the Distance Marketing Directive; or
- (ii) has obligations in its domestic law corresponding to those provided for by the Distance Marketing Directive;
- and, in either case, with the result that the obligations provided for by the Distance Marketing Directive (or corresponding obligations) are applied by that State when the firm carries on that activity; and
- (c) the firm is a national of an EEA State or a company or firm mentioned in article 54 of the Treaty.
- (2) The rules which do not apply are:
- (a) initial disclosure requirements in MCOB 4.4 (in respect of regulated mortgage contracts) and MCOB 4.10 (in respect of home purchase plans);
- (b) MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts and distance home purchase mediation contracts with consumers);
- (c) MCOB 4.6 (Cancellation of distance mortgage mediation contracts) and distance home purchase mediation contracts);
- (d) MCOB 5 (Pre-application disclosure);
- (e) MCOB 6 (Disclosure at offer stage);
- (f) MCOB 7.6.7 R to MCOB 7.6.17 R (Further advances);
- (g) MCOB 8.3 (Application of rules in MCOB 4) to the extent that it applies MCOB 4.4 to MCOB 4.6;
- (h) [deleted]
- (i) MCOB 9.3 (Pre-application disclosure);
- (j) MCOB 9.4 (Content of illustrations); and
- (k) MCOB 9.5 (Disclosure at offer stage for equity release transactions).
- 01/12/2009
- Past version of MCOB 1.3.4 before 01/12/2009
Distance contracts with retail customers
MCOB 1.3.5
See Notes
Parts of MCOB relate to distance contracts (or distance mortgage mediation contracts and distance home purchase mediation contracts) with consumers. These expressions are derived from the Distance Marketing Directive, and the following paragraphs provide some guidance to firms on their meaning:
- (1) consumer
- The Distance Marketing Directive applies for distance contracts with 'any natural person who is acting for purposes which are outside his trade, business or profession', for which the term 'consumer' has been adopted. Examples of individuals who would be regarded as consumers include:
- (a) personal representatives, including executors, unless they are acting in a professional capacity, for example a solicitor acting as executor; or
- (b) private individuals acting in personal or other family circumstances, for example, a trustee of a family trust.
- (2) Distance contract
- To be a distance contract, a contract must be concluded under an 'organised distance sales or service-provision scheme' run by the contractual provider of the service who, for the purpose of the contract, makes exclusive use (directly or through an intermediary) of one or more means of distance communication up to and including the time at which the contract is concluded. So:
- (a) the firm must have put in place facilities designed to enable a customer to deal with it exclusively at a distance, such as facilities for a customer to deal with it purely by post, telephone, fax or the Internet. If a firm normally operates face-to-face and has no facilities in place enabling a customer to deal with it customarily by distance means, the Distance Marketing Directive will not apply. A one-off transaction effected exclusively by distance means to meet a particular contingency or emergency will not be a distance contract; and
- (b) there must have been no simultaneous physical presence of the firm and the other party to the contract throughout the offer, negotiation and conclusion of the contract. So, for example, contracts offered, negotiated and concluded over the Internet, through a telemarketing operation, or by post will normally be distance contracts.
- 01/11/2007
- Past version of MCOB 1.3.5 before 01/11/2007
Use of intermediaries
MCOB 1.3.6
See Notes
- 01/11/2007
- Past version of MCOB 1.3.6 before 01/11/2007
MCOB 1.5
Application to appointed representatives
- 01/12/2004
MCOB 1.5.1
See Notes
- (1) Although MCOB does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of MCOB, anything done or omitted by a firm's appointed representative (when acting as such) will be treated as having been done or omitted by the firm (section 39(4) of the Act).
- (2) Firms should refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives.
- 31/10/2004
MCOB 1.6
Application to mortgages in relation to the Consumer Credit Act 1974
- 06/04/2007
- Past version of MCOB 1.6 before 06/04/2007
MCOB 1.6.1
See Notes
- 01/07/2005
- Past version of MCOB 1.6.1 before 01/07/2005
MCOB 1.6.2
See Notes
- 31/10/2004
MCOB 1.6.3
See Notes
- 31/10/2004
MCOB 1.6.4
See Notes
If, notwithstanding the steps taken by a firm to comply with MCOB 1.6.3 R, it transpires that a mortgage which the firm has treated as unregulated is in fact a regulated mortgage contract, the firm must as soon as practicable after the correct status of the mortgage has been established:
- (1) contact the customer and provide him with the following information in a durable medium:
- (a) a statement that the mortgage contract is a regulated mortgage contract subject to FSA regulation, stating in particular the position with regard to redress and compensation; and
- (b) (where relevant) a statement that the Consumer Credit Act 1974 will not apply to the mortgage contract and that any Consumer Credit Act rights or requirements set out in previous communications will not apply;
- (2) apply to the regulated mortgage contract all relevant MCOB requirements, such as those on disclosure (in MCOB 7) or on the treatment of customers in arrears (in MCOB 13).
- 31/10/2004
MCOB 1.6.5
See Notes
- (1) MCOB 1.6.4 R(2) means, for example, that if a firm discovered immediately after completion that a loan was a regulated mortgage contract, the firm would be required to comply with MCOB 7.4 (Disclosure at the start of the contract).
- (2) Although MCOB 1.6.4 R recognises that firms may become aware that a mortgage is a regulated mortgage contract at a late stage, the FSA expects this to be an extremely rare occurrence. It could arise, for example, if a firm has acted on the understanding, verified as far as was practicable, that in respect of a particular mortgage contract less than 40% of the land would be used in connection with a dwelling. If it was discovered later that more than 40% of the land was used in connection with the dwelling (and provided that all the other legal requirements were met) the mortgage will be a regulated mortgage contract to which MCOB applies.
- (3) MCOB 1.6.3 R and MCOB 1.6.4 R do not override the application of MCOB to any regulated mortgage contract. MCOB applies notwithstanding a firm's genuine belief that a mortgage is unregulated. In deciding whether to take disciplinary action as a result of a breach of MCOB, the FSA will take into account whether the action by the firm was reckless or deliberate (see DEPP 6.2.1G (1)(a)).
- 28/08/2007
- Past version of MCOB 1.6.5 before 28/08/2007
Export chapter as
MCOB 2
Conduct of business standards: general
MCOB 2.1
Application
- 01/12/2004
Who?
MCOB 2.1.1
See Notes
- 31/10/2004
MCOB 2.1.2
See Notes
This table belongs to MCOB 2.1.1 R
- 30/06/2010
- Past version of MCOB 2.1.2 before 30/06/2010
What?
MCOB 2.1.3
See Notes
This chapter applies in relation to:
- (1) home finance activities;
- (1A) to the extent specified in MCOB 2.1.2 R, regulated sale and rent back activity;
- (2) those activities in MCOB 12 and MCOB 13 that are carried on after a regulated mortgage contract or home purchase plan has come to an end following the sale of a repossessed property, and those activities in MCOB 12 that are carried on after a home reversion plan has ended for any reason; and
- (3) the communication or approval of a financial promotion of qualifying credit, of a home purchase plan, of a home reversion plan or of a regulated sale and rent back agreement.
- 30/06/2010
- Past version of MCOB 2.1.3 before 30/06/2010
MCOB 2.2
Communications
- 01/12/2004
Purpose
MCOB 2.2.1
See Notes
- 31/10/2004
General
MCOB 2.2.2
See Notes
- 06/04/2007
- Past version of MCOB 2.2.2 before 06/04/2007
Prescribed terms for regulated mortgage contracts, home reversion plans and regulated sale and rent back agreements
MCOB 2.2.3
See Notes
In any communication to a customer, a firm must:
- (1) describe any early repayment charge as an 'early repayment charge';
- (2) describe any higher lending charge as a 'higher lending charge';
- (3) describe any lifetime mortgage as a 'lifetime mortgage';
- (4) describe any home reversion plan as a 'home reversion plan'; and
- (5) describe any regulated sale and rent back agreement as a 'sale and rent back agreement';
- 30/06/2010
- Past version of MCOB 2.2.3 before 30/06/2010
Related investment advice
MCOB 2.2.5
See Notes
- 01/11/2007
- Past version of MCOB 2.2.5 before 01/11/2007
Clear, fair and not misleading communications and financial promotions
MCOB 2.2.6
See Notes
- 06/04/2007
- Past version of MCOB 2.2.6 before 06/04/2007
MCOB 2.2.6A
See Notes
MCOB 2.2.7
See Notes
- 06/04/2007
- Past version of MCOB 2.2.7 before 06/04/2007
MCOB 2.2.8
See Notes
- 30/06/2010
- Past version of MCOB 2.2.8 before 30/06/2010
MCOB 2.2.8A
See Notes
- 06/04/2007
MCOB 2.2.8B
See Notes
The following guidance may be relevant to a firm that communicates or approves a financial promotion of a home purchase plan:
- (1) guidance on what 'communicate', 'approve' and 'financial promotion' mean, and on the media of communication to which financial promotion rules apply (see MCOB 3.2.1 G and MCOB 3.2.2 G);
- (2) guidance on other Handbook provisions relevant to financial promotions (see MCOB 3.2.8 G to MCOB 3.2.9 G);
- (3) guidance on other regulations and guidelines relevant to financial promotions (see MCOB 3.5.3 G);
- (4) guidance on referring to the FSA (see MCOB 3.6.2 G (3));
- (5) guidance on the clear, fair and not misleading standard (see MCOB 3.6.5 G, MCOB 3.6.10 G and MCOB 3.6.14 G); and
- (6) guidance on the use of the Internet for communicating financial promotions (see MCOB 3.12 and PERG 8.22).
MCOB 2.2.9
See Notes
- 31/10/2004
MCOB 2.3
Inducements: regulated mortgage contracts, home reversion plans and regulated sale and rent back agreements
- 30/06/2010
- Past version of MCOB 2.3 before 30/06/2010
Purpose
MCOB 2.3.1
See Notes
- 06/04/2007
- Past version of MCOB 2.3.1 before 06/04/2007
Prohibition of inducements
MCOB 2.3.2
See Notes
A firm must take reasonable steps to ensure that it, and any person acting on its behalf, does not:
- (1) offer, give, solicit or accept an inducement; or
- (2) direct or refer any actual or potential business in relation to a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement to another person on its own initiative or on the instructions of an associate;
if it is likely to conflict to a material extent with any duty that the firm owes to its customers in connection with such a home finance transaction or any duty which such a recipient firm owes to its customers in connection with such a home finance transaction.
- 30/06/2010
- Past version of MCOB 2.3.2 before 30/06/2010
MCOB 2.3.3
See Notes
- 31/10/2004
MCOB 2.3.4
See Notes
- 31/10/2004
MCOB 2.3.5
See Notes
MCOB 2.3.2 R does not prevent a firm:
- (1) assisting a home finance intermediary so that the quality of the home finance intermediary's service to customers is enhanced; or
- (2) giving or receiving indirect benefits (such as gifts, hospitality and promotional competition prizes);
- 06/04/2007
- Past version of MCOB 2.3.5 before 06/04/2007
MCOB 2.3.6
See Notes
- (1) A firm must not operate a system of giving or offering inducements to a mortgage intermediary, reversion intermediary, SRB intermediary or any other third party whereby the value of the inducement increases if the intermediary or third party, such as a packager, exceeds a target set for the amount of business referred (for example, a volume override).
- (2) A firm must not solicit or accept an inducement whereby the value of the inducement increases if the firm exceeds a target set for the amount of business referred.
- 30/06/2010
- Past version of MCOB 2.3.6 before 30/06/2010
Quantification of inducements
MCOB 2.3.7
See Notes
- (1) A mortgage lender, reversion provider or SRB agreement provider must quantify, in cash terms, any material inducement it offers to a mortgage intermediary, reversion intermediary, SRB intermediary or a third party.
- (2) In quantifying the value of the material inducement, the firm must include any subsequent payments (such as a trail fee) made where the customer continues with the same home finance transaction.
- 30/06/2010
- Past version of MCOB 2.3.7 before 30/06/2010
MCOB 2.3.8
See Notes
- (1) Quantification of any material inducement offered by the mortgage lender or reversion provider supports the disclosure requirements elsewhere in MCOB. Further guidance on the disclosure of any inducement in cash terms is provided in MCOB 5.6.118 G for regulated mortgage contracts other than lifetime mortgages, MCOB 9.4.124 G for lifetime mortgages and MCOB 9.4.173 G for home reversion plans.
- (1A) Quantification of any material inducement offered by a SRB agreement provider in connection with the conclusion of a regulated sale and rent back agreement must be included in the disclosures made to the potential SRB agreement seller under MCOB 5.9.1R (1A)(c).
- (2) A payment made to a third party unconnected with the home finance intermediary, where that payment only reflects the cost of outsourcing work relating to the processing of mortgage applications, would not be considered an inducement for these purposes.
- 30/06/2010
- Past version of MCOB 2.3.8 before 30/06/2010
MCOB 2.4
High pressure sales: regulated mortgage contracts, home reversion plans and regulated sale and rent back agreements
- 01/07/2009
- Past version of MCOB 2.4 before 01/07/2009
Purpose
MCOB 2.4.1
See Notes
The purpose of this section is to remind firms of the relevance of the high level standards in PRIN, especially with regard to the use of sales methods that may lead a customer to feel pressurised to enter into, or vary, a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement.
- 01/07/2009
- Past version of MCOB 2.4.1 before 01/07/2009
Fair treatment
MCOB 2.4.2
See Notes
- (1) Principle 6 (Customers' interests) requires that a firm must pay due regard to the interests of its customers and treat them fairly. This means, for example, that a firm should avoid selling practices that commit customers (or lead customers to believe that they are committed) to any regulated mortgage contract or home reversion plan before they have been able to consider the illustration and offer document. One such practice might be to present a new customer with an illustration, offer document and mortgage deed at one time and to require the mortgage deed to be signed on the same occasion (when there is no urgent need to do so).
- (2) For regulated sale and rent back agreements, the firm should avoid practices that commit customers (or lead customers to believe they are committed) to any such agreement before they have been able to consider the information that is required by MCOB 5.9.1 R (Pre-sale disclosure) and before the expiry of the 14 day cooling-off period as required by MCOB 6.9.4 R (Written pre-offer document: Stage One).
- 30/06/2010
- Past version of MCOB 2.4.2 before 30/06/2010
Information
MCOB 2.4.3
See Notes
- 01/07/2009
- Past version of MCOB 2.4.3 before 01/07/2009
MCOB 2.5
Reliance on others
- 01/12/2004
Purpose
MCOB 2.5.1
See Notes
- 06/04/2007
- Past version of MCOB 2.5.1 before 06/04/2007
When firms can rely on others
MCOB 2.5.2
See Notes
- 31/10/2004
MCOB 2.5.3
See Notes
- (1) In relying on MCOB 2.5.2 R, a firm should take reasonable steps to establish that the other person providing the information is:
- (a) not connected with the firm; and
- (b) competent to provide the information.
