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MCOB 9.1 Application

Who?

MCOB 9.1.1 R

This chapter applies to a firm in a category listed in column (1) of the table in MCOB 9.1.2 R in accordance with column (2) of that table, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans2.

MCOB 9.1.2A G

2The rules and guidance that are not relevant to home reversion plans are those related, for example, to interest rates, APR, higher lending charge, mortgage credit cards, multi-part mortgages and foreign currency mortgages.

What?

MCOB 9.1.3 R

This chapter applies in the circumstances set out in other rules in this sourcebook, but in relation to an equity release transaction2, in accordance with the table in MCOB 9.1.4 R.

2
MCOB 9.1.4 R

This table belongs to MCOB 9.1.3 R

Section of MCOB 9

Applies in relation to an equity release transaction as set out in the following rules: 2

2

MCOB 9.1 , MCOB 9.2

all of the rules below in this column2

MCOB 9.3 , MCOB 9.4

MCOB 5.1.3 R

MCOB 9.5

MCOB 6.1.3 R

2 MCOB 9.6 2

MCOB 7.1.3 R

MCOB 9.1.5 R

In this chapter, references to an equity release transaction2 include, where the context requires, references to arrangements which are capable of becoming an equity release transaction2.

2 2
MCOB 9.1.6 R

2This chapter does not apply in relation to arranging, advising on or administering a home reversion plan for a customer acting in his capacity as an unauthorised reversion provider.

MCD application

MCOB 9.1.7 G
  1. (1)

    3This chapter does not apply to an MCD lifetime mortgage, except as set out in (2) to (3), below.

  2. (2)

    MCOB 9.4.33 R, MCOB 9.4.35 R, MCOB 9.4.62 R and MCOB 9.4.63 R apply to the extent specified by MCOB 5A.6.2 R.

  3. (3)

    MCOB 9.6 to MCOB 9.8 apply, except for rules that modify or replace MCOB 7.6.7R to MCOB 7.6.17R (because those rules do not apply to an MCD mortgage lender or an MCD mortgage credit intermediary, MCOB 7B applies instead: see MCOB 7.1.2AR and MCOB 7.1.2BG).

MCOB 9.3 Pre-application disclosure

MCOB 9.3.1 R
  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 home finance transaction is an equity release transaction, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans (see MCOB 9.1.2A G).3

    3
  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 applicable to equity release transactions.4

    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.

  5. (5)

    The terms that by their nature are relevant only to regulated mortgage contracts must be replaced with the appropriate equivalent terms and expressions for home reversion plans.3

MCOB 9.3.1A G

3The provisions in this sourcebook that apply to home reversion plans should be read in a purposive way. This means that firms should substitute equivalent home reversion terminology for lifetime mortgage terminology, where appropriate. Examples of terms and expressions that must be replaced are 'loan' or 'amount borrowed', which should be replaced with 'amount released' or 'amount to be released', as appropriate, and 'mortgage lender' and 'mortgage intermediary' which should be replaced with 'reversion provider' and 'reversion intermediary'.

MCOB 9.3.2 R

Table of modified cross-references to other rules.

This table belongs to MCOB 9.3.1 R.

Subject

Rule or guidance

Reference in rule or guidance

To be read as a reference to:

Variations

MCOB 5.1.3R(2)

MCOB 7

MCOB 7 as modified by MCOB 9

Part of loan not an equity release transaction2

2

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.

Purpose

MCOB 5.2.1G

MCOB 5

MCOB 5 as modified by MCOB 9

Applying for a lifetime mortgage2

2

MCOB 5.3.2G

MCOB 5.6.26R and MCOB 5.6.27R

MCOB 9.4.26R and MCOB 9.4.27R

4Messages to be given when providing information on equity release transactions

MCOB 5.4.18AR (1)

MCOB 5.4.18AR (1)(a)

MCOB 4.7A.2 R

MCOB 4.4A.1R (1) , MCOB 4.4A.2 R and MCOB 4.4A.4R (1)

MCOB 8.5A.2 R

MCOB 4.4A.1R (1) , MCOB 4.4A.2 R and MCOB 4.4A.4R (1), each as applied by MCOB 8.3.1 R in modified form

4Messages to be given when customer requests an execution-only sale

MCOB 5.4.18BR (1)

MCOB 4.8A.14R (1) to MCOB 4.8A.14R (3)

MCOB 8.6A.4R (2)

4 Guidance relevant to messages given to customer

MCOB 5.4.18C G

MCOB 5 Annex 1

MCOB 9 Annex 1 R for a lifetime mortgage; MCOB 9 Annex 2 R for a home reversion plan.

Tied products

MCOB 5.4.24G

MCOB 5.6.74R

MCOB 9.4.73R or MCOB 9.4.160R3

4Provision of illustrations: timing

MCOB 5.5.1 R (2)(e)

MCOB 4.8A.14R (1) , (2) or (3)

MCOB 8.6A.4R (2)

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)

MCOB 9.3.3 R

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

Subject

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 9.3.10G4

Providing anillustration

MCOB 5.5.15R -

MCOB 9.3.12R -

Content ofillustration

MCOB 5.6

MCOB 9.4

MCOB 9.3.4 R

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

Subject

Rule(s)

Business loans and loans to high net worth mortgage customers: tailored provisions4

MCOB 5.7

MCOB 9.3.5 R

An illustration on a particular equity release transaction issued by, or on behalf of an equity release provider, must be an accurate reflection of the costs of the equity release transaction.3

3
MCOB 9.3.6 R

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

MCOB 9.3.6A R

3A reversion 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 an reversion provider, is accurate, except in the case of conveyancing fees and insurance premiums (where estimates may be used).

MCOB 9.3.7 G

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%.

MCOB 9.3.8 G

There are no restrictions on figures which are quoted as higher than those actually charged by the equity release provider3 although this should not be purposely done in order to make one equity release transaction3 look more expensive than another.

3 3
MCOB 9.3.9 G

It is the responsibility of an equity release intermediary3 to ensure an illustration is accurate.3 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 equity release provider, he may be able to rely on that person (see MCOB 2.5.2 R).3

3
MCOB 9.3.10 G

An offer document may not always exactly match the illustration provided before application even when the equity release3 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 lifetime mortgage3will start.

