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MCOB 5A.4 1Provision of a European Standardised Information Sheet (ESIS)

Timing

MCOB 5A.4.1R
  1. (1)

    A firm must provide the consumer with an ESIS for an MCD regulated mortgage contract before the consumer submits an application for that MCD regulated mortgage contract to an MCD mortgage lender, unless an ESIS for that MCD regulated mortgage contract has already been provided.

  2. (2)

    Except in the circumstances in MCOB 5A.4.2 R, a firm must provide the consumer with an ESIS for an MCD regulated mortgage contract when any of the following occurs, unless an ESIS for that MCD regulated mortgage contract has already been provided:

    1. (a)

      the firm advises the particular consumer to enter into that MCD regulated mortgage contract, then an ESIS must be provided at the point the advice is given, unless the advice is given by telephone, in which case the firm must provide an ESIS within five business days; or

    2. (b)

      the consumer requests an ESIS for that MCD regulated mortgage contract, unless the firm is aware that it is unable to offer that regulated mortgage contract to them; or

    3. (c)

      as part of an execution-only sale (or potential execution-only sale) the consumer has provided the firm with the information in MCOB 4.8A.14R (1) to MCOB 4.8A.14R (3) to indicate which MCD regulated mortgage contract they wish to enter into.

  3. (3)

    Except in the circumstances in MCOB 5A.4.2 R, and unless an ESIS for that MCD regulated mortgage contract has already been provided, a firm must provide the consumer with an ESIS for an MCD regulated mortgage contract:

    1. (a)

      without undue delay after the consumer has given the necessary information on his needs, financial situation and preferences under MCOB 11.6.5R (2) (assessment of affordability) and MCOB 11.6.34R (2) (alternative provisions for loans with high net worth mortgage customers); and

    2. (b)

      in good time before the consumer is bound by any MCD regulated mortgage contract or offer.

[Note: article 14(1) of the MCD]

MCOB 5A.4.2R

A firm need not provide an ESIS:

  1. (1)

    in relation to a direct deal;

  2. (2)

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

  3. (3)

    if the firm does not wish to do business with the consumer.

MCOB 5A.4.3R

If the firm chooses not to give an ESIS in the circumstances in MCOB 5A.4.2R (1), where it has given advice on a direct deal, the firm must give the consumer a written record of the advice.

MCOB 5A.4.4G

In the circumstances in MCOB 5A.4.2R (2), the rule in MCOB 5A.4.1R (1) will mean that the consumer may not make an application for an MCD regulated mortgage contract, as an ESIS has not been provided.

MCOB 5A.4.5G

The effect of MCOB 5A.2.1 R and MCOB 5A.4.1R (1) is that, if a consumer's application to enter into an MCD regulated mortgage contract with a MCD mortgage lender, made through an MCD credit intermediary, is subsequently passed by that firm to another MCD mortgage lender, then the firm must ensure that the application is amended and the consumer is provided with an ESIS for the other MCD mortgage lender's MCD regulated mortgage contract before the application is passed to the other MCD mortgage lender.

MCOB 5A.4.6G

If a firm chooses to issue an offer document in addition to an ESIS, it will need to comply with MCOB 6A.3.1R (MCD Mortgages: content of the offer document).

MCOB 5A.4.7R

A firm must not undertake any action that commits the consumer to an application (including accepting product-related fees for the MCD regulated mortgage contract concerned) until the consumer has had the opportunity to consider an ESIS.

MCOB 5A.4.8G

The effect of MCOB 5A.4.1R (1) and MCOB 5A.4.7 R is that a consumer will be deemed to be committed to an application if, for example, they pay a product-related fee (including a valuation fee) or provides electronic or verbal authority to process an application. It is not necessary for a consumer to provide an MCD mortgage lender with a completed application form to submit an application for an MCD regulated mortgage contract.

MCOB 5A.4.9R

The firm dealing directly with the consumer is responsible for ensuring compliance with the content and timing requirements, ie, an MCD mortgage lender is not responsible for ensuring that a consumer has received an ESIS before accepting an application from an MCD mortgage credit intermediary.