- (2) Compliance with (1) may be relied on as tending to establish compliance with MCOB 2.5.2 R.
- (3) Contravention of (1) may be relied on as tending to establish contravention of MCOB 2.5.2 R.
- 31/10/2004
MCOB 2.5.4
See Notes
- (1) Any information which a rule in MCOB requires to be sent to a customer may be sent to another person on the instruction of the customer, so long as the recipient is not connected with the firm.
- (2) There is no need for a firm to send information to a customer where it has taken reasonable steps to establish that this has been or will be supplied by another person.
- 31/10/2004
MCOB 2.6
Exclusion of liability
- 01/12/2004
Purpose
MCOB 2.6.1
See Notes
- 31/10/2004
Limits on the exclusion of liability
MCOB 2.6.2
See Notes
- 31/10/2004
MCOB 2.6.3
See Notes
- 31/10/2004
MCOB 2.6A
Protecting customer's interests: home purchase plans, home reversion plans and regulated sale and rent back agreements
- 01/07/2009
- Past version of MCOB 2.6A before 01/07/2009
MCOB 2.6A.1
See Notes
MCOB 2.6A.2
See Notes
Circumstances that a firm should consider include how the customer will be protected in the event of:
- (1) the failure of a reversion provider, home purchase provider or SRB agreement provider;
- (2) the transfer of a reversion provider's, home purchase provider's or SRB agreement provider's interest (or the interest the provider would have had, had it not nominated a third party to hold it) in the property to a third party;
- (3) other dealings by a reversion provider, home purchase provider or SRB agreement provider (or its nominee) with a third party; and
- (4) a reversion provider's, home purchase provider's or SRB agreement provider's (or its nominee's) failure to perform obligations owed to third parties, or imposed by statute.
MCOB 2.6A.3
See Notes
MCOB 2.6A.4
See Notes
- (1) In the FSA's view, a customer's interests will include:
- (a) protection of the customer's rights under the plan, in particular the right to occupy the property throughout its term;
- (b) protection of any interest (legal or beneficial) that the customer retains, acquires or is intended to acquire in the property, including the expectation that such interests will be unencumbered by third party interests;
- (c) that, where a customer pays sums under a home purchase plan towards the purchase price of the property, those sums will be applied towards the purchase price. Or, in circumstances where that is not practicable (for example, on repossession), that an appropriate amount will be returned to the customer; and
- (d) a customer's contractual entitlement to receive certain sums back after a qualifying period, such as where it has been agreed that a certain percentage of discount will be refunded to the customer after a set period of tenancy.
- (2) The protections that a firm should consider include:
- (a) the extent to which different forms of tenure protect the tenant's right to occupy the property and afford protection against removal. In particular, granting the customer a licence to occupy the property is unlikely to provide an adequate level of security;
- (b) (except in Scotland) the need for any agreement under which a customer has a right to acquire an interest in the property to be specifically enforceable;
- (c) the extent to which appropriate registrations, restrictions, notices or other entries should be made in the relevant land register;
- (d) the timing of entries in the relevant land register and who should be responsible for making them; and
- (e) the customer's need for a full and clear understanding of all the steps that the firm expects him or his advisers to take to protect his interests both at the time the plan is entered into, and throughout its duration.
Protecting customers' interests: additional material for home reversion plans
MCOB 2.6A.5
See Notes
Unless it is satisfied on reasonable grounds based on the customer's knowledge, expertise and experience that it is unnecessary, a firm must obtain from its customer's legal adviser, before its customer enters into a home reversion plan, confirmation that:
- (1) he has been instructed to ensure that the customer's legal rights under the plan are protected to a reasonable standard; and
- (2) he has explained to the customer those aspects of the customer's legal rights and obligations under the home reversion plan that he needs to understand.
- 06/04/2007
Protecting customer's interests: regulated sale and rent back agreements
MCOB 2.6A.5A
See Notes
- 01/07/2009
Protecting customers' interests under regulated sale and rent back agreements: security of tenure
MCOB 2.6A.5B
See Notes
- (1) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement:
- (a) the entitlement of the SRB agreement seller (or trust beneficiary or related person) to occupy the property is governed by a tenancy, which is structured:
- (i) if the property is in England and Wales, as an assured tenancy (including an assured shorthold tenancy) under the Housing Act 1988 (as amended);
- (ii) if the property is in Scotland, as an assured tenancy (including a short assured tenancy) under the Housing (Scotland) Act 1988, (as amended); and
- (iii) if the property is in Northern Ireland, as a private tenancy under the Private Tenancies (Northern Ireland) Order 2006;
- (b) the tenancy is for a fixed term of no less than five years;
- (c) the terms of the tenancy provide for the tenant to terminate the tenancy during the fixed term on no more than three months' notice (and with no other conditions attached); and
- (d) each of the terms of the tenancy is fair.
- (2) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement, if the property is in England and Wales, the terms of the tenancy do not:
- (a) give the landlord power to determine the tenancy in certain circumstances as referred to in section 5(1) of the Housing Act 1988, as amended; or
- (b) otherwise make provision for the tenancy to be brought to an end by the landlord save on a ground or grounds for possession applicable for an assured tenancy under the Housing Act 1988, as amended; or
- (c) make provision for the tenancy to be brought to an end on any of Grounds 2, 6, 8 or 9 under the Housing Act 1988, as amended.
- A firm may not rely during the fixed term of the tenancy on any ground for possession of the property other than a ground for possession on which the terms of the tenancy may under this paragraph (2) make provision for the tenancy to be brought to an end by the landlord, and a firm may only rely on any ground for possession if it is fair for the firm to do so.
- (3) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement, if the property is in Scotland, the terms of the tenancy do not include:
- (a) any provision for it to be brought to an end by the landlord during the fixed term other than a ground for possession applicable for an assured tenancy under the Housing (Scotland) Act 1988, as amended; or
- (b) Grounds 2, 6, 8 or 9 under the Housing (Scotland) Act 1988, (as amended).
- A firm may not rely during the fixed term of the tenancy on any ground for possession of the property other than the grounds permitted under this paragraph (3) to be included in the terms of the tenancy, and a firm may only rely on any ground for possession if it is fair for the firm to do so.
- (4) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement, if the property is in Northern Ireland, the terms of the tenancy do not include:
- (a) any provision which would permit the landlord to forfeit the lease and obtain possession of the property during the fixed term unless the provision is equivalent to a ground for possession applicable for an assured tenancy under Schedule 2 to the Housing Act 1988, as amended, in England; or
- (b) any provision which would permit the landlord to forfeit the lease and obtain possession of the property on the basis that:
- (i) a mortgagee (or chargee) under a mortgage (or charge) entered into by the landlord requires vacant possession for the purposes of exercising a power of sale of the property; or
- (ii) the landlord intends to demolish or reconstruct, or carry out substantial works on, the property or any part of the property; or
- (iii) there are arrears of rent, unless the conditions applicable to either Ground 9 or Ground 10 under the Housing Act 1988, as amended, in England, are satisfied; or
- (iv) alternative accommodation is available for the tenant.
- A firm may not rely during the fixed term of the tenancy on any circumstance to forfeit the lease and obtain possession of the property other than the circumstances permitted under this paragraph (4) to be included in the tenancy agreement, and a firm may only rely on any circumstance if it is fair for the firm to do so.
- (5) A firm must not take, or propose or threaten to take, any steps to evict the SRB agreement seller (or trust beneficiary or related person) other than by applying to the court for a possession order based on the grounds or circumstances, reliance on which is not prohibited by this rule, and enforcing that order in a lawful manner.
- (6) Where a SRB agreement provider enters into or proposes to enter into (whether before or after the commencement of the tenancy) a mortgage (or charge or standard security) over the interest it obtains under a regulated sale and rent back agreement, the firm must ensure that the mortgagee (or chargee or security holder) has agreed in writing to the proposed letting under the agreement, and to the terms of the agreement. The firm must provide to the SRB agreement seller a copy of the agreement in writing of the mortgagee (or chargee or security holder).
[Note: In England, Wales and Scotland a landlord, such as a SRB agreement provider, can only seek possession of a property during the fixed term of an assured tenancy if one or more of a limited number of grounds for possession set out in (in England and Wales) the Housing Act 1988, as amended, or (in Scotland) the Housing (Scotland) Act 1988, as amended, applies and the terms of the tenancy make provision for it to be ended on any of these grounds. Once the fixed term of the assured tenancy has ended, the landlord has the right to seek possession on broader grounds. Where the tenancy is (in England) an assured shorthold tenancy or (in Scotland) a short assured tenancy, the landlord has an additional right to seek possession from the end of the fixed term.
In Northern Ireland, the position is governed by the Private Tenancies (Northern Ireland) Order 2006 and the parties are free to agree the terms of a tenancy including its duration and the grounds on which the landlord may seek possession, including during any fixed term.
In any event it is for the court to decide whether one or more of the grounds for possession actually applies in the particular circumstances of any case.
In Northern Ireland, a tenant must give at least four weeks' notice to quit. Northern Ireland law implies a fixed term of six months in a private tenancy unless the parties agree an alternative fixed term, so a notice to quit expiring before the first six months of the tenancy may not be effective.]
- 30/06/2010
MCOB 2.6A.5C
See Notes
- 30/06/2010
MCOB 2.6A.6
See Notes
- 06/04/2007
Protecting customers' interests: additional material for home purchase plans
MCOB 2.6A.7
See Notes
- 06/04/2007
Treating customers fairly: home purchase plans, home reversion plans and regulated sale and rent back agreements
MCOB 2.6A.8
See Notes
MCOB 2.6A.9
See Notes
A firm is unlikely, for example, to be treating its customer fairly in relation to termination of a home purchase plan, home reversion plan or regulated sale and rent back agreement if:
MCOB 2.6A.10
See Notes
A firm is also unlikely to be treating its customer fairly if, upon termination of an agreement under a home purchase plan, home reversion plan or regulated sale and rent back agreement, the customer does not receive (net of any reasonable sums payable by the customer):
- (1) in the case of a home reversion plan or regulated sale and rent back agreement where the customer retains a beneficial interest in the property, the value of that beneficial interest; or
- (2) in the case of a home purchase plan, the value of purchase payments made.
[Note: The terms of a home purchase plan, home reversion plan or regulated sale and rent back agreement should take into account relevant legal obligations such as those under the Unfair Terms Regulations and, where applicable, the Housing Act 1988 (or, in Scotland, the Housing (Scotland) Act 1988). A firm may find material on the FSA website concerning the FSA's consumer protection powers useful. The Office of Fair Trading has also published guidance on the impact of the Unfair Terms Regulations on tenancy agreements.]
Treating customers fairly: home reversion plans and regulated sale and rent back agreements
MCOB 2.6A.11
See Notes
A firm is unlikely, for example, to be treating a reversion occupier or SRB agreement seller fairly if:
- (1) the reversion occupier or SRB agreement seller is obliged to maintain the property to a standard which exceeds the standard that the property is in when the home reversion plan or regulated sale and rent back agreement commences;
- (2) the reversion occupier or SRB agreement seller is not entitled to, or is not given, reasonable notice of an inspection, or the inspection is conducted in a way that is biased against him;
- (3) unreasonable restrictions are imposed on who may occupy the property, taking into account the potential needs of the reversion occupier or SRB agreement seller throughout the duration of the home reversion plan or regulated sale and rent back agreement;
- (4) unreasonable restrictions are imposed on the uses to which the property may be put;
- (5) the reversion occupier or SRB agreement seller is unreasonably treated as having abandoned the property. For example, it is likely to be unreasonable to treat a property as abandoned based only on a period of non-occupation;
- (5A) the rent payable under a regulated sale and rent back agreement is increased by an unreasonable amount or any charges payable under a regulated sale and rent back agreement are unreasonably imposed after the agreement is concluded; and
- (6) where the reversion occupier has a reasonable expectation that the home reversion plan can be transferred to another property, agreement to such a transfer is, or can be, refused unreasonably.
Independent valuation: home reversion plans and regulated sale and rent back agreements
MCOB 2.6A.12
See Notes
MCOB 2.6A.12A
See Notes
- 30/06/2010
MCOB 2.6A.13
See Notes
- (1) A valuer may be considered competent if he is a suitably qualified member of a professional body.
- (2) A valuer may be considered independent if:
- (a) the customer can choose the valuer subject to the firm objecting on reasonable grounds and to the valuer being competent;
- (b) he owes a duty of care to the customer in valuing the property; and
- (c) the customer has an appropriate remedy against him under a complaints procedure which allows the complaint to be referred to an independent person whose decision is binding on the valuer.
- (3) Compliance with (1) and (2) (except, in the case of a regulated sale and rent back agreement, (2)(b)) may be relied on as tending to establish compliance with MCOB 2.6A.12 R.
- (4) [deleted]
- (5) For a regulated sale and rent back agreement, contravention of (1) or (2) (except (2)(b)) may be relied on as tending to show contravention of MCOB 2.6A.12 R.
MCOB 2.6A.13A
See Notes
- 30/06/2010
MCOB 2.6A.14
See Notes
- 06/04/2007
Obtaining best price: partial home reversion plans or regulated sale and rent back agreements
MCOB 2.6A.15
See Notes
A firm must take reasonable steps to ensure that, when a home reversion plan or regulated sale and rent back agreement ends and the customer retains a beneficial interest in the property:
- (1) the property is sold within a reasonable period of time; and
- (2) the best price that might reasonably be obtained is paid.
MCOB 2.6A.16
See Notes
- 06/04/2007
Arranging or administering for unauthorised providers: home reversion plans
MCOB 2.6A.17
See Notes
For the purpose of this section (except this rule), a reversion arranger or reversion administrator's customer:
- (1) includes a reversion occupier or potential reversion occupier who enters, or proposes to enter, into a home reversion plan with an unauthorised reversion provider who is the firm's customer; and
- (2) excludes an unauthorised reversion provider.
- 06/04/2007
Arranging or administering for unauthorised providers: regulated sale and rent back agreements
MCOB 2.6A.17A
See Notes
For the purpose of this section (except this rule), a SRB arranger's or SRB administrator's customer:
- (1) includes a SRB agreement seller or potential SRB agreement seller who enters, or proposes to enter, into a regulated sale and rent back agreement with an unauthorised SRB agreement provider who is the firm's customer; and
- (2) excludes an unauthorised SRB agreement provider.
- 01/07/2009
Arranging or administering for unauthorised providers: home reversion plans and regulated sale and rent back agreements
MCOB 2.6A.18
See Notes
MCOB 2.7
Application to electronic media and distance communications
- 01/12/2004
MCOB 2.7.1
See Notes
- 31/10/2004
Additional guidance in respect of electronic communication with or for customers
MCOB 2.7.2
See Notes
For any electronic communication with a customer in relation to a home finance transaction a firm should:
- (1) have in place appropriate arrangements, including contingency plans, to ensure the secure transmission and receipt of the communication; it should also be able to verify the authenticity and integrity of the communication together with the date and time sent and received; the arrangements should be proportionate and take into account the different levels of risk in a firm's business;
- (2) be able to demonstrate that the customer wishes to communicate using this medium; and
- (3) if entering into an agreement, make it clear to the customer that a contractual relationship is created that has legal consequences.
