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Status: You are viewing the version of the handbook as on 2009-03-31.

MCOB 5.8 1Home purchase plans

MCOB 5.8

Applying for a home purchase plan

Note: The rules regarding applying for a home purchase plan are set out in MCOB 5.3.

Financial information statement: timing

MCOB 5.8.1RRP

A firm dealing directly with a customer must ensure that the customer is, or has been, provided with an appropriate financial information statement for a home purchase plan in a durable medium:

  1. (1)

    before the customer submits an application for that particular plan to a home purchase provider; and

  2. (2)

    without undue delay when any of the following occurs:

    1. (a)

      the firm makes a personal recommendation to the customer to enter into a home purchase plan (unless the personal recommendation is made by telephone, in which case a firm must ensure the financial statement is or has been provided as soon as practicable after the telephone call);

    2. (b)

      the firm provides written information that is specific to the amount of finance to be provided on a particular plan; or

    3. (c)

      the customer requests written information from the firm that is specific to the amount of finance to be provided on a particular plan, unless the firm does not wish to do business with the customer.

  3. (3)

    A firm may comply with (1) and (2) by providing an offer document if this can be done as quickly as providing a financial information statement.

MCOB 5.8.2GRP

In ensuring that the customer is provided with an appropriate financial information statement, a firm need not provide another when one that remains appropriate has already been provided for that particular home purchase plan. If a financial information statement ceases to be appropriate, for example because the terms of the proposed plan are subsequently materially altered, a new appropriate statement must be provided.

MCOB 5.8.3GRP

The guidance on the timing of mortgage illustrations may be relevant (see MCOB 5.5).

Financial information statement: format

MCOB 5.8.4RRP

A financial information statement must:

  1. (1)

    be personalised to reflect the customer's requirements;

  2. (2)

    contain only the material prescribed or permitted in this section;

  3. (3)

    contain that material in the order set out in this section; and

  4. (4)

    present the material concisely, clearly and consistently.

MCOB 5.8.5RRP

A financial information statement, if not set out in a separate document, must be:

  1. (1)

    in a prominent place within the other document and clearly identifiable as key information that the customer should read; and

  2. (2)

    separate from the other content of the document in which it is included.

MCOB 5.8.6GRP

The guidance on the content, order and format of illustrations may be relevant (see MCOB 5.6.4 G).

Financial information statement: content

MCOB 5.8.7RRP

A financial information statement must contain:

  1. (1)

    a prominent Key facts logo at the top of the statement;

  2. (2)

    the term of the home purchase plan;

  3. (3)

    the overall cost of the plan, comprising:

    1. (a)

      the purchase price of the property;

    2. (b)

      the deposit payable;

    3. (c)

      the amount of the plan required;

    4. (d)

      the amount of any fees added to the plan;

    5. (e)

      the total amount payable; and

    6. (f)

      the amount the customer must pay per £1 provided under the plan;

  4. (4)

    details of the payments the customer must make, including:

    1. (a)

      the assumed start date;

    2. (b)

      all rental rates that will apply;

    3. (c)

      when the rental rates will apply and for how long;

    4. (d)

      for each rental rate, the number, frequency and amount of the periodic payments that will apply;

    5. (e)

      in relation to the first periodic payment, the amount of the purchase payment and of the rental payment;

    6. (f)

      the amount of any insurance rent payments;

    7. (g)

      a summary total; and

    8. (h)

      details of when the summary total will change.

MCOB 5.8.8RRP

A financial information statement may contain a figure equivalent to an APR after the amount the customer must pay per £1 provided under the home purchase plan. A firm must use an approach equivalent to the APR rules when calculating an APR equivalent.

MCOB 5.8.9GRP

See the Key facts logo provisions for further requirements regarding the use of the Key facts logo and the location of specimens.

MCOB 5.8.10GRP

The details of the rental rate charged should be based on information available to a firm at the time of producing the financial information statement. For example, if a rental rate cannot be ascertained at that time because it is based on a fluctuating rate of interest, a firm should base the information on the current fluctuating rate.

Opportunity to consider pre-application disclosure

MCOB 5.8.11RRP

A firm must ensure that the customer has had a reasonable opportunity to consider the financial information statement and risks and features statement before committing the customer to an application.