3 3
MCOB 9.3.11 R

[deleted]4

3 4 4
MCOB 9.3.12 R

In meeting a request an illustration in relation to a particular equity release transaction (see MCOB 5.5.1 R (2)(d))4, the firm must not delay the provision of the illustration by requesting information other than:

3 4
  1. (1)

    the information necessary to personalise the illustration, if the firm does not already know it;

    3
  2. (2)

    where the firm is uncertain whether the transaction will be an equity release transaction,3 such information as is necessary to ascertain this;3

    3
  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

MCOB 9.4 Content of illustrations

Purpose

MCOB 9.4.1 G

This section sets out the required content of an illustration for an equity release transaction provided to a customer by a firm. The template of an illustration for a lifetime mortgage is set out in MCOB 9 Annex 1 and for a home reversion plan, in MCOB 9 Annex 2.8

8

Content, order, format etc

MCOB 9.4.2 R

An illustration provided to a customer must:

  1. (1)

    contain the material set out in the relevant annex to this chapter in the order and using the numbered section headings, sub-headings and text prescribed, except where this section provides otherwise;8

    8
  2. (2)

    follow the format of the template in 8the relevant annex to this chapter8, with:

    1. (a)

      prominent use of the Key facts5 logo followed by the text 'about this lifetime mortgage' or 'about this home reversion plan'8;

      55
    2. (b)

      each section clearly separated;

    3. (c)

      all the amounts set out in Sections 6, 8, 11, 12 and 15 in columns that make the amounts clear; and

    4. (d)

      no section split across different pages except where it is impractical not to do so;

  3. (3)

    use font sizes and typefaces consistently throughout the illustration which are sufficiently legible so that the illustration can be read easily by a typical customer;

  4. (4)

    ensure that the information within each section is clearly laid out (for example, through the use of bullet points or similar devices to separate information);

  5. (5)

    include prominent headings with the numbered section headings clearly differentiated in some way from the other text in the illustration (for example, through the use of larger and more prominent fonts, the use of shading or colour);

  6. (6)

    replace "[name of mortgage lender]" or "[name of reversion provider"] with the name of the equity release provider; a trading name used by the equity release provider may be stated;8

    8
  7. (7)

    describe any early repayment charge as an "early repayment charge" and not use any other expression to describe such charges;

  8. (8)

    describe any higher lending charge as a "higher lending charge" and not use any other expression to describe such charges; and

  9. (9)

    describe any lifetime mortgage as a "lifetime mortgage" and any home reversion plan as a "home reversion plan" and not use any other expression to describe such a mortgage or plan8 or omit that description from the name given to any product that meets the definition.

    8
MCOB 9.4.3 G
  1. (1)

    Further requirements regarding the use of the Key facts logo and the location of specimens are set out in GEN 5.1 and GEN 5 Annex 1 G.5

    5
  2. (2)

    MCOB 9.4.2 R(3) does not prevent the use of different fonts and typefaces for headings and risk warnings. Its purpose is to prevent particular sections of the illustration from being made less prominent than other sections through the inconsistent use of font sizes and typefaces.

  3. (3)

    The illustration can contain the equity release provider's or equity release intermediary's logo and other "brand" information.8

    8
  4. (4)

    The illustration can contain page numbers and other references that aid understanding, record keeping and identification of a particular illustration such as the date and time an illustration is produced or a unique reference number, provided these do not detract from the content of the illustration.

  5. (5)

    Firms are reminded of their general obligation for communications to customers to be clear, fair and not misleading. Sections of the illustration may be split across pages where it is practical to do so. When splitting sections, firms should split the section at an appropriate place, for example at the end of a sub-section, and not split risk warnings or tables (unless the length of the table is greater than one page).

MCOB 9.4.4 R

A firm must include in the illustration all prescribed section headings, except that:

8
  1. (1)

    in Section 8 of the lifetime mortgageillustration8 (What you owe and when):

    1. (a)

      Section 8 (A) (details of mortgage payments) is only required where the terms of12 the lifetime mortgage either:12

      77
      1. (i)

        require the customer to make regular payments to the mortgage lender, in respect of all or part of the interest or part of the capital due under those terms, either over the duration of the lifetime mortgage or until a specified date; or12

      2. (ii)

        expect that the customer will make such payments until he or she chooses to stop doing so.12

    2. (b)

      Section 8(B) (projection of roll-up of interest) is only required where all or part of the interest on the lifetime mortgage7 is or may be12 rolled-up;

      7
  2. (2)

    Section 16 of the lifetime mortgageillustration8 (Using a mortgage intermediary) or section 12 of the home reversion planillustration (Using a home reversion intermediary) 8is required only where the illustration is provided to the customer by, or on behalf of, an equity release intermediary8; and

    8
  3. (3)

    where the illustration is issued in connection with a further advance, an additional section "Total borrowing" must be inserted after Section 8 of a lifetime mortgageillustration8, and must be numbered "9", with all subsequent sections renumbered accordingly.

    8

Content: required information

MCOB 9.4.5 R

The illustration provided to a customer must:

  1. (1)

    contain only the material specified in MCOB 9.4 and no other material except where provided for elsewhere in MCOB 9.4; and

  2. (2)

    be in a document separate from any other material that is provided to the customer.

MCOB 9.4.6 R

As a minimum the illustration must be personalised to reflect the following:

  1. (1)

    the specific equity release transaction8 in which the customer is interested;

    8
  2. (2)

    the amount of the loan or equity8 required by the customer, or for drawdown mortgages and instalment reversion plans,8 the amount the customer wishes to draw down or to receive8 on a monthly (or such frequency that amounts are available) basis. Where the amount the customer can draw down is variable, the firm must agree with the customer an expected amount to be drawn down per year (see MCOB 9.4.13 R);

  3. (3)

    the price or value of the property on which the equity release amount is based8 (estimated where necessary);

    8
  4. (4)

    such information relating to the customer, or the property, or both as is necessary to determine that the customer would qualify for the equity release transaction8 in question; and

    8
  5. (5)

    the term of the instalment reversion plan or, in the case of a lifetime mortgage and an open-ended instalment reversion plan, the estimated term.8

    8
MCOB 9.4.7 G

A firm should not illustrate more than one equity release transaction8 in the same illustration, for example by using one illustration to compare alternative products.

8
MCOB 9.4.8 G

These are8 minimum requirements. The illustration may be personalised to a greater degree if the equity release provider or equity release intermediary8 wishes, subject to the restrictions on the information that can be obtained from the customer when he requests written information on a particular transaction (see MCOB 5.5.1 R (2)(c)).8

8
MCOB 9.4.9 G

In relation to the price or value of the property8, in order for the firm to comply with the principle that an illustration should be clear, fair and not misleading8, an estimated valuation, where the estimated valuation is not that provided by the customer, must be a reasonable assessment based on all the facts available at the time. For example, an overstated valuation could enable a more attractive lifetime mortgage7 to be illustrated on the basis of a lower ratio of the loan amount to the property value - for example, one with a lower rate of interest.

8 8 7
MCOB 9.4.10 R
  1. (1)

    In estimating the term of a lifetime mortgage or an open-ended instalment reversion plan,8 a firm must:

    8
    1. (a)

      use an estimate of the life expectancy of the customer that is reasonable and based on evidence12; and2

    2. (b)

      for the purposes of the illustration, where the estimate of12 life expectancy is not a whole number of12 years, the term should be rounded up to the next whole year (for example, if the life expectancy12 is between fifteen and sixteen years, an estimated term of sixteen years should be used in the illustration).