- 06/04/2007
- Past version of MCOB 2.7.2 before 06/04/2007
MCOB 2.7.3
See Notes
- 31/10/2004
General provisions related to distance contracts
MCOB 2.7.4
See Notes
During the course of a distance contract with a consumer, the making or performance of which constitutes or is part of a regulated mortgage contract, home purchase plan or regulated sale and rent back agreement:
- (1) the firm must, at the consumer's request, provide a paper copy of the contractual terms and conditions of the regulated mortgage contract, home purchase plan, regulated sale and rent back agreement or services being provided by the firm; and
- (2) the firm must comply with the customer's request to change the means of distance communication used, unless this is incompatible with the regulated mortgage contract, home purchase plan, regulated sale and rent back agreement or service being provided by the firm.
- 30/06/2010
- Past version of MCOB 2.7.4 before 30/06/2010
MCOB 2.7.5
See Notes
- 01/11/2007
- Past version of MCOB 2.7.5 before 01/11/2007
Unsolicited services
MCOB 2.7.6
See Notes
- (1) A firm must not:
- (a) supply a service to a consumer without a prior request on his part, when this activity includes a request for immediate or deferred payment; or
- (b) enforce any obligations against a consumer in the event of unsolicited supplies of services, the absence of a reply not constituting consent.
- (2) Paragraph (1) applies in relation to mortgage mediation activities, entering into a regulated mortgage contract, home purchase mediation activities or entering into a home purchase plan under an organised distance sales or service-provision scheme run by the firm or by an intermediary, who, for the purpose of that supply, makes exclusive use of one or more means of distance communication up to and including the time at which the services are supplied.
- 01/11/2007
- Past version of MCOB 2.7.6 before 01/11/2007
MCOB 2.7A
E-Commerce
- 01/11/2007
Application
MCOB 2.7A.1
See Notes
- 01/11/2007
Information about the firm and its products or services
MCOB 2.7A.2
See Notes
A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:
- (1) its name;
- (2) the geographic address at which it is established;
- (3) the details of the firm, including its e-mail address, which allow it to be contacted rapidly and communicated with in a direct and effective manner;
- (4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R), together with a statement which explains that it is on the FSA register and includes its FSA register number;
- (5) if it is a professional firm, or a person regulated by the equivalent of a designated professional body in another EEA State:
- (a) the name of the professional body (including any designated professional body) or similar institution with which it is registered;
- (b) the professional title and the EEA State where the professional title was granted;
- (c) a reference to the applicable professional rules in the EEA State of establishment and the means to access them; and
- (6) where the firm undertakes an activity that is subject to VAT, its VAT number.
[Note: article 5(1) of the E-Commerce Directive]
- 01/11/2007
MCOB 2.7A.3
See Notes
If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and delivery costs.
[Note: article 5(2) of the E-Commerce Directive]
- 01/11/2007
MCOB 2.7A.4
See Notes
A firm must ensure that commercial communications which are part of, or constitute, an information society service, comply with the following conditions:
- (1) the commercial communication must be clearly identifiable as such;
- (2) the person on whose behalf the commercial communication is made must be clearly identifiable;
- (3) promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and
- (4) promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously.
[Note: article 6 of the E-Commerce Directive]
- 01/11/2007
MCOB 2.7A.5
See Notes
An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication as soon as it is received by the recipient.
[Note: article 7(1) of the E-Commerce Directive]
- 01/11/2007
Requirements relating to the placing and receipt of orders
MCOB 2.7A.6
See Notes
A firm must (except when otherwise agreed by parties who are not consumers):
- (1) give an ECA recipient at least the following information, clearly, comprehensibly and unambiguously, and before the order is placed by the recipient of the service:
- (a) the different technical steps to follow to conclude the contract;
- (b) whether or not the concluded contract will be filed by the firm and whether it will be accessible;
- (c) the technical means for identifying and correcting input errors before the placing of the order; and
- (d) the languages offered for the conclusion of the contract;
- (2) indicate any relevant codes of conduct to which it subscribes and information on how those codes can be consulted electronically;
- (3) (when an ECA recipient places an order through technological means), acknowledge the receipt of the recipient's order without undue delay and by electronic means (an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them); and
- (4) make available to an ECA recipient, appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors before the placing of an order.
[Note: article 10(1) and (2) and 11(1) and (2) of the E-Commerce Directive]
- 01/11/2007
MCOB 2.7A.7
See Notes
Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them.
[Note: article 10(3) of the E-Commerce Directive]
- 01/11/2007
Exception: contract concluded by e-mail
MCOB 2.7A.8
See Notes
The requirements relating to the placing and receipt of orders do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications.
[Note: article 10(4) and 11(3) of the E-Commerce Directive]
- 01/11/2007
MCOB 2.8
Record keeping
- 01/12/2004
Purpose
MCOB 2.8.1
See Notes
- 31/10/2004
Accessibility of records
MCOB 2.8.2
See Notes
- 31/10/2004
MCOB 2.8.3
See Notes
- 31/10/2004
MCOB 2.8.4
See Notes
- (1) A firm may arrange for records to be kept in such form as it chooses, provided the record is readily accessible for inspection by the FSA.
- (2) Where a firm chooses to maintain records in electronic form, it should take reasonable steps to ensure that:
- (a) the electronic record accurately reflects the original information; and
- (b) the electronic record has not been subject to unauthorised or accidental alteration.
- 31/10/2004
MCOB 2.8.5
See Notes
- 31/10/2004
Home purchase plans
MCOB 2.8.6
See Notes
- 06/04/2007
MCOB 2 Annex 1G
Form of joint instruction letter
- 30/06/2010
See Notes
- 30/06/2010
MCOB 3
Financial Promotion of qualifying credit, home reversion plans and regulated sale and rent back agreements
MCOB 3.1
Application: who?
- 01/12/2004
MCOB 3.1.1
See Notes
- 30/06/2010
- Past version of MCOB 3.1.1 before 30/06/2010
MCOB 3.1.2
See Notes
This chapter applies generally to firms in relation to all financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement. This wide application is however cut back by MCOB 3.2 (Application: what?) and MCOB 3.3 (Application: where?) which limit the application of this chapter for:
- (1) financial promotions which would fall within the scope of the exemptions in the Financial Promotion Order or the additional exemptions set out in MCOB 3.2.5 R (Applications: what? Exemptions); and
- (2) financial promotions to persons outside the United Kingdom.
- 30/06/2010
- Past version of MCOB 3.1.2 before 30/06/2010
MCOB 3.1.3
See Notes
MCOB 3.1.1 R means that:
- (1) this chapter applies not only to financial promotions for regulated mortgage contracts, but also to promotions for qualifying credit; and
- (2) this chapter applies to all aspects of a promotion by a firm of products which combine unsecured and secured lending.
- 31/10/2004
MCOB 3.1.4
See Notes
- 31/10/2004
MCOB 3.1.5
See Notes
- 31/10/2004
MCOB 3.1.7
See Notes
A financial promotion may relate to other controlled investments in addition to qualifying credit, home reversion plans and regulated sale and rent back agreements, for example a building society leaflet which describes the range of mortgage, savings and insurance products it provides. In such cases, the financial promotion rules in this and other sourcebooks will each apply as relevant.
- 30/06/2010
- Past version of MCOB 3.1.7 before 30/06/2010
MCOB 3.1.8
See Notes
As a result of articles 90 and 91 of the Regulated Activities Order:
- (1) a financial promotion of qualifying credit is not subject to the advertising provisions of the Consumer Credit Act 1974, unless it is an exempt generic promotion; and
- (2) where a firm makes a communication, which consists of a financial promotion of qualifying credit and information relating to a different form of lending that is not qualifying credit (for example an unsecured personal loan), the content of the latter will need to comply with the relevant advertising provisions of the Consumer Credit Act 1974.
- 06/04/2007
- Past version of MCOB 3.1.8 before 06/04/2007
Authorised professional firms
MCOB 3.1.9
See Notes
- (1) Except for MCOB 3.6.17 R to MCOB 3.6.25 R (Annual percentage rate (APR)), MCOB 3 does not apply to an authorised professional firm in relation to the communication of a financial promotion if the following conditions are satisfied:
- (a) the firm's main business must be the practice of its profession (see IPRU(INV) 2.1.2R(3));
- (b) the financial promotion must be made for the purposes of and incidental to the promotion or provision by the firm of:
- (i) its professional services; or
- (ii) its non-mainstream regulated activities (see PROF 5.2 (Nature of non-mainstream activities)); and
- (c) the financial promotion must not be communicated on behalf of another person who would not be able lawfully to communicate the financial promotion if he were acting in the course of business.
- (2) In (1)(b)(i), 'professional services' means services:
- (a) which do not constitute a regulated activity; and
- (b) the provision of which is supervised and regulated by a designated professional body.
- 06/04/2007
- Past version of MCOB 3.1.9 before 06/04/2007
MCOB 3.1.10
See Notes
- 31/10/2004
Nationals of other EEA States
MCOB 3.1.11
See Notes
Illustrative examples of qualifying credit promotions
MCOB 3.1.12
See Notes
MCOB 3.2
Application: what?
- 01/12/2004
Application for a financial promotion of qualifying credit
MCOB 3.2.-3
See Notes
Application, purpose and general | MCOB 3.1 to MCOB 3.5 |
Form and content of non-real time qualifying credit promotions | MCOB 3.6 |
Unsolicited real time promotions of qualifying credit or home reversion plans | MCOB 3.7 |
Form and content of real time qualifying credit promotions | MCOB 3.8 |
Confirmation of compliance: financial promotions of qualifying credit or home reversion plans | MCOB 3.9 |
Records: non-real time financial promotions of qualifying credit or home reversion plans | MCOB 3.10 |
Communication and approval of qualifying credit promotions for an overseas person or an unauthorised person | MCOB 3.11 |
The Internet and other electronic media | MCOB 3.12 |
- 06/04/2007
Application for a financial promotion of a home reversion plan
MCOB 3.2.-2
See Notes
Application, purpose and general | MCOB 3.1 to MCOB 3.5 |
Form and content of non-real time qualifying credit promotions | MCOB 3.6 in accordance with MCOB 3.8A |
Unsolicited real time financial promotions of qualifying credit or home reversion plans | MCOB 3.7 |
Form and content of financial promotions of home reversion plans | MCOB 3.8A |
Confirmation of compliance: financial promotions of qualifying credit or home reversion plans | MCOB 3.9 |
Records: non-real time financial promotions of qualifying credit or home reversion plans | MCOB 3.10 |
The Internet and other electronic media | MCOB 3.12 |
- 06/04/2007
Application for a financial promotion of a regulated sale and rent back agreement
MCOB 3.2.-2A
See Notes
Application, purpose and general | MCOB 3.1 to MCOB 3.5 |
Form and content of non-real time qualifying credit promotions | MCOB 3.6 in accordance with MCOB 3.8B |
Unsolicited real time financial promotions of qualifying credit or regulated sale and rent back agreements | MCOB 3.7 |
Form and content of financial promotions of regulated sale and rent back agreements | MCOB 3.8B |
Confirmation of compliance: financial promotions of qualifying credit or regulated sale and rent back agreements | MCOB 3.9 |
Records: non-real time financial promotions of qualifying credit or regulated sale and rent back agreements | MCOB 3.10 |
The Internet and other electronic media. | MCOB 3.12 |
- 30/06/2010
Application for a financial promotion of a home purchase plan
MCOB 3.2.-1
See Notes
- 06/04/2007
What do "communicate", "approve" and "financial promotion" mean?
MCOB 3.2.1
See Notes
- (1) The rules in this chapter adopt various concepts from the restriction on financial promotion by unauthorised persons in section 21(1) of the Act (Restrictions on financial promotion). Guidance on that restriction is contained in PERG 8 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:
- (a) 'communicate' is in PERG 8.6 (Communicate); and
- (b) 'invitation or inducement' and 'engage in investment activity' (two elements which, with 'communicate', make up the definition of 'financial promotion') is in PERG 8.4 (Invitation or inducement) and PERG 8.7 (Engage in investment activity).
- (2) Guidance on the approval of a financial promotion of qualifying credit is in MCOB 3.11.1 G (Approval of qualifying credit promotions).
- 06/04/2007
- Past version of MCOB 3.2.1 before 06/04/2007
Media of communication
MCOB 3.2.2
See Notes
- (1) There is no restriction on the media of communication to which this chapter applies. It applies to a financial promotion communicated by any means, including by way of printed advertising, radio and television broadcasts, a personal visit, a telephone call, an e-mail, the Internet and electronic media such as digital and other forms of interactive television or media. Both solicited and unsolicited communications are covered.
- (2) Financial promotions may be communicated for example, by means of:
- (a) product brochures;
- (b) general advertising in magazines, newspapers, radio and television programmes and websites;
- (c) mailshots (whether distributed by post, facsimile, e-mail or other media);
- (d) telemarketing activities, such as telephone calls made by call centres;
- (e) written correspondence, telephone calls and face-to-face discussions with customers;
- (f) sales aids which themselves constitute a financial promotion;
- (g) presentations to groups of customers; and
- (h) other publications, which may contain non-personal recommendations as to obtaining qualifying credit or entering into a home reversion plan.
- 06/04/2007
- Past version of MCOB 3.2.2 before 06/04/2007
MCOB 3.2.3
See Notes
- 06/04/2007
- Past version of MCOB 3.2.3 before 06/04/2007
Exemptions
MCOB 3.2.4
See Notes
This chapter does not apply to a firm in relation to a financial promotion of qualifying credit of a kind listed in MCOB 3.2.5 R, except that if the firm approves the financial promotion, the following apply:
- (1) MCOB 3.1 to MCOB 3.5 (Application, Purpose and General);
- (2) MCOB 3.6.3 R (Clear, fair and not misleading);
- (3) MCOB 3.11.1 G to MCOB 3.11.4 G (Approval of qualifying credit promotions; No approval of real time qualifying credit promotions; Approval of qualifying credit promotions when not all the rules apply); and
- (4) if the firm approves a non-real time financial promotion of qualifying credit by an overseas person MCOB 3.11.5 R (Non-real time qualifying credit promotions for overseas persons) applies.
- 06/04/2007
- Past version of MCOB 3.2.4 before 06/04/2007
MCOB 3.2.4A
See Notes
MCOB 3.2.5
See Notes
This table belongs to MCOB 3.2.4 R and MCOB 3.2.4A R.
