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MCOB 7.5 Mortgages: statements3

Annual statement: requirement

MCOB 7.5.1R

Subject to MCOB 7.5.2 R, a firm must provide the customer with a statement at least once a year (or, in relation to the first statement, within the first 13 months)2:

  1. (1)

    covering the regulated mortgage contract and any tied product purchased through the firm; and

  2. (2)

    giving information about the existence of any linked borrowing or linked deposits, or any other products purchased through the firm where the payments for those products are combined with the payments on the regulated mortgage contract.

MCOB 7.5.2R

Where a tied product is operated separately from the regulated mortgage contract, for example where the premiums on a tied insurance product are not combined with payments on the regulated mortgage contract, the statement required by MCOB 7.5.1 R in relation to the tied product may be provided in a separate communication.

Annual statement: content

MCOB 7.5.3R

The statement required by MCOB 7.5.1 R must contain the following:

  1. (1)

    except in the case of mortgage credit cards, information on the type of regulated mortgage contract, including:

    1. (a)

      a clear statement of whether the regulated mortgage contract is an interest-only mortgage, or repayment mortgage, or a combination of both; and

    2. (b)

      a prominent reminder, where all of the regulated mortgage contract is an interest-only mortgage, that:

      1. (i)

        the customer's payments to the firm do not include any costs of the repayment strategy5 (if that is the case); and

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      2. (ii)

        the customer should have in place arrangements to pay off the capital, and should check the performance of any investments they might have in place for this purpose;

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    3. (c)

      a prominent reminder, where only part of the regulated mortgage contract is an interest-only mortgage, that:

      1. (i)

        the customer's payments to the firm do not include any costs of the repayment strategy5 (if that is the case); and

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      2. (ii)

        the customer should have in place arrangements to pay off the amount of the loan that is on an interest-only basis, and should check the performance of any investments they might have in place for this purpose;

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  2. (2)

    details of the following transactions and information on the regulated mortgage contract during the period since the last statement (or, where the statement is the first statement, since the customer entered into the regulated mortgage contract):

    1. (a)

      the date and amount of each payment made;

    2. (b)

      the amount of each payment that was due during the statement period;

    3. (c)

      the rate(s) of interest applicable to the regulated mortgage contract during the statement period and, if applicable, the date(s) on which the rate(s) of interest changed;

    4. (d)

      the amount of interest charged under the regulated mortgage contract during the statement period; and

    5. (e)

      any other amounts charged under the regulated mortgage contract during the statement period, including fees and any amounts due in relation to tied products;

  3. (3)

    a reminder that the customer should contact the firm if they are unable to make their regular payments under the regulated mortgage contract; and

  4. (4)

    information at the date the statement is issued on:

    1. (a)

      the amount owed by the customer under the regulated mortgage contract;

    2. (b)

      the actual remaining term of the regulated mortgage contract (but if the term of the regulated mortgage contract is open-ended this should be clearly stated);

    3. (c)

      the date at which any early repayment charges on the regulated mortgage contract cease to apply;

    4. (d)

      where applicable, the early repayment charge that applies, expressed as a monetary amount (see MCOB 5.6.84 R);

    5. (e)

      the cost of redeeming the regulated mortgage contract (this must be shown as the sum of MCOB 7.5.3 R(4)(a) and MCOB 7.5.3 R(4)(d) plus any linked borrowing that cannot be retained (including the outstanding balances) plus any other charges that can be quantified at the date the statement is issued); if additional charges are payable that cannot be quantified at the point that the statement is issued (for example if the customer is in arrears5) a warning must be included to that effect; and1

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    6. (f)

      where applicable, the date on which the requirement for the customer to purchase any tied products from the firm comes an end.

MCOB 7.5.3AR
  1. (1)

    4MCOB 7.5.3 R (1)(b) does not apply where as a result of the customer having payment difficulties:

    1. (a)

      the regulated mortgage contract has changed to an interest-only mortgage; and

    2. (b)

      interest is being deferred and capitalised by the firm.

  2. (2)

    Paragraph (1) applies only where the customer continues to have payment difficulties.

MCOB 7.5.4R

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MCOB 7.5.5R

Where a firm provides a customer with a statement containing the information set out in MCOB 7.5.3 R(2) more frequently than once a year, the information set out in MCOB 7.5.3 R(1), MCOB 7.5.3 R(3) and MCOB 7.5.3 R(4) may be provided in a separate communication, but must be provided at least once a year.

MCOB 7.5.6G

Whether a firm is likely to provide the information set out in MCOB 7.5.3 R(2) more frequently than once a year will depend on the nature of the regulated mortgage contract. In determining how frequently to provide that information, a firm should take into account the need to keep the customer informed of any changes in the amount they owe, the customer's expectations and, where appropriate, the duration of the loan. For example, for a mortgage credit card the information might be provided monthly.

MCOB 7.5.7R

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Annual statement - additional content for customers in arrears

MCOB 7.5.8G

If a firm chooses to use the annual statement to provide a customer with a regular written statement in accordance with MCOB 13.5.1 R (Statements of charges), as described in MCOB 13.5.2 G(4), it will need to include the actual payment shortfall 5in the annual statement.

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MCOB 7.5.9G

In some circumstances, a firm may agree a temporary payment plan with a customer that does not involve the customer paying the full amount he owes in each payment period. Where an account in arrears is subject to such a payment plan, and the amount that falls due each payment period is greater than the agreed payment, the firm will still need to show the payments that were due in accordance with MCOB 7.5.3 R(2)(b). However, in these circumstances, the firm may wish to add information to acknowledge that a temporary payment plan is in place.

Annual statement: additional content if tariff of charges has changed

MCOB 7.5.10R

If the tariff of charges has changed since the last annual statement was sent to the customer (or, where the annual statement is the first statement, since the customer entered into the regulated mortgage contract) and a firm has not already sent a revised tariff of charges to the customer, it must include one with the annual statement.