MCOB 5A.4.10R

Where a firm has already provided an ESIS under MCOB 5A.4.1 R and the terms for the proposed regulated mortgage contract are subsequently materially altered or different, the firm must ensure that the consumer is provided with a revised ESIS, before acting on the amendment, when the change occurs at the point that a consumer submits an application for the MCD regulated mortgage contract.

MCOB 5A.4.11G

What constitutes “materially altered” or “different” requires consideration of the facts of each individual case. For example, a change of product such that the underlying terms and conditions of the MCD regulated mortgage contract have changed should normally be regarded as material or different, as would an additional charge, such as a higher lending charge, applying to the MCD regulated mortgage contract when it did not previously.

Uncertainty whether a mortgage is regulated

MCOB 5A.4.12R
  1. (1)

    If, at the point an ESIS must be provided under MCOB 5A.4.1 R, a firm is uncertain whether the contract will be an MCD regulated mortgage contract, the firm must:

    1. (a)

      provide an ESIS; or

    2. (b)

      seek to obtain from the consumer, information that will enable the firm to ascertain whether the contract will be an MCD regulated mortgage contract.

  2. (2)

    Where (1)(b) applies, an ESIS must be provided, unless, on the basis of the information provided by the consumer, the firm has reasonable evidence that the contract is not an MCD regulated mortgage contract.

Providing an ESIS without delay in response to a customer request

MCOB 5A.4.13G

Where the consumer requests an ESIS for a particular MCD regulated mortgage contract (see MCOB 5A.4.1R (2)(b)), the purpose of MCOB 5A.4.14 R, MCOB 5A.4.15 R and MCOB 5A.4.16 G is to ensure that the consumer receives an ESIS without unnecessary delay. These requirements do not restrict the information that the firm may obtain from the consumer after it has provided the consumer with an ESIS.

MCOB 5A.4.14R

In meeting a request for an ESIS under MCOB 5A.4.1R (2)(b), the firm must not delay the provision of the ESIS by requesting information other than:

  1. (1)

    such information as is necessary to complete the ESIS in accordance with MCOB 5A.5.2 R and MCOB 5A.5.3 R, if the firm does not already know it;

  2. (2)

    where the firm acts in accordance with MCOB 5A.4.12R (2), such information as is necessary to ascertain whether or not the contract will be an MCD regulated mortgage contract;

  3. (3)

    where the interest rates, payments or any other terms and conditions to be included in the ESIS are dependent on the consumer's credit record, such information as is necessary to produce an ESIS;

  4. (4)

    where the firm includes a quotation for any tied products or compulsory insurance in the ESIS, such information as is necessary to produce those quotations;

  5. (5)

    any of the following information where it affects the availability of the MCD regulated mortgage contract that the consumer has requested information on, or affects the information to be included in, the ESIS:

    1. (a)

      whether the consumer is a first-time buyer, a subsequent buyer moving home or entering into an MCD regulated mortgage contract without moving home;

    2. (b)

      whether the MCD regulated mortgage contract is required for a right-to-buy purchase or for a shared ownership purchase;

    3. (c)

      the location of the property to be purchased, where known; and

    4. (d)

      whether the terms are dependent on a third-party guarantee.

MCOB 5A.4.15R

Where MCOB 5A.4.14R (3) applies:

  1. (1)

    a firm must ask the consumer relevant questions about their credit history or obtain information on their credit record from a credit reference agency;

  2. (2)

    a credit reference agency must not be used unless:

    1. (a)

      it would be quicker than asking the consumer the relevant questions about their credit history; or

    2. (b)

      the consumer is not able to provide sufficient information on their credit history.

MCOB 5A.4.16G

A firm may use information that it already holds on the consumer for the purpose of producing the ESIS (for example, if it already holds the consumer's credit record), providing the use of this information does not delay the consumer receiving the ESIS and the consumer's consent is obtained, where appropriate.

MCOB 5A.4.17R

If, on the basis of the information obtained from the consumer or, on the basis of information that the firm already holds on the consumer, the firm would do business with the consumer but not on the terms requested, the firm may provide the consumer with an ESIS for a different MCD regulated mortgage contract, if it chooses to do so.