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MCOB 2.2 Communications


MCOB 2.2.1G

The purpose of MCOB 2.2 is to restate, in slightly amended form, and as a separate rule, the part of Principle 7 (Communications with clients) that relates to communication of information. This enables a customer, who is a private person, to bring an action for damages under section 150 (Contravention of rules) of the Act to recover loss resulting from a firm that carries on the activities referred to in MCOB 2.1.3 R communicating information, in the course of those activities, in a way that is not clear or fair, or that is misleading. MCOB 2.2 also clarifies the expectations of the FSA where any rule requires the provision of information and there are two or more customers.


MCOB 2.2.2G

In many circumstances there will be two or more customers under any home finance transaction,4 or two or more prospective customers looking to enter into the same home finance transaction.4 In such circumstances, where a rule in MCOB requires the provision of information to such customers and the customers have different addresses, a firm sending out this information should send it to each address. If the customers share the same address it will be sufficient to send a single copy of the information addressed to each of the customers.


Prescribed terms for regulated mortgage contracts and home reversion plans4

MCOB 2.2.3R

In any communication to a customer, a firm must:

  1. (1)

    describe any early repayment charge as an 'early repayment charge';

  2. (2)

    describe any higher lending charge as a 'higher lending charge';4

  3. (3)

    describe any lifetime mortgage4 as a 'lifetime mortgage'; and4

  4. (4)

    describe any home reversion plan as a 'home reversion plan';

and not use any other expression to describe them.

MCOB 2.2.4R



Related investment advice

MCOB 2.2.5G

Firms are reminded that they should follow the relevant rules in COB 5 and COB 6 relating to advice and disclosure on investments if they are advising the customer on an investment such as an annuity associated with an equity release transaction4 or an ISA used as a repayment vehicle.21


Clear, fair and not misleading communications and financial promotions4

MCOB 2.2.6R
  1. (1)

    When a firm communicates information to a customer, it must take reasonable steps to communicate in a way that is clear, fair and not misleading. 1

  2. (2)


MCOB 2.2.6AR

4A firm which approves a financial promotion of a home purchase plan must take reasonable steps to ensure that the financial promotion is clear, fair and not misleading.

MCOB 2.2.7G

When considering how to comply with the requirements of ,4these rules on clear, fair and not misleading communications and financial promotions,4 a firm should have regard to the customer's knowledge of the home finance transaction4 to which the information relates.

MCOB 2.2.8G

The rule on clear, fair and not misleading communications4 covers all communications with customers, for example any oral or written statements, telephone calls and any correspondence which is not a financial promotion4 to which MCOB 3 (Financial promotion) applies. In respect of financial promotions of qualifying credit or of home reversion plans,4 firms should note the separate requirements of MCOB 3.

MCOB 2.2.8AR

4If a firm uses a figure equivalent to an APR in a communication of a financial promotion of a home purchase plan, when calculating that figure it must use an approach equivalent to the APR rules.

MCOB 2.2.8BG

4The following guidance may be relevant to a firm that communicates or approves a financial promotion of a home purchase plan:

  1. (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. (2)

    guidance on other Handbook provisions relevant to financial promotions (see MCOB 3.2.8 G to MCOB 3.2.9 G);

  3. (3)

    guidance on other regulations and guidelines relevant to financial promotions (see MCOB 3.5.3 G);

  4. (4)

    guidance on referring to the FSA (see MCOB 3.6.2 G (3));

  5. (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. (6)

    guidance on the use of the Internet for communicating financial promotions (see MCOB 3.12 and PERG 8.22).

Note: A comparative financial promotion will need to comply with regulation 4A of the Control of Misleading Advertisements Regulations 1988.

MCOB 2.2.9G

Prominence of relevant information can play a key role in ensuring that a communication is clear, fair and not misleading. Where this is the case, the firm should consider prominence in the context of the communication as a whole. Use can be made of the positioning of text, background and text colour and type size to ensure that specified information meets the requirements of MCOB.