  2. (2)

    Where the term estimated using the approach12 set out in (1) is less than fifteen years, the firm should use a term of fifteen years in preparing the illustration.

MCOB 9.4.10A E

12Use of the most recent appropriate mortality tables in the Continuous Mortality Investigation published by the Institute and Faculty of Actuaries or in the National Life Tables published by the Office of National Statistics may be relied on as tending to establish compliance with MCOB 9.4.10R(1)(a).

MCOB 9.4.11 R

Where the illustration is issued to two or more customers who intend to borrow jointly, or who own the property jointly,8 the term estimated should be based on the longest life expectancy.

8
MCOB 9.4.12 R

If the customer requests an illustration showing a term of the customer's choice, that illustration must be issued in addition to the illustration showing the term calculated in accordance with these rules8. The term chosen should be stated in Section 4 of the illustration "What you have told us".

8 8
MCOB 9.4.13 R

The amount to be specified in the illustration and 8referred to in MCOB 9.4.6 R(2) is:

  1. (1)

    the amount that the customer has asked to borrow, release8 or draw down; or

  2. (2)

    where the lifetime mortgage7 is a revolving credit agreement such as a secured overdraft or mortgage credit card:6

    7
    1. (a)

      6(if it provides for an initial drawdown and linked borrowing facilities that would allow the customer to increase the amount of the loan without any further approval from the mortgage lender) the amount of the initial drawdown; or

    2. (b)

      6(in all other cases) the total borrowing that the firm is willing to provide under the lifetime mortgage;7 or

      7
  3. (3)

    in cases where, on the basis of the information obtained from the customer before providing the illustration, it is clear that the customer would not be eligible to borrow, release8 or draw down the amount he requested, an estimate of the amount that the customer could borrow, release8 or draw down, based on the information obtained from the customer.

MCOB 9.4.14 G

MCOB 9.4.13 R (3) does not require information to be obtained from the customer before providing an illustration in order to ascertain the amount the customer is eligible to borrow or to release from the property8. Instead, its purpose is to avoid a firm being in a position where it would otherwise have to provide a customer with an illustration for an amount it knew the customer would not be eligible for, based on whatever information it had obtained from the customer before providing the illustration.

MCOB 9.4.15 R

Where the illustration relates to a lifetime mortgage7 that is sub-divided into different parts with different types of interest rate or different rates of interest or different conditions, or a combination of these, the requirements in MCOB 9.4 may be adapted to accommodate this. The adaptations made must be limited to those that are necessary.

7
MCOB 9.4.16 G

MCOB 9.4.15 R applies where, for example, the lifetime mortgage7 is divided so that a certain amount is payable on a fixed interest rate, and a certain amount on a discounted interest rate.

7

Information to be included at the head of the illustration

MCOB 9.4.17 R

The following information must be included at the head of the illustration:

  1. (1)

    the customer's name;

  2. (2)

    the date of issue of the illustration;

  3. (3)

    details of how long the illustration is valid for, and whether there is any date by which the equity release transaction8 covered by the illustration needs to commence (for example, where a fixed interest rate is only available if the lifetime mortgage8 commences before a certain date); and

    8
  4. (4)

    the prescribed text at the head of the illustration.

    8
MCOB 9.4.17A R
  1. (1)

    8The requirements for a lifetime mortgageillustration are set out in MCOB 9.4.18 R to MCOB 9.4.132 R.

  2. (2)

    The requirements for a home reversion planillustration are set out in MCOB 9.4.133 R to MCOB 9.4.176 G.

Section 1 of a lifetime mortgage illustration8: "About this information"

MCOB 9.4.18 R

Under the section heading "About this information", the prescribed text in MCOB 9 Annex 1 under this heading must be included.

Section 2 of a lifetime mortgage illustration8: "Which service are we providing you with?

MCOB 9.4.19 R
  1. (1)

    Unless (2) applies, under the section heading "Which service are we providing you with?" the prescribed text in MCOB 9 Annex 1 under this heading must be included with a "check box" for each statement, one of which must be marked prominently to indicate the level of service provided to the customer:

  2. (2)

    If the level of service described in the illustration is provided by another firm, (1) may be replaced by the following:Under the section heading "Which service are we providing you with?" the following text should be presented as two options with a "check box" for each option, one of which must be marked prominently to indicate the level of service provided to the customer:"[name of firm] recommends, having assessed your needs, that you take out this lifetime mortgage.[name of firm] is not recommending a particular lifetime mortgage for you. However, based on your answers to some questions, it is giving you information about this lifetime mortgage so that you can make your own choice, or find out about other ways in which you may be able to release equity from your home.".

Section 3 of a lifetime mortgage illustration8: "What is a lifetime mortgage?"

MCOB 9.4.20 R

Under the section heading "What is a lifetime mortgage?", the prescribed text in MCOB 9 Annex 1 under this heading must be included.

Section 4 of a lifetime mortgage illustration8: "What you have told us"

MCOB 9.4.21 R
  1. (1)

    Under the section heading "What you have told us", the illustration must state the information that has been obtained from the customer under MCOB 9.4.6 R and MCOB 9.3.12 R (apart from MCOB 9.4.6 R(1) and MCOB 9.4.6 R(5) which are provided for in Section 5 of the illustration ), and can include brief details of any other information that has been obtained from the customer and used to produce the illustration.

  2. (2)

    Where the customer requests an additional illustration showing a term of their choice, the term chosen by the customer must be stated in this section, together with a statement to the effect that the term is the customer's choice.

  3. (3)

    If the amount on which the illustration is based includes the amount that the customer wants to borrow or draw down plus charges and other payments that have been added to the loan or amount to be drawn down:

    1. (a)

      except where (b) applies, this section must include the following text after the loan amount or amount to be drawn down from MCOB 9.4.13 R(1):"plus £ [insert total amount of fees and other charges added to the loan] for fees that have been added to the loan [or amount drawn down] - see Section 11 for details."; or

    2. (b)

      where there are other fees or charges that the customer must pay that have not been added to the loan this section must include the following text after the loan amount or amount to be drawn down from MCOB 9.4.13 R(1):"plus £ [insert total amount of fees and other charges added to the loan] for fees that have been added to the loan [or amount drawn down]. These and the additional fees that you need to pay are shown in Section 11.".

