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MCOB 4.4 Initial disclosure requirements

Disclosure where initial contact is not made by telephone

MCOB 4.4.1R
  1. (1)

    A firm must ensure that, on first making contact with a customer when it anticipates giving personalised information or advice on a regulated mortgage contract, it:

    1. (a)

      establishes with the customer whether it will provide advice or information;

    2. (b)

      establishes with the customer how much he will pay or, alternatively, the basis on which the firm will be remunerated, where appropriate; and

    3. (c)

      provides the customer with either:

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      1. (i)

        an initial disclosure document4; or

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      2. (ii)

        if the firm has reasonable grounds to be satisfied that the services which it is likely to provide to the customer will relate to a combination of different types of home finance transaction, or will4 relate to home finance transactions and4 one or more of non-investment insurance contracts or packaged products 3, a combined initial disclosure document4;

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      in a durable medium.

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  2. (2)

    The requirement in (1)(c) does not apply where;

    1. (a)

      an initial disclosure document has already been provided by the firm and that document is still likely to be accurate and appropriate for the customer; or

    2. (b)

      an initial disclosure document has already been provided by the firm which first made contact with the customer in respect of the particular regulated mortgage contract, and the firm subsequently making contact with the customer:

      1. (i)

        does not anticipate altering or replacing the service described in that document; or

      2. (ii)

        is not making contact with a view to concluding a distance mortgage mediation contract; or

    3. (c)

      initial contact is made by telephone.

  3. (3)

    A firm may choose not to include the initial disclosure information required by sections 6, 7 and 8 of the initial disclosure document4, and sections 5, 7 and 8 of the combined initial disclosure document4, if it provides the customer with the information required by those sections in some other durable medium before the customer makes an application for a regulated mortgage contract.

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  4. (4)

    4A firm must not use a combined initial disclosure document in relation to a combination of:

    1. (a)

      regulated mortgage contracts (other than lifetime mortgages)5 or home purchase plans; and

    2. (b)

      equity release transactions.

MCOB 4.4.2G

MCOB 4.4.1 R (2)(b) means, for example, that a mortgage lender will provide the initial disclosure document in a direct sale but not where the sale involves a mortgage intermediary. If a number of different firms are involved in relation to the transaction, having regard to MCOB 2.5.4 R (2), those firms should take reasonable steps to establish that the customer has been provided with an initial disclosure document as required by MCOB 4.4.1 R.

MCOB 4.4.3G
  1. (1)

    In many cases, MCOB 4.4.1 R (1) means that the initial disclosure document will be provided at the time of the first contact between the firm and the customer. However, there may be circumstances, for example in relation to a loan for a business purpose, where the possibility of the customer entering into, or varying the terms of, a regulated mortgage contract is only identified after preliminary discussions. Disclosure, in the context of MCOB 4, is only required once this possibility is identified.

  2. (2)

    In the FSA's opinion, the requirements at MCOB 4.4.1 R and MCOB 4.4.7 R would not apply when a customer contacts a firm simply to arrange to receive personalised information or advice on a regulated mortgage contract at a later time, such as when a customer books an appointment. In such cases, initial disclosure should be made when the firm first makes contact with the customer with a view to actually giving the information or advice. However, firms should note the additional disclosure requirements in MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts with retail customers), and, the need to ensure that the required information (to be provided with the initial disclosure document) is provided in good time (see MCOB 4.5.3 G (1)).

MCOB 4.4.4G

If a firm has provided a customer with an appropriate initial disclosure document but subsequently discovers that the customer wants different services from those originally anticipated and described in the document, the firm will need to establish the details of the new service to be provided to the customer and provide the customer with a new initial disclosure document in accordance with MCOB 4.4.1 R or MCOB 4.4.7 R.

Uncertainty whether a mortgage is regulated

MCOB 4.4.5R
  1. (1)

    If at the point that initial disclosure must be made in accordance with MCOB 4.4.1 R or MCOB 4.4.7 R a firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:

    1. (a)

      provide the initial disclosure document; or

    2. (b)

      seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.

  2. (2)

    Where (1)(b) applies, the initial disclosure document must be provided unless, on the basis of the information provided by the customer, the firm has reasonable evidence that the contract is not a regulated mortgage contract.

Information to be provided to customers on request

MCOB 4.4.6R
  1. (1)

    If a firm's scope of service is based on MCOB 4.3.1 R (1)(b) it must maintain, and keep up to date, in a durable medium and in a form which is appropriate for distribution to the customer, a list of the mortgage lenders whose regulated mortgage contracts it offers. This list must also confirm whether or not the firm provides services in relation to all of the regulated mortgage contracts generally available from each mortgage lender.

  2. (2)

    The customer must be provided with a copy of the information described in (1) on request.

  3. (3)

    A firm must take reasonable steps to ensure that its appointed representatives provide a copy of the record in (1) to a customer on request.

Disclosure where initial contact is by telephone

MCOB 4.4.7R
  1. (1)

    If the initial contact of a kind in MCOB 4.4.1 R(1) is by telephone, then unless MCOB 4.4.1 R(2)(a) applies, the following information must be given before proceeding further:

    1. (a)

      the name of the firm and (if the call is initiated by or on behalf of the firm) the commercial purpose of the call;

    2. (b)

      the scope of the service provided by the firm (within the meaning of MCOB 4.3.1 R);

    3. (c)

      if the scope of the service is based on MCOB 4.3.1 R(1)(b), that the customer can request a copy of the list of mortgage lenders whose regulated mortgage contracts it offers and confirmation of whether the firm provides services in relation to all of the regulated mortgage contracts generally available from each mortgage lender;1

    4. (d)

      whether or not the firm will provide the customer with advice on those regulated mortgage contracts within its scope; and

    5. (e)

      that the information given under (a) to (d) will be confirmed in writing.

  2. (2)

    2Provided that the telephone call in (1) has not led the firm to conclude that the customer is ineligible for any of its regulated mortgage contracts, and that the customer has provided his contact details, the firm must send the customer a copy of an initial disclosure document or combined initial disclosure document4 and any other information required to be provided, in a durable medium within five business days of the telephone call (see also MCOB 4.5.2 R (2)(b) for the equivalent requirement in relation to distance mortgage mediation contracts).2

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  3. (3)

    If the customer accepts the offer in (1)(c) of a list of the mortgage lenders whose regulated mortgage contracts the firm offers, that list must also be sent with the information required in (2).

MCOB 4.4.8G

Firms are reminded of the requirements in MCOB 3.8 (Form and content of real time qualifying credit promotions) in relation to telephone calls that may fall within the definition of a financial promotion and should also note the additional requirements that apply in relation to distance mortgage mediation contracts with retail customers in MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts with retail customers).