Exemptions | ||
This chapter does not apply to the following: | ||
(1) | an illustration produced in accordance with the requirements of MCOB 5, MCOB 6, MCOB 7 or MCOB 9; | |
(2) | a financial promotion which contains only one or more of the following: | |
(a) | the name of the firm (or its appointed representative); | |
(b) | a logo; | |
(c) | a contact point (address (including an e-mail address), telephone or facsimile number); | |
(d) | a brief, factual statement of the firm's (or its appointed representative's) main occupation; | |
(3) | a financial promotion which can lawfully be communicated by an unauthorised person without approval; | |
(4) | a financial promotion communicated from outside the United Kingdom which would be exempt under articles 30, 31, 32 or 33 of the Financial Promotion Order (Overseas communicators) if the office from which the financial promotion is communicated were a separate unauthorised person (but see GEN 4.4.1R (Business for private customers from non-UK offices)); |
- 06/04/2007
- Past version of MCOB 3.2.5 before 06/04/2007
MCOB 3.2.6
See Notes
MCOB 3.2.5 R(2) exempts a financial promotion made by a firm or an appointed representative which refers to its activities only in general terms in image or brand advertising. The items identified in MCOB 3.2.5 R(2) do not enable detailed information to be given about the qualifying credit, home reversion plan or regulated sale and rent back agreement available from the firm. Thus firms should avoid the use of names, logos or addresses, for example, which attempt to convey additional product or cost-related information.
- 30/06/2010
- Past version of MCOB 3.2.6 before 30/06/2010
Combination of exemptions
MCOB 3.2.7
See Notes
- 06/04/2007
- Past version of MCOB 3.2.7 before 06/04/2007
Other relevant handbook rules
MCOB 3.2.8
See Notes
- 06/04/2007
- Past version of MCOB 3.2.8 before 06/04/2007
MCOB 3.2.9
See Notes
- 06/04/2007
- Past version of MCOB 3.2.9 before 06/04/2007
MCOB 3.3
Application: where?
- 01/12/2004
Territorial Scope
MCOB 3.3.1
See Notes
This chapter applies to a firm in relation to:
- (1) the communication of a financial promotion to a person in the United Kingdom;
- (2) the communication of an unsolicited real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement, unless it is made from a place, and for the purposes of a business which is only carried on, outside the United Kingdom;
- (3) the approval of a non-real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement for communication to a person in the United Kingdom; and
- (4) the communication or approval for communication of a financial promotion that is an electronic commerce communication to a person in an EEA state other than in the United Kingdom.
- 30/06/2010
- Past version of MCOB 3.3.1 before 30/06/2010
MCOB 3.3.2
See Notes
- (1) The application under MCOB 3.3.1 R is relevant both when a firm communicates a financial promotion itself and when a firm approves a non-real time financial promotion for communication by others. But see also MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation) for approval of financial promotions).
- (2) The exemptions in MCOB 3.2.5 R (Application: what?; Exemptions) also incorporate some territorial elements. In particular, the exemption for financial promotions originating outside the United Kingdom (section 21(3) of the Act (Restrictions on financial promotion)) (see MCOB 3.2.5 R (4)), the exemptions for overseas communicators (see MCOB 3.2.5 R (4)), the exemption for electronic commerce communications made from an establishment in an EEA State other than the United Kingdom to an ECA recipient in the United Kingdom (see PERG 8.12.38G (Incoming electronic commerce communication (article 20B)).
- (3) [deleted]
- 01/11/2007
- Past version of MCOB 3.3.2 before 01/11/2007
Exceptions to territorial scope: rules without territorial limitation for approval of financial promotions
MCOB 3.3.3
See Notes
Subject to MCOB 3.3.5 R the following parts of this chapter apply without any territorial limitation if a firm approves a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement:
- (1) MCOB 3.1 to MCOB 3.5 (Application, Purpose and General);
- (2) rules requiring a financial promotion to be clear, fair and not misleading (see MCOB 3.6.3 R (1) in relation to qualifying credit, MCOB 3.8A.1 R in relation to a home reversion plan and MCOB 3.8B.1 R in relation to a regulated sale and rent back agreement); and
- (3) the provisions regarding approval of financial promotions (except those relating to approval of financial promotions of qualifying credit provided by an overseas person) (see MCOB 3.11.1 G to MCOB 3.11.4 G and MCOB 3.8A.6 R).
- 30/06/2010
- Past version of MCOB 3.3.3 before 30/06/2010
MCOB 3.3.4
See Notes
- 06/04/2007
- Past version of MCOB 3.3.4 before 06/04/2007
Exceptions to territorial scope: financial promotions of qualifying credit relating to distance contracts
MCOB 3.3.5
See Notes
- (1) Notwithstanding MCOB 3.3.1 R and MCOB 3.3.3 R, where a firm which satisfies the conditions in (2) communicates a financial promotion of qualifying credit, the rules in (3) do not apply.
- (2) The conditions are that:
- (a) the firm communicates the financial promotion of qualifying credit from an establishment maintained by the firm in an EEA State other than the United Kingdom, and not from an establishment maintained by the firm in the United Kingdom or outside the EEA;
- (b) either that EEA State:
- (i) has implemented the Distance Marketing Directive; or
- (ii) has obligations in its domestic law corresponding to those provided for by the Distance Marketing Directive;
- (c) the financial promotion of qualifying credit relates, exclusively, to a distance contract, for the conclusion of which the obligations provided for by the Distance Marketing Directive (or corresponding obligations) are applied by that State; and
- (d) the firm is a national of an EEA State or a company or firm mentioned in article 54 of the Treaty.
- (3) The rules which do not apply are:
- (a) MCOB 3.6.1 R (Name and contact point);
- (b) MCOB 3.6.13 R (Required risk statements);
- (c) MCOB 3.6.15 R (Transient advertising);
- (d) MCOB 3.6.26 R (Multi-rate mortgages);
- (e) MCOB 3.6.27 R (Fees for advice or arranging); and
- (f) MCOB 3.8.2 R (3) and (4) (Form and content of real time qualifying credit promotions).
- 01/12/2009
- Past version of MCOB 3.3.5 before 01/12/2009
Meaning of 'communicated to a person inside or outside the United Kingdom'
MCOB 3.3.6
See Notes
For the purposes of this chapter:
- (1) a financial promotion is communicated to a person outside the United Kingdom if it is:
- (a) made to a person who receives it outside the United Kingdom; or
- (b) directed only at persons outside the United Kingdom; and
- (2) a financial promotion is communicated to a person inside the United Kingdom if it is communicated to a person other than as described in (1);
- 06/04/2007
- Past version of MCOB 3.3.6 before 06/04/2007
MCOB 3.3.7
See Notes
Meaning of "'directed only at persons outside the United Kingdom'
- (1) If the conditions set out in 4(a), (b), (c) and (d) are met, a financial promotion directed from a place inside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.
- (2) If the conditions set out in 4(c) and (d) are met, a financial promotion directed from a place outside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.
- (3) In any other case, where one or more of the conditions in 4(a) to (e) is met, that fact will be taken into account in determining whether a financial promotion is directed only at persons outside the United Kingdom (but a financial promotion may still be regarded as directed only at persons outside the United Kingdom even if none of these conditions is met).
- (4) The conditions are that:
- (a) the financial promotion is accompanied by an indication that it is directed only at persons outside the United Kingdom;
- (b) the financial promotion is accompanied by an indication that it must not be acted upon by persons in the United Kingdom;
- (c) the financial promotion is not referred to in, or directly accessible from, any other financial promotion which is made to a person or directed at persons in the United Kingdom by the same person;
- (d) there are in place proper systems and procedures to prevent recipients in the United Kingdom (other than those to whom the financial promotion might otherwise lawfully have been made) obtaining the product to which the financial promotion relates, from the person directing the financial promotion, a close relative of his or a member of the same group;
- (e) the financial promotion is included in:
- (i) a website, newspaper, journal, magazine or periodical publication which is principally accessed in or intended for a market outside the United Kingdom; and
- (ii) a radio or television broadcast or teletext service transmitted principally for reception outside the United Kingdom.
- 06/04/2007
- Past version of MCOB 3.3.7 before 06/04/2007
MCOB 3.4
Purpose
- 01/12/2004
MCOB 3.4.1
See Notes
- (1) Section 21(1) of the Act (Restriction on financial promotion) imposes a restriction on the communication of financial promotions by unauthorised persons. A person must not, in the course of business, communicate a financial promotion unless:
- (a) he is an authorised person; or
- (b) the content of the financial promotion is approved by an authorised person.
- (2) However, the Financial Promotion Order exempts from the restriction created by section 21(1) of the Act certain types of financial promotions.
- 06/04/2007
- Past version of MCOB 3.4.1 before 06/04/2007
MCOB 3.4.2
See Notes
- (1) The purpose of this chapter is to provide rules and guidance for a firm which wishes to communicate or approve a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement.
- (2) This chapter amplifies, for activities within its scope Principle 6 (Customers' interests) and Principle 7 (Communications with clients).
- 30/06/2010
- Past version of MCOB 3.4.2 before 30/06/2010
MCOB 3.5
General
- 01/12/2004
MCOB 3.5.1
See Notes
- 06/04/2007
- Past version of MCOB 3.5.1 before 06/04/2007
Other regulations and guidelines
MCOB 3.5.3
See Notes
A firm communicating a financial promotion may also be subject to other regulations and guidelines, outside the remit of the FSA, such as:
- (1) the codes issued from time to time by the Advertising Standards Authority, the Independent Television Commission and the Radio Authority;
- (2) regulations of any overseas regulator (where relevant) if the firm intends to market from the United Kingdom into any other country;
- (3) the Privacy and Electronic Communications (EC Directive) Regulations 2003
- (4) the Timeshare Act 1992, as amended by the Timeshare Regulations 1997 (SI 1997/1081); and
- (5) the Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277).
- 06/10/2010
- Past version of MCOB 3.5.3 before 06/10/2010
'Real time' and 'non-real time' qualifying credit promotions
MCOB 3.5.4
See Notes
- 06/04/2007
- Past version of MCOB 3.5.4 before 06/04/2007
MCOB 3.5.5
See Notes
- (1) A 'real time financial promotion' is a financial promotion which is communicated in the course of a personal visit, telephone conversation or other interactive dialogue.
- (2) A 'non-real time financial promotion' is a financial promotion that is not a real time financial promotion. It includes a financial promotion made by letter, e-mail or contained in a newspaper, journal, magazine, other periodical publication, website, television or radio programme, or teletext service.
- (3) The following are to be regarded as indications that a financial promotion is a non-real time financial promotion:
- (a) the financial promotion is communicated to more than one person in identical terms (save for details of the recipient's identity);
- (b) the financial promotion is communicated by way of a system which in the normal course constitutes or creates a record of the communication which is available to the recipient to refer to at a later time; and
- (c) the financial promotion is communicated by way of a system which in the normal course does not enable or require the recipient to respond immediately to it.
- 06/04/2007
- Past version of MCOB 3.5.5 before 06/04/2007
Meaning of 'made', 'directed at' and 'recipient' in MCOB 3
MCOB 3.5.6
See Notes
(In accordance with article 6 of the Financial Promotion Order (Interpretation: communications)) any reference in this chapter to:
- (1) a communication being made to another person is a reference to a communication being addressed, whether verbally or in legible form, to a particular person or persons (for example, where it is contained in a telephone call or letter);
- (2) a communication being directed at persons is a reference to a communication being addressed to persons generally (for example where it is contained in a television broadcast or website); and
- (3) a 'recipient' of a communication is the person to whom the communication is made or, in the case of a non-real time financial promotion which is directed at persons generally, any person who reads or hears the communication.
- 06/04/2007
- Past version of MCOB 3.5.6 before 06/04/2007
MCOB 3.6
Form and content of non-real time qualifying credit promotions
- 01/12/2004
Name and contact point
MCOB 3.6.1
See Notes
- 06/04/2007
- Past version of MCOB 3.6.1 before 06/04/2007
MCOB 3.6.2
See Notes
- (1) For the purposes of MCOB 3.6.1 R, the name may be a trading name or shortened version of the legal name of the firm (although other legislation, for example, the Companies Act 2006, may require a firm to include information not required by this rule).
- (2) The type of contact point envisaged for a firm by MCOB 3.6.1 R is an e-mail address or telephone or facsimile number, where a customer can contact the firm for its address.
- (3) A firm is not required in a financial promotion which it communicates or approves to name the FSA as its regulator. However, to ensure the financial promotion is clear, fair and not misleading, if the firm chooses to name the FSA as its regulator and the financial promotion refers to matters not regulated by the FSA, it should also make clear that those matters are not regulated by the FSA. This might arise, for example, where the communication included both a financial promotion of qualifying credit and a promotion for unsecured lending.
- 01/10/2009
- Past version of MCOB 3.6.2 before 01/10/2009
Clear, fair and not misleading
MCOB 3.6.3
See Notes
- (1) A firm must be able to show that it has taken reasonable steps to ensure that a non-real time financial promotion is clear, fair and not misleading.
- (2) A non-real time financial promotion which includes a comparison or contrast must:
- (a) compare credit meeting the same needs or which is intended for the same purpose;
- (b) objectively compare one or more material, relevant, verifiable and representative features of that credit, which may include price;
- (c) not create confusion in the market place between the firm itself (or the person whose qualifying credit promotion it approves) and a competitor or between the firm's trademarks, trade names, other distinguishing marks, qualifying credit (or those of the person whose qualifying credit promotion it approves) and those of a competitor;
- (d) not discredit or denigrate the trademarks, trade names, other distinguishing marks, qualifying credit, services, activities or circumstances of a competitor;
- (e) not take unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor;
- (f) not present qualifying credit as an imitation or replica of qualifying credit bearing a protected trademark or trade name; and
- (g) indicate in a clear and unequivocal way in any comparison referring to a special offer the date on which the offer ends or, where appropriate, that the special offer is subject to the availability of the qualifying credit, and, where the special offer has not yet begun, the date of the start of the period during which the special price or other specific conditions will apply.
MCOB 3.6.4
See Notes
- (1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:
- (a) it does not omit any matters the omission of which causes the financial promotion of qualifying credit not to be clear, fair and not misleading;
- (b) if it describes a feature of any qualifying credit, it gives no less prominence to the possible disadvantages than to the benefits associated with that feature;
- (c) it uses plain and intelligible language, and is easily legible (or, in the case of oral promotions, clearly audible);
- (d) the accuracy of all statements of fact in it can be substantiated;
- (e) its promotional purpose is not in any way disguised or misrepresented;
- (f) any statement of fact, promise or prediction is clear, fair and not misleading and any relevant assumptions are clearly and prominently disclosed (but a firm is not required to explain, on the face of the financial promotion of qualifying credit, the basis on which a stated APR is calculated: see MCOB 3.6.18 G);
- (g) any statement of opinion is honestly held and, unless consent is impracticable, given with the written consent of the person concerned;
- (h) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are prominently disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
- (i) it does not contain any false indications, in particular as to:
- (i) the firm's independence;
- (ii) the firm's resources and scale of activities; or
- (iii) the scarcity of any qualifying credit;
- (j) the design, content or format does not in any way disguise, obscure or diminish the significance of any statement, warning or other matter which the financial promotion of qualifying credit is required by this chapter to contain;
- (k) it does not include any reference to approval by the FSA or any government body, unless such approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA));
- (l) where it contains information required as a consequence of the following provisions, the items of information provided in relation to each provision appear in proximity to each other:
- (i) MCOB 3.6.11 R;
- (ii) MCOB 3.6.13 R (Required risk statements), unless MCOB 3.6.15 R(transient advertising) applies;
- (iii) MCOB 3.6.17 R (Annual percentage rate (APR));
- (iv) MCOB 3.6.25 R;
- (v) MCOB 3.6.26 R (Multi-rate mortgages); and
- (vi) MCOB 3.6.27 R (Fees for advice or arranging).
