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Status: You are viewing the version of the handbook as on 2019-12-18.

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

Except in the circumstances in MCOB 5.8.1A R, a 2firm 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 advises the particular customer to enter into one or more home purchase plans, in which case a financial information statement must be provided at the point the advice is given (and financial information statements for all recommended home purchase plans must be provided), unless the advice is given by telephone, in which case the firm must provide a financial information statement within five business days; or2

      2
    2. (b)

      [deleted]2

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    3. (c)

      [deleted]2

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    4. (d)

      2the customer requests a financial information statement, unless the firm is aware that it is unable to offer that home purchase plan to him; or

    5. (e)

      2as part of an execution-only sale (or potential execution-only sale) the customer has provided the firm with the information in MCOB 4.10.9D R (Execution-only sales) (see MCOB 4.10.9B R and MCOB 4.10.9C G) to indicate which home purchase plan or variation he wishes to enter into.

  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 5.8.1ARRP

2A firm need not provide a financial information statement:

  1. (1)

    2in relation to a direct deal; or

  2. (2)

    2if the customer refuses to disclose key information (for example, in a telephone conversation, his name or a communication address) or where the customer is not interested in pursuing the enquiry; or

  3. (3)

    2if the firm does not wish to do business with the customer.

MCOB 5.8.1BRRP

2If the firm chooses not to give a financial information statement in the circumstances set out in MCOB 5.8.1A R, where it has given advice on a direct deal, the firm must give the customer a written record of the advice.

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 document and clearly identifiable as key information that the customer should read; and

    2
  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.

Message to be given when providing information on home purchase plans

MCOB 5.8.12RRP
  1. (1)

    2Except in the circumstances in (2), whenever a firm provides a customer with information specific to the amount of finance to be provided on a particular home purchase plan following an assessment of the customer's needs and circumstances in order to comply with MCOB 4.10.5D R, it must give, clearly and prominently, the following information:

    1. (a)

      the same information on the firm's product range as is required by MCOB 4.4A.1R (1), MCOB 4.4A.2 R and MCOB 4.4A.4R (1) (as applied in relation to home purchase plans by MCOB 4.10.3A R); and

    2. (b)

      that the customer has the right to request a financial information statement for any home purchase plan which the firm is able to offer the customer.

  2. (2)

    A firm need not give the information in (1) if it has previously given that information in compliance with this rule within the last ten business days.

Message to be given when customer requests an execution-only sale

MCOB 5.8.13RRP

2Whenever, as part of an execution-only sale (or potential execution-only sale), a customer provides a firm with the information in MCOB 4.10.9D R (Execution-only sales) (see MCOB 4.10.9B R and MCOB 4.10.9C G) the firm must inform the customer, clearly and prominently, unless the firm has previously given this information in compliance with this rule within the last ten business days, that the customer has the right to request a financial information statement for any home purchase plan which the firm is able to offer the customer.