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MCOB 4.10 1Home purchase plans

Scope of service provided

MCOB 4.10.1R

1A firm must comply with the scope of service requirements at MCOB 4.3.1 R and MCOB 4.3.2 R (Providing services within and beyond scope), MCOB 4.3.4A R (Whole of market) and MCOB 4.3.10 R (Appointed representatives).

Initial disclosure requirements1

MCOB 4.10.2R
  1. (1)

    A firm must, on first making contact with a customer when it anticipates giving personalised information or advice on entering into a new home purchase plan, ensure that the customer is, or has been, provided with an appropriate initial disclosure document or combined initial disclosure document in a durable medium.

  2. (2)

    If the initial contact in (1) is by telephone, a firm must:

    1. (a)

      (if the call is with a view to concluding a distance home purchase mediation contract) give the following information before proceeding further:

      1. (i)

        the name of the firm and (if initiated by the firm) the commercial purpose of the call;

      2. (ii)

        the scope of the service provided by the firm; and

      3. (iii)

        whether or not the firm will provide the customer with advice on those home purchase plans within its scope; and

    2. (b)

      ensure that the customer is, or has been, provided with such a document in a durable medium as soon as is practicable.

  3. (3)

    A firm must not use a combined initial disclosure document in relation to a combination of home purchase plans and equity release transactions.2

MCOB 4.10.3G

1In accordance with Principle 7, where a firm is likely to provide services in relation to both regulated mortgage contracts and home purchase plans, it should provide a combined initial disclosure document rather than two separate initial disclosure documents.

MCOB 4.10.4GRP

1The guidance on initial disclosure requirements at MCOB 4.4.2 G to MCOB 4.4.4 G may be relevant.

Additional requirements for distance home purchase mediation contracts with retail customers

Note: The rules regarding additional disclosure requirements for, and cancellation of, distance home purchase mediation contracts are set out in MCOB 4.5 and MCOB 4.6 respectively.

Advised sales: suitability

MCOB 4.10.5G

1In accordance with Principle 9, a firm should take reasonable steps to obtain from a customer all information likely to be relevant to ensuring the suitability of its advice.

MCOB 4.10.6R

1A firm, before making a personal recommendation on a home purchase plan, must take reasonable steps to ensure that it is:

  1. (1)


  2. (2)

    appropriate to the customer's needs and circumstances; and

  3. (3)

    the most suitable of those home purchase plans that the firm has available to it within the scope of the service provided to the customer.

MCOB 4.10.7GRP

The guidance on suitability at MCOB 4.7.8 G to MCOB 4.7.10 G and MCOB 4.7.16 G may be relevant.

Non-advised sales

MCOB 4.10.8R

1If a firm arranges a home purchase plan or a variation to an existing home purchase plan without giving a personal recommendation, it must ensure that the questions it asks about the customer's needs and circumstances are scripted in advance.

MCOB 4.10.9G

1The guidance on non-advised sales at MCOB 4.8.2 G and on scripted questions at MCOB 4.8.5 G and MCOB 4.8.6 G may be relevant.

Risks and features statement and tariff of charges

MCOB 4.10.10RRP

1A firm must, beforemaking a personal recommendation to a customer of, or when a customer requests or selects, a home purchase plan ensure that the customer is, or has been, provided with an appropriate risks and features statement about that plan.

MCOB 4.10.11RRP

1A risks and features statement need not be personalised to the customer's circumstances but must:

  1. (1)

    include the Key facts logo in a prominent position at the top of the statement;

  2. (2)

    state that the FSA requires a firm to provide the statement;

  3. (3)

    state that mortgages are available and that the customer should think carefully about the product appropriate to his needs;

  4. (4)

    describe the significant features of the plan, including:

    1. (a)

      how the home purchase plan works;

    2. (b)

      the nature of the customer's commitment;

    3. (c)

      when and how a customer's commitment is reviewed;

    4. (d)

      any significant restrictions of the plan; and

    5. (e)

      the charges that a customer may incur under the plan, including the reason for, and amount of, each charge, when they are payable, whether they will be reimbursed and, if so, when;

  5. (5)

    describe the risks associated with the plan, including:

    1. (a)

      the risks to the customer if he fails to keep up repayments and the circumstances in which this might occur; and

    2. (b)

      risks to the customer of the home purchase provider failing or disposing of any of its obligations or rights (including its interest in the property) to a third party (taking into account steps that will be taken by the home purchase provider to mitigate such risks); and

  6. (6)

    state the importance of obtaining independent legal advice.

MCOB 4.10.12RRP

1A firm may omit details of the charges that a customer may incur under a home purchase plan from the risks and features statement if they are included in a separate tariff of charges provided to the customer at the same time.