- (2)
- (a) Contravention of MCOB 3.6.4 E(1) may be relied on as tending to show contravention of MCOB 3.6.3 R(1).
- (b) Compliance with MCOB 3.6.4 E(1) may be relied on as tending to show compliance with MCOB 3.6.3 R(1).
- 06/04/2007
- Past version of MCOB 3.6.4 before 06/04/2007
MCOB 3.6.5
See Notes
In relation to MCOB 3.6.3 R:
- (1) firms should avoid the use of small print to qualify prominent claims;
- (2) if a non-real time financial promotion includes information on the performance of the firm, on conditions in the market, interest rates, APRs or other price information this information should be relevant and recent. Firms should therefore avoid including this information in financial promotions which have a long shelf-life without a clear and prominent warning that the information can become outdated; and
- (3) firms must ensure that an adequate description of mortgage products is given. For example, firms should take care to ensure that where a rate is variable at any time during the term of the mortgage, the content of the financial promotion does not imply the rate may be fixed.
- 06/04/2007
- Past version of MCOB 3.6.5 before 06/04/2007
MCOB 3.6.6
See Notes
The effect of MCOB 3.6.4 E(1)(b) will depend upon the content of the promotion. A non-exhaustive list of examples satisfying MCOB 3.6.4 E(1)(b) follows:
- (1) a promotion which, when describing any cashback offered to the customer, also clearly refers to any relevant conditions, such as a requirement to pay back some or all of the cashback on early repayment of the mortgage;
- (2) a promotion which, when describing any fixed or discount rate, also clearly states the duration of any early repayment charges;
- (3) a promotion which, when describing any reduction in regular payments following from the re-arrangement of existing loans, also clearly indicates any increase in the total cost and any extension to the repayment period for the customer;
- (4) a promotion which, when describing any possible monetary saving, also clearly states how this could be achieved;
- (5) a promotion which, when including references to non-standard services or facilities, also clearly states that an additional fee may be payable for these; and
- (6) a promotion which, when it includes an indication of an initial payment holiday (for example, 'pay nothing for 3 months'), also makes clear whether or not interest will be charged during this period.
- 31/10/2004
MCOB 3.6.7
See Notes
MCOB 3.6.8
See Notes
In ensuring a financial promotion is clear fair and not misleading, a firm must ensure that the financial promotion does not contain any of the following words or expressions, unless the relevant condition applies:
- (1) the word 'overdraft' or any similar expression as describing any agreement for running-account credit except an agreement enabling the customer to overdraw on a current account;
- (2) the expression 'interest free' or any similar expression (such as '0% Finance' or 'Interest Free Option') indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than the customer would be liable to pay as a cash purchaser in relation to the same transaction, except where:
- (a) the total amount payable by the customer does not exceed the cash price; or
- (b) MCOB 3.6.26 R (Multi-rate mortgages) applies, in which case the expression may be used in respect of any rate of charge of 0% provided that during the period in which the rate applies there is no interest charged and no increase in the amount of the mortgage loan.
- (3) the expression 'no deposit' or any similar expression, except where no advance payments are required to be made on the loan;
- (4) the expression 'mortgage guaranteed', 'pre-cleared' or any similar expression, unless the financial promotion invites entry into a contract that is free of any conditions regarding the credit status of the customer; and
- (5) the expression 'gift', 'present' or any similar expressions, unless there are no conditions which would require the customer to return the money or items that are the subject of the claim.
- 06/04/2007
- Past version of MCOB 3.6.8 before 06/04/2007
MCOB 3.6.9
See Notes
A non-real time financial promotion must:
- (1) describe any early repayment charge as an 'early repayment charge' and not use any other expression to describe such charges;
- (2) describe any higher lending charge as a 'higher lending charge' and not use any other expression to describe such charges;
- (3) not contain the 'key facts' logo unless it is required by a rule; and
- (4) describe any lifetime mortgage as a 'lifetime mortgage' and not use any other expression to describe such a mortgage.
- 06/04/2007
- Past version of MCOB 3.6.9 before 06/04/2007
MCOB 3.6.10
See Notes
- (1) It cannot be assumed that customers necessarily have an understanding of the qualifying credit being promoted. If a non-real time financial promotion is specially designed for a targeted collection of customers who are reasonably believed to have particular knowledge of the qualifying credit being promoted, this fact should be made clear.
- (2) In relation to quotations of opinion:
- (a) where only part of an opinion is quoted, it should nevertheless be a fair representation; and
- (b) any connection between the holder of the opinion and the firm should be made clear.
MCOB 3.6.11
See Notes
MCOB 3.6.12
See Notes
- 31/10/2004
Required risk statements
MCOB 3.6.13
See Notes
A non-real time financial promotion must, unless the transient advertising rule applies, prominently contain one or more of the following statements in the circumstances described:
- (1) where it relates to a lifetime mortgage: 'This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.' If the promotion also relates to a home reversion plan the statement may be adapted to the extent necessary to comply with the equivalent requirement for a home reversion plan (see MCOB 3.8A.3R (2)(a));
- (2) where it refers to paying off unsecured debts (for example, credit cards, personal loans or overdrafts) by taking out qualifying credit: 'Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.'
- (3) in all cases except (1) and (2): 'Your home may be repossessed if you do not keep up repayments on your mortgage.'; or if it refers in whole or in part to qualifying credit secured on property which is not the customer's home the statement may be amended but only to the extent necessary in order to reflect that fact.
- (4) where the mortgage will be denominated in a currency other than sterling: 'Changes in the exchange rate may increase the sterling equivalent of your debt.'
- (5) where more than one of the statements in (1) to (4) applies, each relevant statement should be included. In such cases, the statement set out in (1), (2) or (3) should precede that in (4).
- (6) where a non-real time financial promotion relates to both qualifying credit and credit which is not qualifying credit the statements required by (2) or (3) may be modified by replacing your mortgage with a mortgage or any other debt secured on it.
MCOB 3.6.14
See Notes
- (1) Prominence of relevant information can play a key role in ensuring that a communication is clear, fair and not misleading. As a consequence, a number of requirements in MCOB relate to prominence. Where this is the case, the FSA will assess prominence in the context of the promotion as a whole. Use can be made of the positioning of text, background and text colour and typesize to ensure that prescribed information meets the requirements of MCOB. The surrounding of required statements with other information should be avoided where this might detract from the prominence which it is obligatory to afford to the statements.
- (2) Firms may if they wish include a foreign language version of any required warning, in addition to the English language version required by these rules. If foreign language versions of warnings are included, firms are reminded of prominence requirements in MCOB 3.6.13 R and MCOB 3.6.14 G (1). Information should not be included which detracts from the required prominence of warning statements.
- 31/10/2004
Transient advertising
MCOB 3.6.15
See Notes
MCOB 3.6.13 R (Required risk statements) does not apply if the non-real time financial promotion is communicated:
- (1) by way of sound broadcasting or television where the primary purpose of the programming in which the promotion is contained is not to promote lending; or
- (2) by an exhibition of pictures or photographic or cinematographic films.
MCOB 3.6.16
See Notes
- (1) MCOB 3.6.15 R (1) is intended to distinguish between promotions in breaks between 'normal' commercial broadcast programming (where the text prescribed in MCOB 3.6.13 R (Required risk statements) is not required) and promotions in breaks which are in or around programming intended to promote lending where MCOB 3.6.13 R (Required risk statements) applies.
- (2) In relation to promotions on dedicated interactive television services, if the promotion is not contained within programming but instead forms a separate feature, the exemption offered by MCOB 3.6.15 R (1) would not be available.
- 31/10/2004
Annual percentage rate (APR)
MCOB 3.6.17
See Notes
- (1) A firm must ensure that if a non-real time financial promotion contains either price information for specific qualifying credit, or makes reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted, the promotion also:
- (a) states the APR;
- (b) gives the APR, and the accompanying statement in (3), with no less prominence than any price information or reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted; and
- (c) positions the APR after any other rate of charge relating to the qualifying credit, clearly distinguishing it from any such rate but without interjecting other information in between the APR and any other rate of charge.
- (2) A firm must calculate the APR in accordance with MCOB 10 (Annual percentage rate).
- (3) The APR must be expressed as follows, with X being the APR calculated for the particular qualifying credit: 'The overall cost for comparison is X% APR'
MCOB 3.6.18
See Notes
MCOB 3.6.19
See Notes
For the purposes of MCOB 3.6.17 R(1), references to the availability of credit for customers who might otherwise consider their access restricted include references to:
- (1) credit history; or
- (2) credit rating; or
- (3) county court judgments; or
- (4) employment; or
- (5) housing circumstances (for example, council tenants).
- 31/10/2004
MCOB 3.6.20
See Notes
- (1) In relation to MCOB 3.6.17 R(1)(c), the intention is that the APR should follow on, but be readily identifiable as different, from the indicated rate or rates of charge.
- (2) For multi-rate products this should mean that the APR is presented, in sequence, after the different rates of charge that apply.
- (3) The APR may be distinguished from other rates of charge by techniques such as using a contrasting (and legible) colour for text. However, the requirement of MCOB 3.6.17 R(1)(c) will not be satisfied by text devices such as the use of brackets which tend to diminish the impact of the APR.
- 31/10/2004
MCOB 3.6.21
See Notes
If a financial promotion contains price information for more than one qualifying credit product, MCOB 3.6.17 R requires an APR to be provided for each product. Where more than one APR is required to be given, each APR will need to be no less prominent than:
- (1) any price information relating to the particular product;
- (2) any reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted; and
- (3) any other APR in the financial promotion.
MCOB 3.6.22
See Notes
MCOB 3.6.23
See Notes
- 31/10/2004
MCOB 3.6.24
See Notes
- (1) The FSA would not regard an APR described as 'from X%' as satisfying MCOB 3.6.22 R.
- (2) In MCOB 3.6.22 R, when determining the representative APR, account should be taken of the business that has arisen from similar qualifying credit promotion in the previous 12 months. Where the financial promotion is for a new product or business, reference should instead be had to the relevant business plans.
MCOB 3.6.25
See Notes
Multi-rate mortgages
MCOB 3.6.26
See Notes
If the non-real time financial promotion of qualifying credit is for a product where more than one rate of charge will or may apply during the course of the contract, and the non-real time financial promotion of qualifying credit contains information about any of these rates then:
- (1) the non-real time financial promotion of qualifying credit must contain a clear and no less prominent description of all of the rates of charge that will apply;
- (2) where any rate to be charged in the future is variable (such as the mortgage lender's standard variable rate), the rate indicated must be the level of that rate current at the time of the promotion; and
- (3) the rates must be stated in sequence from the rate initially applying through to the rate assumed to apply at the end of the mortgage, and after each rate must be given a statement:
- (a) of its period of application; and
- (b) that the rate then changes.
Fees for advice or arranging
MCOB 3.6.27
See Notes
If a non-real time financial promotion of qualifying credit relates to the controlled activities of advising on or arranging qualifying credit and a fee may be charged for these activities, a firm must ensure that a prominent indication is given of:
- (1) the amount of the fee (if known); or
- (2) a representative fee based upon the business expected to arise from the promotion.
MCOB 3.6.28
See Notes
- 31/10/2004
MCOB 3.6.29
See Notes
- 31/10/2004
MCOB 3.6.30
See Notes
- 31/10/2004
MCOB 3.7
Unsolicited real time financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement
- 30/06/2010
- Past version of MCOB 3.7 before 30/06/2010
Meaning of 'solicited' and 'unsolicited' real time financial promotion
MCOB 3.7.1
See Notes
- (1) An unsolicited real time financial promotion is a real time financial promotion which is not solicited as described in (2).
- (2) A solicited real time financial promotion is a real time financial promotion which is solicited, that is, it is made in the course of a personal visit, telephone call or other interactive dialogue if that call, visit or dialogue:
- (a) was initiated by the recipient of the financial promotion; or
- (b) takes place in response to an express request from the recipient of the financial promotion;
- and it is clear from all the circumstances when the call, visit or dialogue is initiated or requested that during the course of the visit, call or dialogue a financial promotion would be made.
- (3) In (2), a person is not to be treated as expressly requesting a call, visit or dialogue:
- (a) because he omits to indicate that he does not wish to receive any or any further visits or calls or to engage in any or any further dialogue;
- (b) because he agrees to standard terms that state that such visits, calls or dialogues will take place unless he has signified clearly that, in addition to agreeing to the terms, he is willing for them to take place.
- (4) If a financial promotion is solicited by a person ('R') it is treated as also having been solicited by any other person to whom it is made at the same time as R if that other person is a close relative of R or is expected to enter into a home reversion plan, a regulated sale and rent back agreement or any contract for qualifying credit jointly with R.
- 30/06/2010
- Past version of MCOB 3.7.1 before 30/06/2010
MCOB 3.7.2
See Notes
- 06/04/2007
- Past version of MCOB 3.7.2 before 06/04/2007
Prohibition on unsolicited real time financial promotions to customers
MCOB 3.7.3
See Notes
- 30/06/2010
- Past version of MCOB 3.7.3 before 30/06/2010
MCOB 3.7.4
See Notes
- (1) Firms are reminded of the exemptions in MCOB 3.2.5 R (Application: what? exemptions). MCOB 3.7.3 R does not prohibit an exempt real time financial promotion.
- (2) MCOB 3.2.5 R(2) creates an exemption for financial promotions that contain only very limited information about the firm (such as its name or contact details). The limited nature of this exemption means that a firm is unlikely to be able to use it to induce a customer to approach the firm and turn any subsequent communication by the firm into a solicited real time financial promotion.
- 06/04/2007
- Past version of MCOB 3.7.4 before 06/04/2007
MCOB 3.8
Form and content of real time qualifying credit promotions
- 01/12/2004
MCOB 3.8.1
See Notes
A firm should note that MCOB 3.7.3 R (Prohibition on unsolicited real time promotions to customers) prevents a firm from communicating to a customer an unsolicited real time financial promotion of qualifying credit other than an exempt promotion (which is outside the scope of this chapter) or where MCOB 3.7.3 R applies. Many solicited real time financial promotion will be exempt promotions (and, therefore, outside the scope of this chapter). Accordingly, MCOB 3.8.2 R and MCOB 3.8.3 G apply only to solicited real time financial promotions which are not exempt financial promotions and to unsolicited real time financial promotion of qualifying credit within MCOB 3.7.3 R.