  4. (4)

    If the amount on which the illustration is based includes the amount that the customer wants to borrow plus insurance premiums or insurance-related charges (other than a higher lending charge) that have been added to the loan or amount to be drawn down:12

    1. (a)

      except where (b) applies, this section must include the following text after the loan amount or amount to be drawn down from MCOB 9.4.13 R(1) (which may be combined with the prescribed text in (3) if applicable): "plus £[insert amount of premium or charges, or both, to be added to the loan] for insurance [premiums] [and] [charges] that have been added to the loan [or amount drawn down] " see Section 12 for details."; or2

    2. (b)

      where there are other insurance premiums or insurance-related charges, or both, that the customer must pay that have not been added to the loan this section must include the following text after the loan amount or amount to be drawn down from MCOB 9.4.13 R(1) (which may be combined with the prescribed text in (3) if applicable): "plus £ [insert amount of premium or charges, or both, to be added to the loan] for insurance [premiums] [and] [charges] that have been added to the loan [or amount drawn down]. These and any additional insurance [premiums] [and] [charges] that you need to pay are shown in Section 12.".2

  5. (5)

    If the amount on which the illustration is based does not involve any charges or payments being added to the amount to be borrowed or amount to be drawn down, but there are charges that must be paid by the customer, Section 4 of the illustration must include the following text after the loan amount from MCOB 9.4.13 R(1):"No fees have been added to this amount but the fees you need to pay are shown in Section 11. For details of any insurance charges, see Section 12.".2

  6. (6)

    If the lifetime mortgage7 on which the illustration is based has no charges that must be paid by the customer, and no insurance premiums are being added to the loan, Section 4 of the illustration must include the following text after the loan amount from MCOB 9.4.13 R(1):2"We do not charge any fees for this lifetime mortgage.".

    7
MCOB 9.4.22 R

At the end of Section 4 of the illustration a statement must be included making clear that changes to any of the information obtained from the customer, and where appropriate to the valuation of the property, could alter the details elsewhere in the illustration and encouraging the customer to ask for a revised illustration in this event.

MCOB 9.4.23 G

An example of the type of statement that would satisfy MCOB 9.4.22 R is:"The valuation that will be carried out on the property, and changes to any of the information you have given us, could alter the information in this illustration. If this is the case please ask for a revised illustration."

Section 5 of a lifetime mortgage illustration8: "Description of this mortgage"

MCOB 9.4.24 R

Under the section heading "Description of this mortgage" the illustration must:

  1. (1)

    state the name of the mortgage lender providing the lifetime mortgage7 to which the illustration relates (a trading name used by the mortgage lender may also be stated in accordance with MCOB 9.4.2 R(6)), and the name, if any, used to market the lifetime mortgage;7

    77
  2. (2)

    include a statement describing the lifetime mortgage;7

    7
  3. (3)

    if the lifetime mortgage7 is linked to an investment, and payments required on the lifetime mortgage7 will be deducted from the income from the investment, include a statement that this is the case;

    77
  4. (4)
    1. (a)

      provide a description of the interest rate type and rate of interest that applies in accordance with the format described in MCOB 9.4.26 R and MCOB 9.4.27 R;

    2. (b)

      where there is more than one interest rate type or rate of interest, specify the amount of the loan to which each interest rate type and rate of interest applies;

    3. (c)

      unless the interest rate applies for the full life of the loan, confirm what interest rate will apply, when it will apply and for how long it will apply after any initial interest rate ends, in accordance with the format described in MCOB 9.4.26 R and MCOB 9.4.27 R; and

    4. (d)

      provide a clear explanation of the charging approach where different interest rates are applied to different items of debt (for example, for a mortgage credit card where a different interest rate applies to balances that are transferred from that charged on any additional borrowing);

  5. (5)

    include a statement regarding the term of the lifetime mortgage7 using the following text:"We have based this illustration on an estimated term of [insert number of years] years, but remember that the term of this lifetime mortgage is not fixed and could be longer or shorter than [insert number of years] years. If you are still living in your home at the end of [insert number of years] years, the lifetime mortgage will continue to run.";

    7
  6. (6)

    include a statement of the maximum amount the customer may borrow from the mortgage lender and the circumstances (if any) in which the customer may be able to borrow additional funds at a future date;

  7. (7)

    if the customer is obliged to buy any tied products under the lifetime mortgage7 include the following information:

    7
    1. (a)

      details of the tied products required;

    2. (b)

      the following text:"You are obliged to take out [insert details of the tied product(s)] through [insert name of mortgage lender or if relevant, name of mortgage intermediary] as a condition of this lifetime mortgage. Please refer to Section 12 of this illustration for further details.";

  8. (8)

    state very briefly any restrictions that apply to the availability of the lifetime mortgage7 (for example, if it is only available to certain types of customer);

    7
  9. (9)

    where the interest rate, payments (if required) or terms and conditions of the lifetime mortgage7 in the illustration reflect a customer's adverse credit history, include the following text:"The terms of this lifetime mortgage reflect past or present financial difficulties."; and

    7
  10. (10)

    where the intention of the lifetime mortgage7 is solely to provide the customer with a mortgage credit card (rather than the mortgage credit card being an additional feature of a lifetime mortgage7) include the warning about the loss of statutory rights from MCOB 9.4.102 R(2)(a) or (b) in Section 5 of the illustration rather than Section 14.

    77
MCOB 9.4.25 G

Examples of types of statement that would satisfy MCOB 9.4.24 R(2) are as follows (more than one may apply to particular types of lifetime mortgage7):

7
  1. (1)

    For an interest roll-up mortgage12: "You do not have to make any repayments during the life of this lifetime mortgage. The loan, all of the interest and charges due to [name of mortgage lender] will be repaid from the sale of your home. This will happen on your death [or the death of the last borrower] or if you move home (either into another property or into sheltered accommodation or residential care). Any money left over would be paid to you or your beneficiaries.".[If only a part of the interest is rolled up the statement should specify the amount or proportion of the loan on which the interest will be rolled-up].

  2. (2)

    For a drawdown mortgage:"This lifetime mortgage provides you with a cash sum every month [or such other frequency as is applicable, including "on request"] until it is repaid. [Include if applicable: You will also receive a lump sum payment at the start of the lifetime mortgage].".

  3. (3)

    For an interest-only mortgage:"This is an interest only lifetime mortgage, which means that you have to make [insert frequency of payments] payments to [name of mortgage lender] until the lifetime mortgage is repaid. The amount you owe will stay the same over the life of the mortgage unless fees or charges have to be added. The mortgage will be repaid from the sale of your home on your death [or the death of the last borrower] or if you move home (either into another property or into sheltered accommodation or residential care). Any money left over would be paid to you or your beneficiaries.".

MCOB 9.4.26 R

MCOB 9.4.27 R sets out some examples of descriptions of interest rate types and rates of interest that must be used in the illustration to comply with MCOB 9.4.24 R(4). If an interest rate is not described in MCOB 9.4.27 R, it must be presented in the illustration in a way that is consistent with the descriptions in MCOB 9.4.27 R.

