There are certain additional disclosure requirements laid down by the rules which implemented8 the Distance Marketing Directive that will have to be provided by a mortgage intermediary,6 a home purchase intermediary and a SRB intermediary64 to a consumer5 prior to the conclusion of a distance mortgage mediation contract,66 a distance home purchase mediation contract4 or a distance regulated sale and rent back mediation contract.6 The purpose of this section, MCOB 4.5, is to set out those additional requirements. MCOB 4.6 sets out the cancellation rights that apply in relation to such contracts4.35
The FCA expects the requirements in MCOB 4.5 and MCOB 4.6 to be relevant only in a small minority of cases. Mediation at a distance (see MCOB 1.3.5 G and MCOB 1.3.6 G) is unlikely in the home finance4 market. MCOB 4.5 and MCOB 4.6 will only be relevant if a mortgage intermediary, a home purchase intermediary or a SRB intermediary64 enters into a distance contract in respect of its mortgage mediation activities,6 home purchase mediation activities or regulated sale and rent back mediation activities64 quite independent of any contractual arrangement with a consumer5 relating to a particular regulated mortgage contract,6 home purchase plan or regulated sale and rent back agreement64. An example of a distance mortgage mediation contract would be a distance contract under which a mortgage intermediary agreed to review and provide advice on a consumer's5 mortgage needs from time to time.3466565
If the initial contact7 is with a consumer5 with a view to concluding a distance mortgage mediation contract,6 a distance home purchase mediation contract or a distance regulated sale and rent back mediation contract6,4 a firm must:7546
in addition to initial disclosure information and any other required information, provide the consumer5 with the information in MCOB 4 Annex 3 in a durable medium in good time before the conclusion of the distance mortgage mediation contract,6 distance home purchase mediation contract or distance regulated sale and rent back mediation contract644564
with that customer unless an exemption in (2), (3), (4) or (5) applies.
Exemption: telephone sales
This exemption applies if the service is being provided on the telephone and the customer wishes to enter into a contract with the firm. Provided the customer gives his explicit consent to receiving only limited information, the firm may proceed on the basis of at least the following information:2
the total price to be paid by the customer to the firm for the services, including all related fees, charges and expenses, and all taxes paid through the firm or, where an exact price cannot be indicated, the basis for the calculation of the price, enabling the customer to verify it;
notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it;
the information about cancellation rights set out in MCOB 4 Annex 3(5); and
that other information is available on request, and the nature of that information.
If the customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the firm must, prior to the conclusion of the contract, provide orally to the customer all of the information required by (1).2
- (b) 5
Exemption: certain other means of distance communication. This exemption applies if the contract is concluded at the consumer's5 request using a means of distance communication5 (other than telephone) which does not enable provision of the information referred to in MCOB 4 Annex 3 in a durable medium before the conclusion of the contract. In that case, the firm must provide the consumer5 with the information in a durable medium immediately after its4 conclusion.5554
Exemption: successive operations or separate operations under an initial service agreement. This exemption applies if the firm has an initial service agreement with the consumer5 and the contract is in relation to a successive operation or a separate operation of the same nature under that agreement.5
Exemption: other successive or separate operations This exemption applies if:
The information in MCOB 4 Annex 3 will be provided in 'good time' for the purposes of MCOB 4.5.2 R (1), if provided in sufficient time to enable the customer to consider properly the services on offer.
An example of the circumstances in which MCOB 4.5.2 R (4) or (5) may apply is given in MCOB 4.4.4 G. If the initial disclosure document and accompanying information (including that in MCOB 4 Annex 3) was previously provided to a customer and continues to be appropriate, there is no need to provide the information again. If additional information is required, this may be provided by a supplementary document. However, if a service of a different nature is proposed, the firm is expected to provide fresh initial disclosure documentation 6and, in respect of distance mortgage mediation contracts,6 distance home purchase mediation contracts and distance regulated sale and rent back mediation contracts 4 with a6 consumer5, this will need to be accompanied by the information in MCOB 4 Annex 3.66665