- 06/04/2007
- Past version of MCOB 3.8.1 before 06/04/2007
MCOB 3.8.2
See Notes
A firm must ensure that an individual who makes a real time financial promotion of qualifying credit on the firm's behalf:
- (1) does so in a way which is clear, fair and not misleading;
- (2) does not make any untrue claims;
- (3) makes clear the purpose (or purposes) of the financial promotion at the initial point of communication, and identifies himself and the firm which he represents;
- (4) if the time and method of communication were not previously agreed by the recipient:
- (a) checks that the recipient wishes him to proceed;
- (b) terminates the communication if the recipient does not wish him to proceed (but may ask for another appointment);
- (c) recognises and respects, promptly, the right of the recipient to:
- (i) end the communication at any time;
- (ii) refuse any request for another appointment;
- (5) gives any person with whom he arranges an appointment a contact point;
- (6) does not communicate with a person:
- (a) at an unsocial hour, unless the person has previously agreed to such a communication;
- (b) on an unlisted telephone number, unless the person has previously agreed to such calls on that number.
- 06/04/2007
- Past version of MCOB 3.8.2 before 06/04/2007
MCOB 3.8.3
See Notes
- 31/10/2004
MCOB 3.8.4
See Notes
The requirements of MCOB 3.8.2 R and MCOB 3.8.3 G:
- (1) apply in respect of all individuals who initiate the communication, including advisers and call centre operators;
- (2) apply to all forms of real time financial promotion of qualifying credit with customers, including face-to-face and telephone financial promotion;
- (3) but do not prevent, for example, a telephone call centre which has received a call from a customer at an hour generally regarded as unsocial, either responding to that call or asking during the call if the customer would like details of other qualifying credit
- 06/04/2007
- Past version of MCOB 3.8.4 before 06/04/2007
MCOB 3.8.5
See Notes
- 31/10/2004
MCOB 3.8.6
See Notes
- 06/04/2007
- Past version of MCOB 3.8.6 before 06/04/2007
MCOB 3.8A
Form and content of financial promotions of home reversion plans
- 06/04/2007
Clear, fair and not misleading
MCOB 3.8A.1
See Notes
- 06/04/2007
MCOB 3.8A.2
See Notes
Non-real time financial promotions to customers
MCOB 3.8A.3
See Notes
A non-real time financial promotion of a home reversion plan must:
- (1) describe any home reversion plan as a 'home reversion plan' and not use any other expression to describe it; and
- (2) unless it is communicated by way of sound broadcasting or television where the primary purpose of the programming in which the promotion is contained is not to promote home finance or by an exhibition of pictures or photographic or cinematographic films:
- (a) (if made to or directed at a customer other than an unauthorised reversion provider) prominently state that it relates to a home reversion plan and that the customer should ask for a personalised illustration to understand its features and risks; or
- (b) (if made to or directed at an unauthorised reversion provider) prominently state that a home reversion plan is a long-term investment and a complex legal arrangement, and that expert independent legal advice should always be obtained before entering into any agreement.
- 06/04/2007
MCOB 3.8A.4
See Notes
- (1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:
- (a) it includes any matters the omission of which causes the financial promotion not to be clear, fair and not misleading;
- (b) if it describes a feature of any home reversion plan, it gives no less prominence to the possible disadvantages than to the benefits associated with that feature;
- (c) it uses plain and intelligible language, and is easily legible (or, in the case of oral promotions, clearly audible);
- (d) the accuracy of all statements of fact in it can be substantiated;
- (e) its promotional purpose is not in any way disguised or misrepresented;
- (f) any statement of fact, promise or prediction is clear, fair and not misleading and any relevant assumptions are clearly and prominently disclosed;
- (g) any statement of opinion is honestly held and, unless consent is impracticable, given with the written consent of the person concerned;
- (h) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are prominently disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
- (i) it does not contain any false indications, in particular as to:
- (j) the design, content or format does not in any way disguise, obscure or diminish the significance of any statement, warning or other matter which the home reversion plan is required by this chapter to contain;
- (k) it does not include any reference to approval by the FSA or any government body, unless such approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA));
- (2)
- (a) Contravention of (1) may be relied on as tending to show contravention of MCOB 3.8A.1 R.
- (b) Compliance with (1) may be relied on as tending to show compliance with MCOB 3.8A.1 R.
- 06/04/2007
MCOB 3.8A.5
See Notes
The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend upon the content of the promotion. The following non-exhaustive examples would satisfy the requirement:
- (1) a promotion which, when describing any possible monetary saving, also clearly states how this could be achieved; and
- (2) a promotion which, when including references to non-standard services or facilities, also clearly states that an additional fee may be payable for these.
- 06/04/2007
No approval of real time financial promotions of a home reversion plan
MCOB 3.8A.6
See Notes
- 06/04/2007
Referring to the FSA
MCOB 3.8A.7
See Notes
- 06/04/2007
MCOB 3.8B
Form and content of financial promotions of regulated sale and rent back agreements
- 30/06/2010
Clear, fair and not misleading
MCOB 3.8B.1
See Notes
- 30/06/2010
MCOB 3.8B.2
See Notes
Ban on SRB leaflet dropping
MCOB 3.8B.3
See Notes
- 30/06/2010
Non-real time financial promotions to customers and advertisements
MCOB 3.8B.4
See Notes
"If you enter into a sale and rent back agreement you are unlikely to get the market value of your home and, as a tenant, may only be able to remain there for a limited period. There may be other options available. Please ask for a key terms statement.".
- 30/06/2010
MCOB 3.8B.5
See Notes
- 30/06/2010
MCOB 3.8B.6
See Notes
- (1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:
- (a) it includes any matters the omission of which causes the financial promotion not to be clear, fair and not misleading;
- (b) if it describes a feature of any regulated sale and rent back agreement, it gives no less prominence to the possible disadvantages than to the benefits associated with that feature;
- (c) it uses plain and intelligible language, and is easily legible (or, in the case of oral promotions, clearly audible);
- (d) the accuracy of all statements of fact in it can be substantiated;
- (e) its promotional purpose is not in any way disguised or misrepresented;
- (f) any statement of fact, promise or prediction is clear, fair and not misleading and any relevant assumptions are clearly and prominently disclosed;
- (g) any statement of opinion is honestly held and, unless consent is impracticable, given with the written consent of the person concerned;
- (h) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are prominently disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
- (i) it does not contain any false indications, in particular as to the firm's resources and scale of activities;
- (j) the design, content or format does not in any way disguise, obscure or diminish the significance of any statement, warning or other matter which the regulated sale and rent back agreement is required by this chapter to contain; and
- (k) it does not include any reference to approval by the FSA or any government body, unless that approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA)).
- (2)
- (a) Contravention of (1) may be relied on as tending to show contravention of MCOB 3.8B.1 R.
- (b) Compliance with (1) may be relied on as tending to show compliance with MCOB 3.8B.1 R.
- 30/06/2010
MCOB 3.8B.7
See Notes
The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend on the context of the promotion. The costs, restrictions or conditions relating to a feature such as any option available should be detailed for the following non-exhaustive examples:
- 30/06/2010
Exploitation of customer
MCOB 3.8B.8
See Notes
- 30/06/2010
No approval of real time financial promotions of a regulated sale and rent back agreement
MCOB 3.8B.9
See Notes
- 30/06/2010
Referring to the FSA
MCOB 3.8B.10
See Notes
- 30/06/2010
MCOB 3.9
Confirmation of compliance: financial promotions of qualifying credit, home reversion plans or regulated sale and rent back agreements
- 30/06/2010
- Past version of MCOB 3.9 before 30/06/2010
MCOB 3.9.1
See Notes
- (1) Before a firm communicates or approves a non-real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement it must confirm that the financial promotion complies with the rules in this chapter.
- (2) A firm must arrange for the confirmation exercise in (1) to be carried out by an individual or individuals with appropriate expertise.
- 30/06/2010
- Past version of MCOB 3.9.1 before 30/06/2010
MCOB 3.9.2
See Notes
- (1) 'Appropriate expertise' will vary depending on the complexity of the financial promotion and the qualifying credit, home reversion plan or regulated sale and rent back agreement to which it relates. The individuals engaged by a firm to confirm the compliance of its financial promotions with this chapter may themselves have different levels of expertise and therefore a different level of authority for confirmation depending on the type of promotion and the qualifying credit, home reversion plan or regulated sale and rent back agreement involved.
- (2) A firm may arrange for a third party with appropriate expertise to carry out the confirmation exercise on the firm's behalf, but the responsibility for the financial promotion remains with the firm.
- 30/06/2010
- Past version of MCOB 3.9.2 before 30/06/2010
Withdrawing confirmation
MCOB 3.9.3
See Notes
If, at any time after it has completed a confirmation exercise in MCOB 3.9.1 R(1), a firm becomes aware that a financial promotion no longer complies with the rules in this chapter, it must ensure that the financial promotion is withdrawn as soon as is reasonably practicable by:
- (1) ceasing to communicate it;
- (2) withdrawing its approval (if applicable); and
- (3) notifying any person that the firm knows to be relying on its approval (if applicable) or confirmation (under MCOB 3.9.5 R).
- 06/04/2007
- Past version of MCOB 3.9.3 before 06/04/2007
MCOB 3.9.4
See Notes
- (1) MCOB 3.9.3 R is of particular importance to a financial promotion, such as a product brochure, that a firm uses over a period of time. It has little application to a financial promotion which is of its nature ephemeral, for example a mobile phone text message. Further, a financial promotion which clearly speaks as at a particular date will not cease to comply with the rules in this chapter merely because the passage of time has rendered it out-of-date. This does not mean, however, that a financial promotion can include information (such as price information) which is likely to become outdated during the currency of the financial promotion without the firm having regard to the need for any financial promotion to be clear, fair and not misleading. See further MCOB 3.6.5 G (2).
- (2) For compliance with MCOB 3.9.3 R, the FSA will expect a firm to monitor its relevant financial promotions as part of the firm's routine compliance monitoring procedures. A firm may find it helpful to designate a relevant financial promotion with a 'review date', a date at which the financial promotion should be checked once more against the rules in this chapter. If it is found no longer to meet these requirements it should be withdrawn as soon as is reasonably practicable.
- (3) If at any time a firm becomes aware that customers may have been misled by a financial promotion it should consider whether customers who have responded to the financial promotion should be contacted with a view to explaining the position and offering any appropriate form of redress to those who have suffered financial loss.
- 06/04/2007
- Past version of MCOB 3.9.4 before 06/04/2007
MCOB 3.9.5
See Notes
A firm will not contravene any of the rules in this chapter in circumstances where it (firm 'A') communicates a non-real time financial promotion which has been produced by another person provided that:
- (1) A takes reasonable care to establish that another firm (firm 'B') has already confirmed the compliance of the financial promotion in accordance with MCOB 3.9.1 R;
- (2) A takes reasonable care to establish that A communicates the financial promotion only to recipients of the type for whom it was intended at the time B carried out the confirmation exercise; and
- (3) so far as A is, or ought reasonably to be, aware:
- (a) the financial promotion has not ceased to be clear, fair and not misleading since that time; and
- (b) B has not withdrawn the financial promotion.
- 06/04/2007
- Past version of MCOB 3.9.5 before 06/04/2007
MCOB 3.10
Records: non-real time financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement
- 30/06/2010
- Past version of MCOB 3.10 before 30/06/2010
Requirement to make and retain records
MCOB 3.10.1
See Notes
Content of records
MCOB 3.10.2
See Notes
In deciding what is an adequate record, a firm should consider including, or providing reference to, where appropriate, such matters as:
- (1) the name of the individual or individuals who confirmed that the financial promotion complied with the rules in this chapter;
- (2) the date of confirmation and (where appropriate) approval;
- (3) details of the medium for which the financial promotion was authorised;
- (4) the evidence supporting any material factual statement about qualifying credit, a home reversion plan or a regulated sale and rent back agreement in the financial promotion. For example, for any testimonial they use, advertisers should hold signed and dated proof, including a contact address. Unless they are genuine opinions taken from a published source, testimonials should only be used with the written permission of those giving them; and
- (5) where the promotion contains a typical APR, evidence to show that the APR was representative of the business expected to arise from the promotion (see MCOB 3.6.22 R).
MCOB 3.10.3
See Notes
- (1) A firm should also retain a copy of the financial promotion as finally published or, if this is not practicable, monitor the published version to verify that it is in substantially the same format as the version which the firm confirmed complied with the rules in this chapter.
- (2) Records which should be retained include:
- (a) any written financial promotion used by an adviser; and
- (b) any written material which is used in an organised marketing campaign (including, for example, written mailshots whether sent by e-mail, post, facsimile or other media).
- (3) If the financial promotion is not in written form, the record should represent the actual financial promotion as accurately as possible.
Form of records
MCOB 3.10.4
See Notes
- 31/10/2004
MCOB 3.11
Communication and approval of qualifying credit promotions for an overseas person or an unauthorised person
- 01/12/2004
Approval of qualifying credit promotions
MCOB 3.11.1
See Notes
- (1) Section 21(1) of the Act (Restrictions on financial promotion) prohibits an unauthorised person from communicating a financial promotion, in the course of business, unless an exemption applies or the financial promotion is approved by a firm.
- (2) Most of the rules in this chapter apply when a firm approves a financial promotion of qualifying credit in the same way as when a firm communicates a financial promotion of qualifying credit itself. A firm therefore has a similar responsibility for a financial promotion of qualifying credit that it approves as for one that it communicates. For example, a firm which approves a non-real time financial promotion must:
- (a) confirm that the financial promotion complies with the rules in this chapter; and
- (b) be able to show that it has taken reasonable steps to ensure that the financial promotion is clear, fair and not misleading.
- (3) A firm may also wish to approve a financial promotion of qualifying credit that it communicates itself. This would ensure that an unauthorised person who then also communicates it to another person will not contravene the restriction in section 21(1) of the Act (Restrictions on financial promotion).
- (4) A firm which approves a promotion that is exempt under MCOB 3.2.5 R (Application: what?; exemptions) or MCOB 3.3.1 R (Application: where?) must still comply with certain rules in this chapter (see MCOB 3.2.4 R (Application: what? exemptions) and MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation)).
No approval of real time qualifying credit promotions
MCOB 3.11.2
See Notes
Approval of qualifying credit promotions when not all the rules apply
MCOB 3.11.3
See Notes
MCOB 3.11.4
See Notes
Non-real time qualifying credit promotions for overseas persons
MCOB 3.11.5
See Notes
A firm must not communicate or approve a non-real time financial promotion which relates to qualifying credit provided by an overseas person, unless:
- (1) the qualifying credit promotion makes clear which firm has approved or communicated it and, where relevant, explains;
- (a) that the rules made under the Act for the protection of customers do not apply;
- (b) the extent and level to which the compensation scheme will be available, or if the scheme will not be available, a statement to that effect; and
- (c) if the communicator wishes, the protection or compensation available under another system of regulation; and
- (2) the firm has no reason to doubt that the overseas person will deal with customers in the United Kingdom in an honest and reliable way.