MCOB 9.4.27 R

Description of interest rate types and rates of interest. This table belongs to MCOB 9.4.26R:

Description of the interest rate

Amount payable in each instalment (if applicable)

Lender's base mortgage rate - must be described as the [Lender]'s standard variable rate, currently X%, [where applicable insert the date at which the interest rate ends or period for which the interest rate applies].

Amount based on X%.

Fixed rate - must be described as fixed rate of X% [where applicable insert the date at which the interest rate ends or the period for which the interest rate applies].

Amount based on the fixed rate of X%.

Discounted rate - must be described as a variable rate, currently X%, with a discount of Y% [where applicable insert the date at which the discount ends or the period for which the discount applies], giving a current rate payable of Z%.

Amount based on Z%.

Capped rate - must be described as a variable rate, currently X%, which will not go above a ceiling of Y% [where applicable insert the date at which the capped interest rate ends or the period for which the capped interest rate applies].

Amount based on the current interest rate payable (X%).

Capped and collared - must be described as a variable rate, currently X%, which will not go below a floor of Y% or above a ceiling of Z% [where applicable insert the date at which the capped and collared interest rate ends or the period for which the capped and collared interest rate applies].

Amount based on the current interest rate payable (X%).

Tracker rate - must be described as a variable rate which is [X% above/X% below/the same as] [insert interest rate tracked, currently Z%], [where applicable insert the date at which the interest rate ends or the period for which the interest rate applies], to give a current rate payable of Y%. Details should also be provided of how soon after an interest rate change the mortgage interest rate is adjusted.

Amount based on Y%.

Deferred rate - must be described as a variable rate, currently X%, where Y% is not paid now but is added to your mortgage [where applicable insert the date at which the deferred interest rate ends or the period for which the deferred interest rate applies], to give a current rate payable of Z%.

Amount based on Z%.

Stepped rate where different interest rates apply over different time periods (for example, fixed interest rate in year 1 changes in year 2). Each element should be dealt with individually as above.

Amount for each of the 'steps'.

Combinations of the above must be treated in the same way as the descriptions above, (for example, if a discounted interest rate has a 'floor' then it must be described as such).

Follow the above treatment depending on the combination.

MCOB 9.4.28 R

Where the loan under the lifetime mortgage7 is divided into more than one part (for example where part of the loan is a fixed interest rate and part of the loan is a discounted variable interest rate) and the firm displays this in a tabular format in the illustration:

7
  1. (1)

    the following text must be used to introduce the table "As this lifetime mortgage is made up of more than one part, these parts are summarised below:";

  2. (2)

    each part must be numbered for ease of reference in the illustration;

  3. (3)

    the "initial rate payable" must be displayed separately from the interest rate description;

  4. (4)

    the loan amounts must be totalled; and

  5. (5)

    immediately following the table, a statement of what interest rates will apply to each part, (and when they will apply) after any initial interest rate ends in accordance with MCOB 9.4.24 R(4)(c).

MCOB 9.4.29 R

Further information about the lifetime mortgage7 may be included in Section 5 of the illustration as long as it does not significantly:

7
  1. (1)

    duplicate information contained elsewhere in the illustration; and

  2. (2)

    extend the length of this section.

MCOB 9.4.30 G

An example of further information that may be included in accordance with MCOB 9.4.29R11 might be that an "approval in principle" has been granted subject to valuation and satisfactory credit reference.

Section 6 of a lifetime mortgage illustration8: "Benefits"

MCOB 9.4.31 R

Under the section heading "Benefits", the illustration must include:

  1. (1)

    a description of the monetary amount(s), and in a box aligned to the right of the document, the monetary amount(s) that the customer will receive as a lump sum and/or as a monthly [or such other frequency as is applicable] payment;

  2. (2)

    where the lifetime mortgage7 is linked to an investment and the payments required on the lifetime mortgage7 will be deducted from the income from the investment, the monetary amount of the net income the customer will receive. This must be shown in a box immediately underneath that required in (1) and containing the subheading "Your net income"; and

    77
  3. (3)

    if applicable, statements of any other benefits, incentives and guarantees that apply to thelifetime mortgage.7 This must be shown under the subheading "Other benefits and incentives'.

    7
MCOB 9.4.32 G

Examples of text that would satisfy MCOB 9.4.31 R(1), depending on the nature of the7lifetime mortgage,7 are:

  1. (1)

    "This lifetime mortgage will provide a lump sum of £[x].";

  2. (2)

    "The amount you are borrowing will automatically be used to purchase a [name of linked investment product] from [name of provider]. The amount is £[x]."; and

  3. (3)

    "You will receive a monthly [or such other frequency as is applicable] payment from the start of your lifetime mortgage. This will be £ [state amount].".

Section 7 of a lifetime mortgage illustration8: "Risks - important things you must consider"

MCOB 9.4.33 R

The illustration must include under the heading "Risks - important things you must consider" statements and warnings on the following:

  1. (1)

    a brief statement of the specific circumstances in which the mortgage lender is able to repossess the property;

  2. (2)

    a statement of how the mortgage lender will treat any negative equity arising during the life of the lifetime mortgage7 and at the time the amount borrowed under the lifetime mortgage7 is due to be repaid in full;

    77
  3. (3)

    a statement of the effect of the customer wanting or needing to move home (either into another property or into sheltered accommodation or long term care or residential care), covering the circumstances in which the lifetime mortgage7 is portable, and whether early repayment charges are payable (the illustration is not required to include under this heading the exact amount of any early repayment charges);

    7
  4. (4)

    a statement of the effect on the lifetime mortgage7 of another party moving into the property (for example on marriage or the formation of a civil partnership 4or where a family member acts as a carer);

    7
  5. (5)

    a brief statement of the mortgage lender's requirements for repair and maintenance of the property, including the mortgage lender's right (if any) to enter the property to effect essential repairs, and the circumstances in which this may occur;

  6. (6)

    a warning that taking out this lifetime mortgage7 may affect the customer's tax and welfare benefits position, that tax and welfare benefits can change and that the customer should consider seeking further information from HM Revenue and Customs3, Benefits Agency or another source of advice such as a Citizens' Advice Bureau;

    73
  7. (7)

    a brief statement as to whether the customer can secure borrowing from any other source on the property in the future (and if applicable a warning that an increasing debt may mean that it may not be possible to borrow more in the future); and

  8. (8)

    a statement included prominently at the end of Section 7: "Risks " important things you must consider" using the following specified text:"Check that this mortgage will meet your needs if you want your family or others to inherit your home. If you are in doubt, seek independent legal and financial advice".

