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MCOB 9.3 Pre-application disclosure

  1. (1)

    MCOB 5.1 to MCOB 5.5 (with the modifications stated in MCOB 9.3.2 R to MCOB 9.3.12 R) apply to a firm where the regulated mortgage contract is a regulated lifetime mortgage contract.

  2. (2)

    The table in MCOB 9.3.2 R shows how the relevant rules and guidance in MCOB 5 must be modified by replacing the cross-references with the relevant cross-references to rules and guidance in MCOB 9.3 and MCOB 9.4.

  3. (3)

    The table in MCOB 9.3.3 R replaces certain rules and guidance in MCOB 5 with rules and guidance from MCOB 9.3 and MCOB 9.4.

  4. (4)

    The table in MCOB 9.3.4 R disapplies certain rules in MCOB 5 for the purposes of MCOB 9.


Table of modified cross-references to other rules.

This table belongs to MCOB 9.3.1 R.


Rule or guidance

Reference in rule or guidance

To be read as a reference to:


MCOB 5.1.3R(2)


MCOB 7 as modified by MCOB 9

Part of loan not a regulated lifetime mortgage contract

MCOB 5.1.9G

MCOB 5.6.6R(2)

MCOB 9.4.6R(2)

Waiver of provisions

MCOB 5.1.10G

MCOB 5.6

MCOB 9.4.


MCOB 5.2.1G


MCOB 5 as modified by MCOB 9

Applying for a regulated lifetime mortgage contract

MCOB 5.3.2G

MCOB 5.6.26R and MCOB 5.6.27R

MCOB 9.4.26R and MCOB 9.4.27R

Tied products

MCOB 5.4.24G

MCOB 5.6.74R

MCOB 9.4.73R

Issue of offer document in place of illustration

MCOB 5.5.3G

MCOB 6.4 and MCOB 6.6

MCOB 6.4 and MCOB 6.6 as modified by MCOB 9

Customer's credit record

MCOB 5.5.16R

MCOB 5.5.15R(4)

MCOB 9.3.12R(3)


Table of rules in MCOB 5 replaced by rules in MCOB 9: This table belongs to MCOB 9.3.1R


Rule(s) or guidance

Rule(s) or guidance replaced by:

Accuracy of the illustration

MCOB 5.4.2R - MCOB 5.4.7G

MCOB 9.3.5R - MCOB 9.3.10G

Information that is not an illustration

MCOB 5.4.14R

MCOB 9.3.11R

Providing anillustration

MCOB 5.5.15R -

MCOB 9.3.12R -

Content ofillustration

MCOB 5.6

MCOB 9.4


Table of rules in MCOB 5 which do not apply to MCOB 9: This table belongs to MCOB 9.3.1R.



Illustrations for repayment mortgages and interest-only mortgages

MCOB 5.5.13R

Business loans

MCOB 5.7


An illustration on a particular regulated lifetime mortgage contract issued by, or on behalf of a mortgage lender, must be an accurate reflection of the costs of the regulated lifetime mortgage contract.


A mortgage intermediary must take reasonable steps to ensure that an illustration which it issues, or which is issued on its behalf, other than that provided by a mortgage lender:

  1. (1)

    is accurate within the following tolerances:

    1. (a)

      no more than one percent or £1, whichever is the greater, below the actual figures charged by the mortgage lender for the following:

      1. (i)

        the total amount payable in Section 15 of the illustration;

      2. (ii)

        the amounts that the customer must pay by regular instalment (where payments are required), or the amounts of interest charged, in Section 8 of the illustration; and

      3. (iii)

        the amount by which the regular instalment, or the estimated amount owed, would increase following a one percentage point increase in interest rates in Section 9 of the illustration.

    2. (b)

      the APR in Section 15 of the illustration cannot be understated by more than 0.1%; and

  2. (2)

    except in the case of conveyancing fees and insurance premiums (where estimates may be used), is accurate in respect of other figures quoted in the illustration including fees payable to the mortgage lender or mortgage intermediary in Section 11 and cash examples of early repayment charges, calculated in accordance with the rules at MCOB 9.4.83 R to MCOB 9.4.88 R, in Section 13.1


Given that the APR is presented as a percentage, and must be rounded to one decimal place in accordance with MCOB 10 (Annual Percentage Rate), firms should note that the tolerance allowed for the APR in MCOB 9.3.6 R(1)(b) means that, for example, where the actual APR is 5.0%, the quoted APR must be no lower than 4.9%, or where the actual APR is 16.0%, the quoted APR must be no lower than 15.9%.


There are no restrictions on figures which are quoted as higher than those actually charged by the mortgage lender although this should not be purposely done in order to make one regulated lifetime mortgage contract look more expensive than another.


It is the responsibility of a mortgage intermediary to ensure compliance with MCOB 9.3.6 R. However, where a firm can show that it was reasonable for it to rely on information provided to it by another person, other than the mortgage lender, that an illustration was within the tolerances described in MCOB 9.3.6 R, he may be able to rely on MCOB 2.5.2 R, if this turns out not to be the case.

MCOB 9.3.10GRP

An offer document may not always exactly match the illustration provided before application even when the loan requirements have not changed. For example, where a fixed rate has a defined end date, the total amount payable may be different because the number of payments at the fixed rate has reduced, or the estimated amount of interest to be charged has changed, assuming a later date at which the regulated lifetime mortgage contract will start.

MCOB 9.3.11R

Where MCOB 5.4.13 R(2) applies:

  1. (1)

    if the customer initiates the accessing of quotation information on screen (for example, by using the internet or interactive television), the following warning must be displayed equally prominently on each page on screen: This information does not contain all of the details you need to choose a lifetime mortgage. Make sure that you read the separate key facts illustration before you make a decision.

  2. (2)

    a firm must not provide a customised print function where the information on the screen would not be in the form of an illustration if the information were printed in hard copy.

MCOB 9.3.12RRP

In meeting a requestunder MCOB 5.5.1 R(2)(c), the firm must not delay the provision of the illustration by requesting information other than:

  1. (1)

    the information necessary to personalise the illustration in accordance with MCOB 9.4.6 R, if the firm does not already know it;

  2. (2)

    where the firm acts in accordance with MCOB 5.5.11 R (2), such information as is necessary to ascertain whether or not the contract will be a regulated lifetime mortgage contract;

  3. (3)

    where the interest rates, payments (if required) or any other terms and conditions to be included in the illustration are dependent on the customer's credit record, such information as is necessary to produce an illustration;

  4. (4)

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

  5. (5)

    where the customer agrees to receive a quotation for insurance in the illustration (other than that provided for in (4)), such information as is necessary to produce those quotations