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MCOB 1.3 General application: where?

Location of the customer


Except as set out in this section, MCOB applies if the customer of a firm carrying on home finance activities2 is resident in:

  1. (1)

    the United Kingdom; or

  2. (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;

at the time that the home finance activity2 is carried on.


Financial Promotion


The territorial scope of MCOB 3 (Financial promotion) is set out in MCOB 3.3 (Application: where?) rather than in this section.

Electronic commerce activities and communications


The territorial scope of this sourcebook is modified by ECO in relation to electronic commerce activities and electronic commerce communications.

Distance contracts entered into from an establishment in another EEA State

  1. (1)

    The rules in (2) do not apply to a firm with respect to a regulated mortgage activity or a home purchase activity2 exclusively concerning a distance contract if the following conditions are satisfied:

    1. (a)

      the firm carries on the activity from an establishment maintained by the firm in an EEA State other than the United Kingdom; and

    2. (b)

      either the EEA State:

      1. (i)

        has implemented the DMD; or

      2. (ii)

        has obligations in its domestic law corresponding to those provided for by the DMD;

      and, in either case, with the result that the obligations provided for by the DMD (or corresponding obligations) are applied by that State when the firm carries on that activity; and

    3. (c)

      the firm is a national of an EEA State or a company or firm mentioned in article 48 of the Treaty.

  2. (2)

    The rules which do not apply are:

    1. (a)

      initial disclosure requirements in MCOB 4.4 (in respect of regulated mortgage contracts) and MCOB 4.10 (in respect of home purchase plans);2

    2. (b)

      MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts and distance home purchase mediation contracts 2with retail customers);

    3. (c)

      MCOB 4.6 (Cancellation of distance mortgage mediation contracts) and distance home purchase mediation contracts)2;

    4. (d)

      MCOB 5 (Pre-application disclosure);

    5. (e)

      MCOB 6 (Disclosure at offer stage);

    6. (f)

      MCOB 7.6.7 R to MCOB 7.6.17 R (Further advances);

    7. (g)

      MCOB 8.3 (Application of rules in MCOB 4) to the extent that it applies MCOB 4.4 to MCOB 4.6;

    8. (h)


    9. (i)

      MCOB 9.3 (Pre-application disclosure);

    10. (j)

      MCOB 9.4 (Content of illustrations); and

    11. (k)

      MCOB 9.5 (Disclosure at offer stage for equity release transactions).2


Distance contracts with retail customers


Parts of MCOB relate to distance contracts (or distance mortgage mediation contracts and distance home purchase mediation contracts2) with retail customers. These expressions are derived from the Distance Marketing Directive, and the following paragraphs provide some guidance to firms on their meaning:

  1. (1)

    Retail customer

    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 'retail customer' has been adopted. Examples of individuals who would be regarded as retail customers include:

    1. (a)

      personal representatives, including executors, unless they are acting in a professional capacity, for example a solicitor acting as executor; or

    2. (b)

      private individuals acting in personal or other family circumstances, for example, a trustee of a family trust.

  2. (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:

    1. (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 DMD 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

    2. (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.

Use of intermediaries


The mere fact that an intermediary (acting for the supplier or for the retail customer) is involved, does not make the sale of a financial product or service a distance contract. There will not be a distance contract if there has been simultaneous physical presence of the intermediary and the retail customer at some stage in the offer, negotiation and conclusion of the contract.1