MCOB 9.4.35 R

Under the heading "Risks - important things you must consider" the illustration must also include the following if they apply:

  1. (1)

    for drawdown mortgages where there is a monthly (or such other frequency as may apply) cash sum payable, a statement that inflation can erode the value of the cash sum over time;

  2. (2)

    where:

    1. (a)

      the lifetime mortgage7 is linked to an investment; and

      7
    2. (b)

      the payments required on the lifetime mortgage7 will be deducted from the income from the investment; and

      7
    3. (c)

      the customer will receive a fixed net income;

    a statement that inflation can erode the value of the cash sum over time;

  3. (3)

    for drawdown mortgages, details of any circumstances where the mortgage lender may alter or discontinue payments to the customer without their prior consent; and

  4. (4)

    for alllifetime mortgage,7 a statement or warning with regard to any material issue not covered elsewhere in MCOB 9.4.33 R and MCOB 9.4.35 R.

    7

Section 8 of a lifetime mortgage illustration: “What you will owe and when” (A) “Details of mortgage payments” 8

MCOB 9.4.36 G

The section headed "What you will owe and when" (A) “Details of mortgage payments” will apply only where the terms of the lifetime mortgage either:12

7 7 7 7
  1. (1)

    require the customer to make regular payments to the mortgage lender, in respect of all or part of the interest or part of the capital due under those terms, either over the duration of the lifetime mortgage or until a specified date; or12

  2. (1)

    expect that the customer will make such payments until he or she chooses to stop doing so.12

This will include those cases where the interest payment is deducted from the income provided by a linked investment product (such as an annuity) such that the customer receives the net income.

MCOB 9.4.37 R

The heading of the column on the right-hand side of Section 8 of the illustration must state the frequency with which payments must be made by the customer. (For example, if payments are to be made on a monthly basis, the heading for this section must be "What you will owe and when" and the column must be headed "Monthly payments".1

MCOB 9.4.38 R

All the payments in Section 8 of the illustration must be calculated based on the frequency used for the purposes of the heading in MCOB 9.4.37 R and must be shown in the column on the right-hand side of this section.

MCOB 9.4.39 R

Section 8 of the illustration must contain the following information:

  1. (1)

    the loan amount on which the illustration is based. This figure should include all fees, charges and insurance premiums that have been added to the loan in accordance with MCOB 9.4.21 R(3) and MCOB 9.4.21 R(4), and the following text must follow the loan amount:"which include[s] the [fees] [and] [insurance premiums] that are shown in [Section 11] [and] [Section 12] as being added to your lifetime mortgage.";

  2. (2)

    2the assumed start date that has been used in the illustration to estimate the number of payments to be charged at given interest rates;2

  3. (3)

    except where MCOB 9.4.47 R applies, for each of the interest rates charged on the lifetime mortgage:7

    7
    1. (a)

      the number of payments at that interest rate;

    2. (b)

      whether the interest rate is fixed or variable;

    3. (c)

      the interest rate charged on the lifetime mortgage7 at the time the illustration is issued; and

      7
    4. (d)

      the amount that the customer must pay in each instalment at that interest rate, which must be recorded in the right-hand column of this section (see MCOB 9.4.38 R); and

  4. (4)

    where the payment due to the mortgage lender is to be deducted from the income provided by a linked investment product (such as an annuity) such that the customer receives the net income, a clear statement to this effect.

MCOB 9.4.40 G

If appropriate, the two statements required by MCOB 9.4.39 R(1) and MCOB 9.4.39 R(2) may be merged, for example "These payments are based on a loan amount of £x and assume that the lifetime mortgage will start on [dd/mm/yy].".

MCOB 9.4.41 G

MCOB 9.4.39 R (3) applies to each interest rate charged on the lifetime mortgage7 covered by the illustration. This means that it applies to different interest rates charged at different times, for example, where the interest rate changes at the end of any initial discounted, fixed or other special interest rate period.

7
MCOB 9.4.42 G

The firm may determine the assumed start date in MCOB 9.4.39 R(2).

MCOB 9.4.43 R

The following information must be included in the description of the interest rate required by MCOB 9.4.39 R(3)(c) except where MCOB 9.4.47 R applies:

  1. (1)

    where the interest rate can change, the word "currently" must be used to illustrate the current interest rate payable; and

  2. (2)

    where the interest rate changes after a given period the words "followed by" should be used to indicate this.

MCOB 9.4.44 G

An example of how the information required by MCOB 9.4.39 R(3) and MCOB 9.4.43 R may be presented when there is an example term of fifteen years, and an initial fixed interest rate for a period of 22 months followed by the mortgage lender's standard variable interest rate for a period of 158 months, is as follows:"22 payments at a fixed rate of [...]%followed by158 payments at a variable rate, currently [...]%.".

MCOB 9.4.45 R

The information required by MCOB 9.4.39 R(3)(d) must exclude the cost of any products which may be sold in conjunction with the lifetime mortgage7 (whether tied products or not) unless the cost has been added to the lifetime mortgage7

7 7
MCOB 9.4.46 R

If, because of the assumed start date of the lifetime mortgage,7 the initial payment differs from the subsequent payments, the initial payment must be shown in this section in accordance with MCOB 9.4.39 R(3)(d).

7

Multi-part mortgages

MCOB 9.4.47 R

Where the loan under the lifetime mortgage7 is divided into more than one part (for example, where part of the loan is on a fixed interest rate and part on a discounted variable interest rate) and the firm displays the initial cost of all parts, and the total cost, in a tabular format in the illustration, MCOB 9.4.39 R(3) and MCOB 9.4.43 R do not apply; instead:

7
  1. (1)

    each part must be numbered for ease of reference in the illustration;

  2. (2)

    the loan amounts must be totalled;

  3. (3)

    the number and frequency of each payment must be stated;

  4. (4)

    the "initial interest rate payable" for each part must be displayed;

  5. (5)

    whether the interest rate payable is fixed or variable for each part must be stated; and

  6. (6)

    the regular payment for each part must be stated and the total payment for all parts highlighted (excluding the information listed in MCOB 9.4.45 R).

MCOB 9.4.48 R

Unless all of the interest rates described in MCOB 9.4.47 R(4) apply for the life of the loan part to which they apply, then an additional sub section titled "What you will owe in future" must be included to indicate the future stepped payments. This section must:

  1. (1)

    state when a change in payment will occur;

  2. (2)

    state the reason for the change in payment; and

  3. (3)

    confirm that the payment illustrated assumes that interest rates will not change.

Section 8 of a lifetime mortgage illustration: “What you will owe and when” (B) “Projection of roll-up of interest”8

MCOB 9.4.49 G

Section 8 headed "What you will owe and when" (B) "Projection of roll-up of interest" applies only where all or part of the interest due over the life of the lifetime mortgage7 is or may be12 added to the loan and paid to the mortgage lender on repayment of the loan. The projection should be based on the term of the lifetime mortgage7 estimated in accordance with MCOB 9.4.10 R (and if required, MCOB 9.4.12 R).

