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MCOB 3A.2 The fair, clear and not misleading rules

Fair, clear and not misleading communications

MCOB 3A.2.1R
  1. (1)

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

  2. (2)

    A firm must be able to show that it has taken reasonable steps to ensure that any illustration or ESIS is fair, clear and not misleading.

MCOB 3A.2.2G

The purpose of MCOB 3A.2.1 R is to restate, in a slightly amended form and as a separate rule, the part of Principle 7 (Communications with clients) that relates to communication of information.

Communications to customers with different addresses

MCOB 3A.2.3G

Where:

  1. (1)

    there are two or more customers or prospective customers in relation to the same home finance transaction;

  2. (2)

    a rule in MCOB requires the provision of information to such customers; and

  3. (3)

    the customers have different addresses

a firm should send the information 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.

Fair, clear and not misleading financial promotions

MCOB 3A.2.4R
  1. (1)

    A firm communicating or approving a non-real time financial promotion of qualifying credit other than in (2), for a home reversion plan or a regulated sale and rent back agreement must be able to show that it has taken reasonable steps to ensure that the non-real time financial promotion is fair, clear and not misleading.

  2. (2)

    A firm communicating a financial promotion, or approving a non-real time financial promotion in relation to an MCD regulated mortgage contract must ensure that it:

    1. (a)

      is fair, clear and not misleading; and

    2. (b)

      in particular, does not contain wording that may create false expectations for a consumer regarding the availability or the cost of a credit.

[Note: article 10 of the MCD]

Fair, clear and not misleading rule: approval of home purchase plan financial promotions

MCOB 3A.2.5R

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

Restrictions on use of terms

MCOB 3A.2.6R

Any communication, including a non-real time financial promotion, must describe:

  1. (1)

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

  2. (2)

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

  3. (3)

    any lifetime mortgage as a “lifetime mortgage” and not use any other expression to describe such a mortgage;

  4. (4)

    any home reversion plan as a “home reversion plan” and not use any other expression to describe it; and

  5. (5)

    any regulated sale and rent back agreement as a “sale and rent back agreement” and not use any other expression such as “equity release” to describe it.