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MCOB 4A.2 Adequate explanations

  1. (1)

    An MCD mortgage lender or MCD mortgage credit intermediary must provide, orally or in a durable medium, adequate explanations to the consumer of the proposed MCD regulated mortgage contract and any ancillary services, before any binding offer is issued to that consumer, to enable the consumer to assess whether the proposed MCD regulated mortgage contract and ancillary services meets their needs and financial situation.

    [Note: article 16(1) of the MCD]

  2. (2)

    The explanations must, where applicable, include:

    1. (a)

      the pre-contractual information to be provided in accordance with:

      1. (i)

        the ESIS or illustration; and

      2. (ii)

        in the case of an MCD mortgage credit intermediary (unless it is also acting as an MCD mortgage lender and carrying out a direct sale of the proposed MCD regulated mortgage contract)1, MCOB 4.4A.1R (1) and MCOB 4.4A.1R (2), MCOB 4.4A.4 R, MCOB 4.4A.8R (1)(a), (c), (d) and (2), and MCOB 4A.1.1 R to MCOB 4A.1.7 R

    2. (b)

      the essential characteristics of the products proposed;

    3. (c)

      the specific effects the products proposed may have on the consumer, including the consequences of default in payment by the consumer; and

    4. (d)

      where ancillary services are bundled with an MCD regulated mortgage contract, whether each component of the bundle can be terminated separately and the implications for the consumer of doing so.

    [Note: article 16(1) of the MCD]


In complying with MCOB 4A.2.1 R, a firm may adapt the manner and extent of giving the explanations, as well as the person giving them, according to:

  1. (1)

    the circumstances of the situation in which the MCD regulated mortgage contract is offered;

  2. (2)

    the consumer to whom it is offered; and

  3. (3)

    the nature of the MCD regulated mortgage contract offered.

[Note: article 16(2) of the MCD]


The explanations given to a consumer for the purposes of complying with MCOB 4A.2.1 R do not amount to advice to that consumer. Firms may wish to refer to PERG (particularly PERG 4.6) for guidance on the regulatory perimeter in relation to advising on a home finance transaction.