7 7
MCOB 9.4.50 R

An explanation of the table required in accordance with MCOB 9.4.51 R must be shown in a box immediately under the heading using the following text:"This shows how the amount(s) paid to you and the interest and any fees that we charge mount up over [insert number of years estimated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R] years. It has been calculated using the current interest rate(s) of [insert interest rate(s)]. Interest is added to the amount you owe [insert frequency of roll-up of interest - e.g. monthly]. Remember that the mortgage could run for a longer or shorter time than [insert number of years estimated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R] years, and if it runs for longer, the amount you owe will carry on increasing.".

MCOB 9.4.51 R

The table showing the projection in the section headed "Projection of roll-up of interest" should show annual details in columns under the following headings:

  1. (1)

    "Year": this should list the years as 1,2,3... etc. The start date for year one must be an assumed date of completion of thelifetime mortgage.7 The table must show each year of the term estimated in accordance with MCOB 9.4.10 R (or if required, MCOB 9.4.12 R).

    7
  2. (2)

    "Balance at start of year": this must show the estimated amount outstanding on the lifetime mortgage7 at the beginning of each year. For year one this balance would include any lump sum advanced on completion.

    7
  3. (3)

    (where the lifetime mortgage7 is a drawdown mortgage) "Amount paid to you during the year": this must include all amounts to be drawn down during the year in question. Where the amount the customer can draw down is variable, the mortgage lender must agree with the customer an expected amount to be drawn down per year.

    7
  4. (4)

    "Interest charged at [insert percentage(s)]": this must be the interest charge for the year in question, calculated on the balance at the start of the year plus the amount drawn down (if applicable) and any fees added to the loan during the year. The percentage(s) used must be as follows:12

    1. (a)

      for a fixed interest rate that applies throughout the term, the fixed interest rate available at the date the illustration is issued;

    2. (b)

      for a variable interest rate, the interest rate that is available at the time the illustration is issued; and

    3. (c)

      for a capped interest rate, the actual interest rate that is available at the time the illustration is issued, where this is lower than the interest rate at which the cap is set.

    Where more than one interest rate applies (e.g. fixed for part of the term, followed by variable), the mortgage lender must use the rates that are available at the time the illustration is issued.

  5. (5)

    "Fees charged during the year": this must include all fees that can be added to the loan during the life of thelifetime mortgage.7 In year one this will include any fees due to the mortgage lender unless the customer has confirmed that he wishes to pay them separately. The fees for the final year shown must include any fees required on repayment in full of the lifetime mortgage.7

    77
  6. (6)

    "What you owe at the end of the year": this is the total of:

    1. (a)

      the balance at start of the year;

    2. (b)

      total drawn down (if applicable);

    3. (c)

      interest charged for the year; and

    4. (d)

      fees for the year.

    The balance at the end of the final year of the term (estimated in accordance with MCOB 9.4.10 R (or if required, MCOB 9.4.12 R)) must therefore be the estimated amount required to repay in full the lifetime mortgage7 at the end of that year.

    7
MCOB 9.4.52 G

The firm may determine the assumed date of completion in MCOB 9.4.51 R(1).

Section 9 of a lifetime mortgage illustration8: "Will the interest rate change?"

MCOB 9.4.53 R

Where the customer is required to make payments to the mortgage lender on thelifetime mortgage,7 the illustration must include the following under the section heading "Will the interest rate change?":

7
  1. (1)

    if the interest rate is fixed throughout the life of thelifetime mortgage,7 an explanation that the payments will not vary because the interest rate is fixed;

    7
  2. (2)

    if the interest rate is fixed for part of the life of thelifetime mortgage,7 an explanation of when or how increases in the interest rate charged on the lifetime mortgage7 affect the customer's payments;

    77
  3. (3)

    if the interest rate cannot go above a certain level or below a certain level, or both, and this applies throughout the life of thelifetime mortgage,7 an explanation that this is the case;

    7
  4. (4)

    if the interest rate cannot go above a certain level for part of the life of thelifetime mortgage,7 an explanation that this is the case and of when or how increases in the interest rate charged on the lifetime mortgage7 affect the customer's payments;

    77
  5. (5)

    if (3) or (4) apply the maximum or minimum interest rate, or both, and the payments at each of these interest rates; and

  6. (6)

    if the lifetime mortgage7 is made up of a number of different parts including different types of interest rate and different rates of interest, an explanation of when or how increases in the interest rate charged on the lifetime mortgage7 affect the customer's payments for each part (or combination of parts).

    77
MCOB 9.4.54 R
  1. (1)

    Except where (3) applies, where the customer is required to make payments to the mortgage lender on thelifetime mortgage,7 and the customer's payments can vary with changes in interest rates at any time during the life of thelifetime mortgage,7 Section 9: "Will the interest rate change?" must also contain the following text:"The [frequency of payments from MCOB 9.4.37 R] payments shown in this illustration could be considerably different if interest rates change. For example, for one percentage point increase in [describe the interest rate that applies], your [frequency of payments] payment will increase by around £ [insert amount by which payment will increase].".

    77
  2. (2)

    If MCOB 9.4.53 R(6) applies the following additional text must be included after the text in (1), for each part (or combination of parts), where the amounts by which the customer's payments would increase are different:"After the [describe the type of interest rate that applies, the part (or parts) to which it applies and date or period for which it applies] then for one percentage point increase in [describe the interest rate that applies], your [insert frequency of payments] payment will increase by around £ [insert amount by which payment will increase].".

  3. (3)

    Paragraph (1) does not apply where the difference between the interest rate included in the illustration in accordance with MCOB 9.4.39 R and the maximum interest rate that can be charged on the lifetime mortgage7 is less than one percentage point.

    7
MCOB 9.4.55 R

The amount by which the customer's payments would increase in accordance with MCOB 9.4.54 R(1) must be calculated as follows:

  1. (1)

    the firm must use the total amount borrowed, or assume that all payments due on the lifetime mortgage7 have actually been paid, all additional fees and payments due have been paid, and no underpayments or overpayments have been made; and

    7
  2. (2)

    the interest rate from which the increase is calculated must be the variable interest rate charged on the lifetime mortgage7 at the date that the illustration is issued (that is, the variable interest rate quoted in Section 5 of the illustration); where the variable interest rate changes after a set period or on a set date it must be based on the initial variable interest rate charged on the lifetime mortgage7 at the date the illustration is issued (for example, if the initial interest rate is discounted, it must be based on the discounted rate).

    77
MCOB 9.4.56 G

Although the effect of a one percentage point increase in interest rates on the customer's payments is not completely linear, the purpose of MCOB 9.4.54 R(1) and (2) is to show the approximate effect of such an increase.

