MCOB 3A.2 The fair, clear and not misleading rules
Fair, clear and not misleading communications
The purpose of MCOB 3A.2.1R 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
Where:
- (1)
there are two or more customers or prospective customers in relation to the same home finance transaction;
- (2)
a rule in MCOB requires the provision of information to such customers; and
- (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
- (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)
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:
- (a)
is fair, clear and not misleading; and
- (b)
in particular, does not contain wording that may create false expectations for a consumer regarding the availability or the cost of a credit.
- (a)
[Note: article 10 of the MCD]
Fair, clear and not misleading rule: approval of home purchase plan financial promotions
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
Any communication, including a non-real time financial promotion, must describe:
- (1)
any early repayment charge as an “early repayment charge” and not use any other expression to describe such charges;
- (2)
any higher lending charge as a “higher lending charge” and not use any other expression to describe such charges;
- (3)
any lifetime mortgage as a “lifetime mortgage” and not use any other expression to describe such a mortgage;
- (4)
any home reversion plan as a “home reversion plan” and not use any other expression to describe it; and
- (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.