MCOB 3.6 Form and content of non-real time qualifying credit promotions

A non-real time financial promotion5 must contain the name of the firm or its appointed representative and either an address or a contact point from which an address is available.

1. (1)

   A firm must be able to show that it has taken reasonable steps to ensure that a non-real time financial promotion5 is clear, fair and not misleading.

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2. (2)

   A non-real time financial promotion5 which includes a comparison or contrast must:

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   1. (a)

      compare credit3 meeting the same needs or which is intended for the same purpose;

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   2. (b)

      objectively compare one or more material, relevant, verifiable and representative features of that credit,3 which may include price;

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   3. (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;

   4. (d)

      not discredit or denigrate the trademarks, trade names, other distinguishing marks, qualifying credit, services, activities or circumstances of a competitor;

   5. (e)

      not take unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor;

   6. (f)

      not present qualifying credit as an imitation or replica of qualifying credit bearing a protected trademark or trade name; and

   7. (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.

In ensuring a financial promotion is5 clear fair and not misleading, a firm must ensure that the financial promotion5 does not contain any of the following words or expressions, unless the relevant condition applies:

1. (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. (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:

   1. (a)

      the total amount payable by the customer does not exceed the cash price; or

   2. (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. (3)

   the expression 'no deposit' or any similar expression, except where no advance payments are required to be made on the loan;

4. (4)

   the expression 'mortgage guaranteed', 'pre-cleared' or any similar expression, unless the financial promotion5 invites entry into a contract that is free of any conditions regarding the credit status of the customer; and

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5. (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.

A non-real time financial promotion5 must:

1. (1)

   describe any early repayment charge as an 'early repayment charge' and not use any other expression to describe such charges; 1

2. (2)

   describe any higher lending charge as a 'higher lending charge' and not use any other expression to describe such charges; 12

3. (3)

   not contain the 'key facts' logo unless it is required by a rule; and 12

4. (4)

   describe any lifetime mortgage4 as a 'lifetime mortgage' and not use any other expression to describe such a mortgage.2

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A non-real time financial promotion5 that features qualifying credit which is conditional upon the customer obtaining one or more further products from a specific firm (or its agents or associates) must prominently state the compulsory nature of these purchases.

A non-real time financial promotion5 must, unless the transient advertising rule5 applies, prominently contain one or more of the following statements in the circumstances described:

1. (1)

   where it5 relates to a lifetime mortgage:5 '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));

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2. (2)

   where it 5refers 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.'

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3. (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.3

4. (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. (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).

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6. (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.3

MCOB 3.6.13 R (Required risk statements) does not apply if the non-real time financial promotion5 is communicated:

1. (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. (2)

   by an exhibition of pictures or photographic or cinematographic films.

1. (1)

   A firm must ensure that if a non-real time financial promotion5 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:

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   1. (a)

      states the APR;

   2. (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

   3. (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. (2)

   A firm must calculate the APR in accordance with MCOB 10(Annual percentage rate).

3. (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'

If the non-real time financial promotion5 concerns a contract under which the APR varies (for example, depending upon the circumstances of the customer), the APR required by MCOB 3.6.17 R(Annual percentage rate (APR)) is that which is representative of the business expected to arise from the promotion.

For the purposes of MCOB 3.6.22 R, an APR is not representative of business unless it is an APR at or below which at least 66% of customers responding to the promotion and who enter into a qualifying credit agreement which is the subject of the promotion would be charged.

If the non-real time financial promotion of qualifying credit5 concerns a contract where the APR varies depending upon the circumstances of the customer, the following further statement must be included with due prominence:'The actual rate available will depend upon your circumstances. Ask for a personalised illustration.'

If the non-real time financial promotion of qualifying credit5 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 credit5 contains information about any of these rates then:

1. (1)

   the non-real time financial promotion of qualifying credit5 must contain a clear and no less prominent description of all of the rates of charge that will apply;

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2. (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. (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:

   1. (a)

      of its period of application; and

   2. (b)

      that the rate then changes.

If a non-real time financial promotion of qualifying credit5 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. (1)

   the amount of the fee (if known); or

2. (2)

   a representative fee based upon the business expected to arise from the promotion.