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MCOB 4.9 Business loans

MCOB 4.9.1R

For the purposes of the rules in MCOB 4 there is one market in regulated mortgage contracts for a business purpose. Within this market, a firm should describe its scope of service in accordance with MCOB 4.3.1 R.


1Firms are reminded that in accordance with MCOB 1.2.3 R, they should either comply in full with MCOB or comply with all tailored provisions in MCOB that relate to business loans. Therefore, a firm may only follow the tailored provisions in MCOB 4.9 if it also follows all other tailored provisions in MCOB.

MCOB 4.9.2G

Where a personal recommendation is provided in connection with a regulated mortgage contract for a business purpose it is recognised that there may be additional considerations beyond those described in MCOB 4.7.11 E as part of the assessment of whether the regulated mortgage contract is appropriate to the needs and circumstances of the customer.

Initial disclosure document

MCOB 4.9.3G

As explained in MCOB 4.4.3 G(1) the requirement to provide an initial disclosure document is only triggered where the firm has identified the possibility that it will be giving personalised information or advice to a customer on a regulated mortgage contract for a business purpose.

  1. (1)

    Firms are reminded that MCOB 1.2.7 R enables them to substitute an alternative for 'mortgage' in the initial disclosure document(except in relation to sections 6 and 8 of any initial disclosure document2 or sections 5 and 8 of any combined initial disclosure document2.

  2. (2)

    MCOB 1.2.7 R also means that a firm mustamend any initial disclosure document2 so that the final sentence of prescribed text in section 4 states: 'You will receive an illustration which will tell you about any fees relating to a particular [term used by the firm to describe the borrowing, for example "mortgage"]'.

  3. (3)

    Where the initial disclosure documentmakes reference to the permitted business of a firm (for example, sections 6 and 8 of the initial disclosure document may refer to a firm advising on or arranging regulated mortgage contracts) a firm can add text explaining the relevance of these descriptions. One approach may be to add an additional sentence such as: 'Secured overdrafts are referred to here as "mortgages" because they involve a charge being taken over your property'.

Non-advised sales

MCOB 4.9.5R

MCOB 4.8.1 R does not apply in relation to a regulated mortgage contract for a business purpose.