MCOB 3.12
The Internet and other electronic media
- 01/12/2004
MCOB 3.12.1
See Notes
Approach and general guidance
MCOB 3.12.2
See Notes
MCOB 3.12.3
See Notes
As indicated in MCOB 3.3 (Application: where?), for the purposes of the financial promotion rules there are two types of approach to financial promotion communicated via the Internet and other electronic media:
- (1) real time financial promotions where the communication is in the form, for example, of a telephone conversation, or other form of interactive dialogue; and
- (2) non-real time financial promotions where the customer may, for example, choose from reading a description of the qualifying credit, home reversion plan or regulated sale and rent back agreement, through to the completion of a contract in a similar way to browsing through a leaflet rack. The rules in this chapter relating to hard copy financial promotions such as advertisements in magazines or newspapers apply equally to such promotions. E-mails, material displayed on a website and sound and television broadcasts are non-real time financial promotions (see MCOB 3.5.5 R(2)).
MCOB 3.12.4
See Notes
- (1) Before using the Internet, digital or any other form of interactive television or other electronic media to promote its services, a firm should refer to legislation such as the Data Protection Act 1998 and the Computer Misuse Act 1990, as well as to this chapter.
- (2) In relation to financial promotions communicated by way of television, firms will want to have regard to Guidance Note 3 of the ITC Code of Advertising Standards and Practice on the use and appearance of superimposed text.
- (3) When designing websites and other electronic media, firms should be aware of the difficulties that can arise when reproducing certain colours and printing certain types of text. These difficulties could cause problems with the presentation and retrieval of required information. Any financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement communicated by the Internet, digital or other forms of interactive television is subject to the requirements on form and content in this chapter.
Specific guidance
MCOB 3.12.5
See Notes
MCOB 3 Annex 1
Examples of qualifying credit promotions
- 01/12/2004
See Notes
Examples of qualifying credit promotions - mcob3_annex1.pdf
MCOB 4
Advising and selling standards
MCOB 4.1
Application
- 01/12/2004
Who?
MCOB 4.1.1
See Notes
- 31/10/2004
MCOB 4.1.2
See Notes
This table belongs to MCOB 4.1.1 R
(1) Category of firm | (2) Applicable section |
mortgage lender | MCOB 4.1 to MCOB 4.4, and MCOB 4.8 to MCOB 4.9 |
mortgage adviser | whole chapter except MCOB 4.10 |
mortgage arranger | whole chapter except MCOB 4.7 and MCOB 4.10 |
home purchase provider |
MCOB 4.1, MCOB 4.2 and MCOB 4.10 (except MCOB 4.10.5 G to MCOB 4.10.7 G). MCOB 4.3, MCOB 4.4 and MCOB 4.8 in accordance with MCOB 4.10 |
home purchase adviser | MCOB 4.1, MCOB 4.2, MCOB 4.5, MCOB 4.6 and MCOB 4.10. MCOB 4.3, MCOB 4.4, MCOB 4.7 and MCOB 4.8 in accordance with MCOB 4.10 |
home purchase arranger | As for a home purchase adviser except MCOB 4.10.5 G to MCOB 4.10.7 G and MCOB 4.7 do not apply |
reversion provider
reversion adviser reversion arranger | see MCOB 8for the application of this chapter |
SRB adviser | MCOB 4.1, MCOB 4.2, MCOB 4.5, MCOB 4.6 and MCOB 4.11 |
SRB arranger | MCOB 4.1, MCOB 4.2, MCOB 4.5, MCOB 4.6 and MCOB 4.11 |
SRB agreement provider | MCOB 4.1, MCOB 4.2 and MCOB 4.11 |
- 30/06/2010
- Past version of MCOB 4.1.2 before 30/06/2010
What?
MCOB 4.1.3
See Notes
This chapter applies if a firm in the course of carrying on a home finance activity:
- (1) makes, or anticipates making, a personal recommendation about; or
- (2) gives, or anticipates giving, personalised information relating to;
- (3) entering into a home finance transaction; or
- (4) varying the terms of a home finance transaction entered into by the customer.
- 06/04/2007
- Past version of MCOB 4.1.3 before 06/04/2007
MCOB 4.1.4
See Notes
- (1) MCOB 4.4 (Initial disclosure requirements) applies only in relation to varying the terms of a regulated mortgage contract entered into by the customer in any of the following ways:
- (a) adding or removing a party;
- (b) taking out a further advance; or
- (c) switching all or part of the regulated mortgage contract from one interest rate to another.
- (2) Otherwise, this chapter, MCOB 4, applies in relation to any form of variation of a regulated mortgage contract.
- 31/10/2004
MCOB 4.1.5
See Notes
- 06/04/2007
- Past version of MCOB 4.1.5 before 06/04/2007
MCOB 4.1.6
See Notes
- 30/06/2010
- Past version of MCOB 4.1.6 before 30/06/2010
MCOB 4.1.7
See Notes
- 06/04/2007
- Past version of MCOB 4.1.7 before 06/04/2007
MCOB 4.1.8
See Notes
- 31/10/2004
MCOB 4.2
Purpose
- 01/12/2004
MCOB 4.2.1
See Notes
- (1) This chapter amplifies Principle 6 (Customers' interests), Principle 7 (Communications with clients) and Principle 9 (Customers: relationships of trust).
- (2) The purpose of this chapter is to ensure that:
- (a) customers are adequately informed about the nature of the service which they may receive from a firm in relation to home finance transactions. In particular firms need to make clear to customers the scope of home finance transactions available from them; and
- (b) where advice is given, it is suitable for the customer. The steps firms need to take to ensure that the customer receives suitable advice will vary depending on the demands and needs of the customer and the type of home finance transaction.
- (3) This chapter also implements certain requirements of the Distance Marketing Directive in relation to distance mortgage mediation contracts and distance home purchase mediation contracts.
- 06/04/2007
- Past version of MCOB 4.2.1 before 06/04/2007
MCOB 4.3
Scope of service provided
- 01/12/2004
Providing services within and beyond scope
MCOB 4.3.1
See Notes
- (1) Subject to (2), a firm must take reasonable steps to ensure that the scope of the service given to a customer, and the home finance transactions offered, is based on a selection from one of the following:
- (a) the whole market; or
- (b) a limited number of home finance providers; or
- (c) a single home finance provider.
- (2) A firm may change the scope of the service it gives to a particular customer by widening the scope, for example, from that in (1)(c) to that in (b) or (a) but it must take reasonable steps to ensure that before doing so:
- 06/04/2007
- Past version of MCOB 4.3.1 before 06/04/2007
MCOB 4.3.2
See Notes
- 31/10/2004
MCOB 4.3.3
See Notes
- 01/01/2007
- Past version of MCOB 4.3.3 before 01/01/2007
Whole of market
MCOB 4.3.4
See Notes
- (1) A firm which holds itself out as giving information or advice to customers on regulated mortgage contracts from the whole market must not give any such information or advice unless:
- (a) it has considered a sufficiently large number of regulated mortgage contracts which are generally available from the market; and
- (b) the consideration in (a) is based on criteria which reflect adequate knowledge of the regulated mortgage contracts generally available from the market as a whole.
- (2) A firm in (1) must satisfy the obligation in MCOB 4.7.2 R by taking reasonable steps to ensure that a personal recommendation given to a customer is:
- (a) in accordance with the consideration in (1); and
- (b) the regulated mortgage contract which on the basis of that consideration is the most suitable to meet the customer's needs.
- 31/10/2004
MCOB 4.3.4A
See Notes
In applying this chapter, there is:
- (1) one market for regulated mortgage contracts that are not lifetime mortgages; and
- (2) another market for home purchase plans.
- 06/04/2007
MCOB 4.3.5
See Notes
- 31/10/2004
MCOB 4.3.6
See Notes
- (1) When offering only a selection of regulated mortgage contracts as described in MCOB 4.3.5 G, a firm should ensure that its analysis of the market and of the available regulated mortgage contracts is kept adequately up to date. For example, a firm would need to update its selection of regulated mortgage contracts if it became aware that a regulated mortgage contract had become generally available offering an improved product feature, or a better interest rate, when compared with the regulated mortgage contracts currently in the firm's selection.
- (2) One way in which a firm may wish to satisfy MCOB 4.3.4 R is by using a panel of mortgage lenders, which includes representative firms from the whole market. However, if a firm wishes to offer a whole of market service through the use of a panel, it must still assess the individual regulated mortgage contracts that are being offered by mortgage lenders in making its selection.
- 31/10/2004
Independence
MCOB 4.3.7
See Notes
- (1) When providing information or giving advice to a customer on home finance transactions, a firm must not hold itself out as acting independently unless it intends to:
- (a) provide that service wholly or predominantly based on the whole market in the relevant type of home finance transaction; and
- (b) enable the customer to pay a fee for the provision of that service.
- (2) A firm which in accordance with (1) holds itself out as independent must ensure that the information or advice subsequently given to the customer concerned is information or advice on home finance transactions from the whole market in the relevant type of home finance transaction.
- 06/04/2007
- Past version of MCOB 4.3.7 before 06/04/2007
MCOB 4.3.8
See Notes
- (1) MCOB 4.3.7 R stipulates what a firm must do if it is to hold itself out to any particular customer as acting independently. A firm which wishes to hold itself out generally as acting independently should ensure that doing so (for example through a trading name or advertising) is consistent with the kind of service which customers receive in relation to the relevant home finance transactions.
- (2) A firm that sells both investments and home finance products can offer from the whole market (or the whole market for a type of home finance transaction) and therefore be 'independent' for one but offer only a limited range for the other. If this is the case, the firm should explain the different nature of the services in a way that meets the requirement for clear, fair and not misleading communications in MCOB 2.2.6 (Clear, fair and not misleading communications).
- 06/04/2007
- Past version of MCOB 4.3.8 before 06/04/2007
MCOB 4.3.9
See Notes
- 31/10/2004
Appointed representatives
MCOB 4.3.10
See Notes
MCOB 4.4
Initial disclosure requirements
- 01/12/2004
Disclosure where initial contact is not made by telephone
MCOB 4.4.1
See Notes
- (1) A firm must ensure that, on first making contact with a customer when it anticipates giving personalised information or advice on a regulated mortgage contract, it:
- (a) establishes with the customer whether it will provide advice or information;
- (b) establishes with the customer how much he will pay or, alternatively, the basis on which the firm will be remunerated, where appropriate; and
- (c) provides the customer with either:
- (i) an initial disclosure document; or
- (ii) if the firm has reasonable grounds to be satisfied that the services which it is likely to provide to the customer will relate to a combination of different types of home finance transaction, or will relate to home finance transactions and one or more of non-investment insurance contracts or packaged products, a combined initial disclosure document;
- in a durable medium.
- (2) The requirement in (1)(c) does not apply where;
- (a) an initial disclosure document has already been provided by the firm and that document is still likely to be accurate and appropriate for the customer; or
- (b) an initial disclosure document has already been provided by the firm which first made contact with the customer in respect of the particular regulated mortgage contract, and the firm subsequently making contact with the customer:
- (i) does not anticipate altering or replacing the service described in that document; or
- (ii) is not making contact with a view to concluding a distance mortgage mediation contract; or
- (c) initial contact is made by telephone.
- (3) A firm may choose not to include the initial disclosure information required by sections 6, 7 and 8 of the initial disclosure document, and sections 5, 7 and 8 of the combined initial disclosure document, if it provides the customer with the information required by those sections in some other durable medium before the customer makes an application for a regulated mortgage contract.
- (4) A firm must not use a combined initial disclosure document in relation to a combination of:
- (a) regulated mortgage contracts (other than lifetime mortgages) or home purchase plans; and
- (b) equity release transactions.
- 01/11/2007
- Past version of MCOB 4.4.1 before 01/11/2007
MCOB 4.4.2
See Notes
- 31/10/2004
MCOB 4.4.3
See Notes
- (1) In many cases, MCOB 4.4.1 R (1) means that the initial disclosure document will be provided at the time of the first contact between the firm and the customer. However, there may be circumstances, for example in relation to a loan for a business purpose, where the possibility of the customer entering into, or varying the terms of, a regulated mortgage contract is only identified after preliminary discussions. Disclosure, in the context of MCOB 4, is only required once this possibility is identified.
- (2) In the FSA's opinion, the requirements at MCOB 4.4.1 R and MCOB 4.4.7 R would not apply when a customer contacts a firm simply to arrange to receive personalised information or advice on a regulated mortgage contract at a later time, such as when a customer books an appointment. In such cases, initial disclosure should be made when the firm first makes contact with the customer with a view to actually giving the information or advice. However, firms should note the additional disclosure requirements in MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts with retail customers), and, the need to ensure that the required information (to be provided with the initial disclosure document) is provided in good time (see MCOB 4.5.3 G (1)).
- 31/10/2004
MCOB 4.4.4
See Notes
- 31/10/2004
Uncertainty whether a mortgage is regulated
MCOB 4.4.5
See Notes
- (1) If at the point that initial disclosure must be made in accordance with MCOB 4.4.1 R or MCOB 4.4.7 R a firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:
- (a) provide the initial disclosure document; or
- (b) seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.
- (2) Where (1)(b) applies, the initial disclosure document must be provided unless, on the basis of the information provided by the customer, the firm has reasonable evidence that the contract is not a regulated mortgage contract.
- 31/10/2004
Information to be provided to customers on request
MCOB 4.4.6
See Notes
- (1) If a firm's scope of service is based on MCOB 4.3.1 R (1)(b) it must maintain, and keep up to date, in a durable medium and in a form which is appropriate for distribution to the customer, a list of the mortgage lenders whose regulated mortgage contracts it offers. This list must also confirm whether or not the firm provides services in relation to all of the regulated mortgage contracts generally available from each mortgage lender.
- (2) The customer must be provided with a copy of the information described in (1) on request.
- (3) A firm must take reasonable steps to ensure that its appointed representatives provide a copy of the record in (1) to a customer on request.
- 31/10/2004
Disclosure where initial contact is by telephone
MCOB 4.4.7
See Notes
- (1) If the initial contact of a kind in MCOB 4.4.1 R(1) is by telephone, then unless MCOB 4.4.1 R(2)(a) applies, the following information must be given before proceeding further:
- (a) the name of the firm and (if the call is initiated by or on behalf of the firm) the commercial purpose of the call;
- (b) the scope of the service provided by the firm (within the meaning of MCOB 4.3.1 R);
- (c) if the scope of the service is based on MCOB 4.3.1 R(1)(b), that the customer can request a copy of the list of mortgage lenders whose regulated mortgage contracts it offers and confirmation of whether the firm provides services in relation to all of the regulated mortgage contracts generally available from each mortgage lender;
- (d) whether or not the firm will provide the customer with advice on those regulated mortgage contracts within its scope; and
- (e) that the information given under (a) to (d) will be confirmed in writing.
