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MCOB 13.5 Dealing with a customer in arrears or with a 1sale shortfall on a regulated mortgage contract1

Statements of charges

MCOB 13.5.1R

Where an account is in arrears, and the payment shortfall2 or sale shortfall 1is attracting charges, a firm must provide the customer with a regular written statement (at least once a quarter) of the payments due, the actual payment shortfall2, the charges incurred and the debt.

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MCOB 13.5.2G
  1. (1)

    For the purpose of MCOB 13.5.1 R, charges that trigger the requirement for regular statements include all charges and fees levied directly as a result of the account falling into arrears. This includes charges such as monthly administrative charges, legal fees and interest. If interest is applied to the amount of the arrears, as it is applied to the rest of the mortgage, a firm need not send a written statement, unless other charges are also being made. If interest is applied to the amount of the arrears in a different manner to the rest of the mortgage then a written statement will be required.

  2. (2)

    In determining the frequency for providing statements in accordance with MCOB 13.5.1 R, a firm should have regard to the application of new charges and the number of transactions on the customer's account.

  3. (3)

    [deleted]2

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  4. (4)

    Information provided should cover the period since the last statement. Firms may use the annual statement to comply with MCOB 13.5.1 R, in which case the annual statement will need to be supplemented to include the actual payment shortfall2.

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Pressure on customers

MCOB 13.5.3R

A firm must not put pressure on a customer through excessive telephone calls or correspondence, or by contact at an unreasonable hour.

MCOB 13.5.4G

In MCOB 13.5.3 R, a reasonable hour will usually fall between 8 am and 9 pm. Firms should also have regard to the circumstances of the customer and any knowledge they have of the customer's work pattern or religious faith which might make it unreasonable to contact the customer during these hours.

MCOB 13.5.5G

In MCOB 13.5.3 R, putting pressure on a customer includes:

  1. (1)

    the use of documents which resemble a court summons or other official document, or are intended to lead the customer to believe that they come from or have the authority of a court (which might in any event constitute a criminal offence under the County Courts Act 1984 or section 40 of The Administration of Justice Act 1970); and

  2. (2)

    the use of documents containing unfair, unclear or misleading information intended to coerce the customer into paying. A firm should also have regard to Section 1 of the Malicious Communications Act 1988 which establishes a criminal offence in respect of letters sent which convey a threat or false information with intent to cause distress or anxiety.

MCOB 13.5.6G

In relation to MCOB 13.5.3 R, a firm should also have regard to the general law, including the Data Protection Act 1998, on the disclosure of information to third parties.