- (2) Provided that the telephone call in (1) has not led the firm to conclude that the customer is ineligible for any of its regulated mortgage contracts, and that the customer has provided his contact details, the firm must send the customer a copy of an initial disclosure document or combined initial disclosure document and any other information required to be provided, in a durable medium within five business days of the telephone call (see also MCOB 4.5.2 R (2)(b) for the equivalent requirement in relation to distance mortgage mediation contracts).
- (3) If the customer accepts the offer in (1)(c) of a list of the mortgage lenders whose regulated mortgage contracts the firm offers, that list must also be sent with the information required in (2).
- 06/04/2007
- Past version of MCOB 4.4.7 before 06/04/2007
MCOB 4.4.8
See Notes
- 31/10/2004
MCOB 4.5
Additional disclosure for distance mortgage mediation contracts, distance home purchase mediation contracts and distance regulated sale and rent back mediation contracts with retail customers
- 30/06/2010
- Past version of MCOB 4.5 before 30/06/2010
MCOB 4.5.1
See Notes
- (1) There are certain additional disclosure requirements laid down by the Distance Marketing Directive that will have to be provided by a mortgage intermediary, a home purchase intermediary and a SRB intermediary to a consumer prior to the conclusion of a distance mortgage mediation contract, a distance home purchase mediation contract or a distance regulated sale and rent back mediation contract. The purpose of this section, MCOB 4.5, is to set out those additional requirements. MCOB 4.6 sets out the cancellation rights that apply in relation to such contracts.
- (2) The FSA expects the requirements in MCOB 4.5 and MCOB 4.6 to be relevant only in a small minority of cases. Mediation at a distance (see MCOB 1.3.5 G and MCOB 1.3.6 G) is unlikely in the home finance market. MCOB 4.5 and MCOB 4.6 will only be relevant if a mortgage intermediary, a home purchase intermediary or a SRB intermediary enters into a distance contract in respect of its mortgage mediation activities, home purchase mediation activities or regulated sale and rent back mediation activities quite independent of any contractual arrangement with a consumer relating to a particular regulated mortgage contract, home purchase plan or regulated sale and rent back agreement. An example of a distance mortgage mediation contract would be a distance contract under which a mortgage intermediary agreed to review and provide advice on a consumer's mortgage needs from time to time.
- 30/06/2010
- Past version of MCOB 4.5.1 before 30/06/2010
MCOB 4.5.2
See Notes
If the initial contact of a kind in MCOB 4.4.1 R (1) is with a consumer with a view to concluding a distance mortgage mediation contract, a distance home purchase mediation contract or a distance regulated sale and rent back mediation contract, a firm must:
- (1) in addition to initial disclosure information and any other required information, provide the consumer with the information in MCOB 4 Annex 3 in a durable medium in good time before the conclusion of the distance mortgage mediation contract, distance home purchase mediation contract or distance regulated sale and rent back mediation contract with that customer unless an exemption in (2), (3), (4) or (5) applies.
- (2) Exemption: telephone sales
- (a) This exemption applies if the service is being provided on the telephone and the customer wishes to enter into a contract with the firm. Provided the customer gives his explicit consent to receiving only limited information, the firm may proceed on the basis of at least the following information:
- (i) the name of the person in contact with the customer and his link with the firm;
- (ii) the total price to be paid by the customer to the firm for the services, including all related fees, charges and expenses, and all taxes paid through the firm or, where an exact price cannot be indicated, the basis for the calculation of the price, enabling the customer to verify it;
- (iii) notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it;
- (iv) the information about cancellation rights set out in MCOB 4 Annex 3(5); and
- (v) that other information is available on request, and the nature of that information.
- (aa) If the customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the firm must, prior to the conclusion of the contract, provide orally to the customer all of the information required by (1).
- (b) Where (a) or (aa) applies, the firm must send the consumer without delay and, at the latest immediately after a contract is concluded, the information required by (1), in a durable medium.
- (3) Exemption: certain other means of distance communication. This exemption applies if the contract is concluded at the consumer's request using a means of distance communication (other than telephone) which does not enable provision of the information referred to in MCOB 4 Annex 3 in a durable medium before the conclusion of the contract. In that case, the firm must provide the consumer with the information in a durable medium immediately after its conclusion.
- (4) Exemption: successive operations or separate operations under an initial service agreement. This exemption applies if the firm has an initial service agreement with the consumer and the contract is in relation to a successive operation or a separate operation of the same nature under that agreement.
- (5) Exemption: other successive or separate operations This exemption applies if:
- 30/06/2010
- Past version of MCOB 4.5.2 before 30/06/2010
MCOB 4.5.3
See Notes
- (1) The information in MCOB 4 Annex 3 will be provided in 'good time' for the purposes of MCOB 4.5.2 R (1), if provided in sufficient time to enable the customer to consider properly the services on offer.
- (2) An example of the circumstances in which MCOB 4.5.2 R (4) or (5) may apply is given in MCOB 4.4.4 G. If the initial disclosure document and accompanying information (including that in MCOB 4 Annex 3) was previously provided to a customer and continues to be appropriate, there is no need to provide the information again. If additional information is required, this may be provided by a supplementary document. However, if a service of a different nature is proposed, the firm is expected to provide fresh initial disclosure documentation and, in respect of distance mortgage mediation contracts, distance home purchase mediation contracts and distance regulated sale and rent back mediation contracts with a consumer, this will need to be accompanied by the information in MCOB 4 Annex 3.
- 30/06/2010
- Past version of MCOB 4.5.3 before 30/06/2010
MCOB 4.6
Cancellation of distance mortgage mediation contracts, distance home purchase mediation contracts and distance regulated sale and rent back mediation contracts
- 30/06/2010
- Past version of MCOB 4.6 before 30/06/2010
MCOB 4.6.1
See Notes
- 30/06/2010
- Past version of MCOB 4.6.1 before 30/06/2010
MCOB 4.6.2
See Notes
- 01/11/2007
- Past version of MCOB 4.6.2 before 01/11/2007
MCOB 4.6.3
See Notes
Where the notice of the right to cancel forms part of another document, or is one of a number of documents sent to the consumer at the same time, a firm should ensure that the presence of the notice of the right to cancel is drawn to the consumer's attention.
- 01/11/2007
- Past version of MCOB 4.6.3 before 01/11/2007
Cancellation period
MCOB 4.6.4
See Notes
- (1) A consumer has a right to cancel a distance mortgage mediation contract, a distance home purchase mediation contract or a distance regulated sale and rent back mediation contract in accordance with this section.
- (2) The right to cancel must be exercised within 14 days beginning on the later of:
- 30/06/2010
- Past version of MCOB 4.6.4 before 30/06/2010
Exercising the right to cancel
MCOB 4.6.5
See Notes
A consumer who has a right to cancel a distance mortgage mediation contract, a distance home purchase mediation contract or a distance regulated sale and rent back mediation contract may, without giving any reason, cancel the contract by serving notice on the firm, before the expiry of the cancellation period in MCOB 4.6.4 R either:
- (1) by serving on, or otherwise sending by post, notice to the firm's last known address, addressed to the firm, its appointed representative or on any agent of the firm with authority to accept notice on the firm's behalf; or
- (2) in accordance with any other practical instructions for exercising that right provided to the consumer in accordance with MCOB 4 Annex 3(5).
- 30/06/2010
- Past version of MCOB 4.6.5 before 30/06/2010
MCOB 4.6.6
See Notes
- 01/11/2007
- Past version of MCOB 4.6.6 before 01/11/2007
MCOB 4.6.7
See Notes
- 01/11/2007
- Past version of MCOB 4.6.7 before 01/11/2007
Effects of cancellation
MCOB 4.6.8
See Notes
- 01/11/2007
- Past version of MCOB 4.6.8 before 01/11/2007
MCOB 4.6.9
See Notes
- 31/10/2004
MCOB 4.6.10
See Notes
When a consumer exercises a right to cancel under MCOB 4.6.4 R:
- (1) the firm must:
- (a) pay to the consumer without delay, and no later than 30 days after the date on which the firm received notice of cancellation from him, any sums which he has paid to or for the benefit of the firm in connection with the contract (including sums paid by the consumer to agents of the firm) except for the amount referred to in (b);
- (b) subject to (c), the firm is permitted to require the consumer to pay for the services it has actually provided in connection with the contract; the amount payable, however, must be in accordance with the sums which the consumer agreed to pay and must not:
- (i) exceed an amount which is in proportion to the extent of the service already provided to the consumer by the firm; and
- (ii) be such that it could be construed as a penalty;
- (c) sub-paragraph (b) applies only if:
- (i) where performance of the contract has commenced before expiry of the cancellation period, this was requested by the consumer; and
- (ii) the firm can demonstrate that the consumer was provided with details of the amount which he may be required to pay if exercising his right to cancel in accordance with MCOB 4 Annex 3(5).
- (2) The firm is entitled to receive without delay, and no later than 30 days after the date on which the consumer posted or otherwise sent notice of cancellation to the firm any property that became the consumer's under the contract and any sums payable to the firm under (1)(b).
Record keeping
MCOB 4.6.11
See Notes
MCOB 4.7
Advised sales
- 01/12/2004
Suitability
MCOB 4.7.1
See Notes
- 31/10/2004
MCOB 4.7.2
See Notes
- 31/10/2004
MCOB 4.7.3
See Notes
- 31/10/2004
MCOB 4.7.4
See Notes
For the purposes of MCOB 4.7.2 R:
- (1) a regulated mortgage contract will be suitable if, having regard to the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware, the firm has reasonable grounds to conclude that:
- (a) the customer can afford to enter into the regulated mortgage contract;
- (b) the regulated mortgage contract is appropriate to the needs and circumstances of the customer; and
- (c) the regulated mortgage contract is the most suitable of those that the firm has available to it within the scope of the service provided to the customer;
- (2) no recommendation must be made if there is no regulated mortgage contract from within the scope of the service provided to the customer which is appropriate to his needs and circumstances; and
- (3) if a firm is dealing with an existing customer in arrears and has concluded that there is no suitable regulated mortgage contract for the purposes of MCOB 4.7.2 R, the firm must nonetheless have regard to MCOB 13.3.2AR (1), MCOB 13.3.2AR (5) and MCOB 13.3.2AR (6) (see also MCOB 13.3.4AR (1)(a) and MCOB 13.3.4AR (1)(b)).
- 25/06/2010
- Past version of MCOB 4.7.4 before 25/06/2010
MCOB 4.7.5
See Notes
In relation to MCOB 4.7.4 R(1)(a), a firm must explain to the customer that the assessment of whether he can afford to enter into a regulated mortgage contract is based on:
- (1) current interest rates, which might rise in the future; and
- (2) the customer's current circumstances, which might change in the future.
- 31/10/2004
MCOB 4.7.6
See Notes
In relation to MCOB 4.7.4 R(1)(a) and (b), where a firm makes a personal recommendation to a customer to enter into a regulated mortgage contract where a main purpose is to consolidate existing debts it must also take account of the following, where relevant, in assessing whether the regulated mortgage contract is suitable for the customer:
- (1) the costs associated with increasing the period over which a debt is to be repaid;
- (2) whether it is appropriate for the customer to secure a previously unsecured loan; and
- (3) where the customer is known to have payment difficulties, whether it would be more appropriate for the customer to negotiate an arrangement with his creditors than to take out a regulated mortgage contract.
- 31/10/2004
MCOB 4.7.7
See Notes
- (1) In assessing whether a customer can afford to enter into a particular regulated mortgage contract, a firm should give due regard to the following:
- (a) information that the customer provides about his income and expenditure, and any other resources that he has available;
- (b) any likely change to the customer's income, expenditure or resources; and
- (c) the costs that the customer will be required to meet once any discount period in relation to the regulated mortgage contract comes to an end (on the assumption that interest rates remain unchanged).
- (2) Contravention of MCOB 4.7.7 E(1) may be relied upon as tending to show contravention of MCOB 4.7.4 R(1)(a).
- 31/10/2004
MCOB 4.7.8
See Notes
- 31/10/2004
MCOB 4.7.9
See Notes
- 31/10/2004
MCOB 4.7.10
See Notes
In complying with MCOB 4.7.4 R a firm is not required to consider whether it would be preferable for the customer to:
- (1) purchase a property by using his own resources, rather than by borrowing under a regulated mortgage contract;
- (2) rent a property, rather than purchase one; or
- (3) delay entering into a regulated mortgage contract until a later date (on the grounds that property prices would have fallen in the intervening period, or that the interest rate in relation to the regulated mortgage contract would be lower, or both).
- 31/10/2004
MCOB 4.7.11
See Notes
- (1) In assessing whether the regulated mortgage contract is appropriate to the needs and circumstances of the customer for the purposes of MCOB 4.7.4 R(1)(b), a firm should give due regard to the following:
- (a) whether the customer's requirements meet the eligibility criteria for the regulated mortgage contract (for example, the amount that the customer wishes to borrow, or the loan-to-value ratio);
- (b) whether the customer should have an interest-only mortgage, a repayment mortgage, or a combination of the two;
- (c) whether the customer has a preference for a particular term;
- (d) whether the customer has a preference or need for stability in the amount of required payments, especially having regard to the impact on the customer of significant interest rate changes in the future;
- (e) whether the customer has a preference or need for payments to be reduced at the outset (for example, a loan with an initial discount rate period);
- (f) whether the customer intends to make early repayments; and
- (g) whether the customer has a preference or need for any other features of a regulated mortgage contract (for example, payment holidays).
- (2) Compliance with (1) may be relied upon as tending to show compliance with MCOB 4.7.4 R(1)(b).
- 31/10/2004
MCOB 4.7.12
See Notes
- (1) MCOB 4.7.11 E(1)(b) does not require a firm to provide advice on investments. Whether such advice should be given will depend upon the individual needs and circumstances of the customer. Where considered relevant, MCOB 4 does not restrict the ability of an adviser to refer the customer to another source of investment advice (for example, where the adviser is not qualified to provide advice on investments).
- (2) Where the scope of the advice provided is based on a selection of regulated mortgage contracts from a single or limited number of lenders, the assessment of suitability should not be limited to the types of regulated mortgage contracts which the firm offers. A firm cannot recommend the 'least worst' regulated mortgage contract where the firm does not have access to products appropriate to the customer's needs and circumstances. This means, for example, that a firm dealing solely in the sub-prime market should not recommend one of these regulated mortgage contracts if approached for advice by a customer with an unblemished credit record.
MCOB 4.7.13
See Notes
- (1) A firm should, out of all the regulated mortgage contracts identified as being appropriate for that customer, recommend the one that is the least expensive for that customer taking into account those pricing elements identified by the customer as being most important to him.
- (2) Compliance with (1) may be relied upon as tending to show compliance with MCOB 4.7.4 R(1)(c).
- 31/10/2004
MCOB 4.7.14
See Notes
- (1) With regard to MCOB 4.7.13 E(1) different customers are likely to identify different pricing elements as being of most importance. For example, it may be the overall cost, the cost over the first five years, or the absence of early repayment charges that