MCOB 9.4.57 R

Where the customer is not required to make payments to the mortgage lender on the lifetime mortgage7 and therefore all or part of the interest is rolled up, the following information must be included under the section heading "Will the interest rate change?":

7
  1. (1)

    if the interest rate is fixed throughout the life of thelifetime mortgage,7 an explanation that the estimated debt shown in accordance with MCOB 9.4.51 R(6) will not vary because the interest rate is fixed;

    7
  2. (2)

    if the interest rate is fixed for part of the life of thelifetime mortgage,7 an explanation of when or how increases in the interest rate charged on the lifetime mortgage7 affect the estimated debt shown in accordance with MCOB 9.4.51 R(6);

    77
  3. (3)

    if the interest rate cannot go above a certain level or below a certain level, or both, and this applies throughout the life of thelifetime mortgage,7 an explanation that this is the case; and

    7
  4. (4)

    if the interest rate cannot go above a certain level for part of the life of thelifetime mortgage,7 an explanation of when or how increases in the interest rate charged on the lifetime mortgage7 affect the estimated debt shown in accordance with MCOB 9.4.51 R(6).

    77
MCOB 9.4.58 R

Where the customer is not required to make payments to the mortgage lender on the lifetime mortgage7 and therefore all or part of the interest is rolled up, Section 9: "Will the interest rate change?" must also contain (if applicable):

7
  1. (1)

    if the interest rate is variable, the following text:"If the interest rate increases, the amount you owe will also increase. If the interest rate was [one percentage point higher than shown MCOB 9.4.51 R(4)(b)] throughout the example term of [insert number of years " see MCOB 9.4.10 R or MCOB 9.4.12 R] years, the amount you would owe us at the end of that time would be: [insert amount]."; or

  2. (2)

    if the interest rate will become variable at the end of a fixed or capped rate period, the following text:"If the interest rate increases after the [insert as applicable: fixed rate period or capped rate period] ends, the amount you owe will also increase. If the interest rate was [one percentage point higher than shown in MCOB 9.4.51 R(4)(b) above] throughout the remainder of the example term of [insert number of years - see MCOB 9.4.10 R or MCOB 9.4.12 R] years, the amount you would owe us at the end of that time would be: [insert amount]."; or

  3. (3)

    if a capped rate applies throughout the life of the lifetime mortgage7 and the interest rate at the date of issue of the illustration is lower than the capped rate, the following text:"If the interest rate increases, the amount you owe will also increase. The interest rate on this lifetime mortgage cannot be higher than [rate at which interest is capped] If the interest rate was [rate at which interest is capped] throughout the example term of [insert number of years - see MCOB 9.4.10 R and MCOB 9.4.12 R] years, the amount you would owe us at the end of that time would be: [insert amount].".

    7

Risk warning

MCOB 9.4.59 R

Where MCOB 9.4.54 R(1) applies, the following words must also be prominently displayed at the end of the sub-section "Will the interest rate change?""Rates may increase by much more than this so make sure you can afford the [insert frequency of payments from MCOB 9.4.37 R] payment.".

MCOB 9.4.60 R

Where MCOB 9.4.58 R(1) or (2) applies, the following words must also be prominently displayed at the end of the sub-section "Will the interest rate change?""Your debt may increase significantly."

Section 10 of a lifetime mortgage illustration8: "How the value of your home could change"

MCOB 9.4.62 R

Where the customer is required to make payments to the mortgage lender on the lifetime mortgage7 in respect of the interest payable, and therefore the amount outstanding on the lifetime mortgage7 will broadly remain unchanged, Section 10: "How the value of your home could change" must contain the following text:"The amount you owe will usually stay the same over the life of the mortgage so the amount due to [name of mortgage lender] when the mortgage is repaid will be [amount of loan], unless charges have to be added.".

7 7
MCOB 9.4.63 R

Where the customer is not required to make payments to the mortgage lender on the lifetime mortgage7 and therefore all or part of the interest is rolled up, Section 10: "How the value of your home could change" must contain the following text:"When you look at how the amount you owe [goes][may go]12 up, remember also that property prices can go up or down, and this can affect the amount of money left over for you or your estate after the mortgage is repaid to [name of mortgage lender]12".

7
MCOB 9.4.64 R

Section 10: "How the value of your home could change" must contain the following text in addition to the text in accordance with MCOB 9.4.62 R or MCOB 9.4.63 R:"Based on the estimated value of your home now of [insert amount from MCOB 9.4.6 R(3)] this example shows what the value of your home would be after [insert term from MCOB 9.4.10 R or MCOB 9.4.12 R] years if the value went up by 1% each year or went down by 1% each year. Remember also that the mortgage may run for more or less than [insert term from MCOB 9.4.10 R, or MCOB 9.4.12 R] years. This is an example only and gives no guide to how much the value of your home will actually change. If your home went up in value by 1% each year it would be worth [insert amount] after [insert term from MCOB 9.4.10 R, or MCOB 9.4.12 R] years. If your home went down in value by 1% each year - it would be worth [insert amount] after [insert term from MCOB 9.4.10 R or MCOB 9.4.12 R] years."

Section 11 of a lifetime mortgage illustration8: "What fees must you pay?"

MCOB 9.4.65 R

Under the section heading "What fees must you pay?" the illustration must:

  1. (1)

    itemise all the fees that are included in the calculation of the APR in accordance with MCOB 10 (Annual Percentage Rate), excluding any charges for insurance set out in Section 12 in accordance with MCOB 9.4.72 R; and1

  2. (2)

    include a statement at the end of the section using the following text:"You may have to pay other taxes or costs in addition to any fees shown here.".

MCOB 9.4.66 G

An example of a fee that would be included in Section 11 would be an administrative charge to redeem thelifetime mortgage.7 An example of a fee that would not be included would be a fee payable by the customer to insure their property elsewhere (however this would need to be stated in the separate "Insurance" section as required by MCOB 9.4.72 R). Where fees are payable only on early repayment of thelifetime mortgage.7 they should not be stated here (however these fees would need to be stated in Section 13 of the illustration "What happens if you do not want this mortgage any more", as required by MCOB 9.4.83 R(1)(c)).

7 7
MCOB 9.4.67 R

The fees included in this section in accordance with MCOB 9.4.65 R must be itemised under the relevant sub-headings as follows:

  1. (1)

    the fees that are payable by the customer to the mortgage lender must be itemised under the sub-heading "Fees payable to [name of mortgage lender]";

  2. (2)

    the remaining fees must be itemised under the sub-heading: "Other fees"; and

  3. (3)
    1. (a)

      if there are no fees to be itemised in accordance with (1), the sub-heading must be retained and a statement must be included that no fees apply;

    2. (b)

      if there are no fees to be itemised in accordance with (2), the sub-heading must be retained and only the text in MCOB 9.4.65 R(2) applies.

MCOB 9.4.68 R

The following information must be provided for each fee included in this section of the illustration in accordance with MCOB 9.4.65 R(1):

  1. (1)

    a description of the fee;

  2. (2)

    the amount payable by the customer recorded in a column headed "Fee amount" on the right-hand side of this section;

  3. (3)

    for fees included under the sub-heading "Other fees", to whom the fee is payable;

  4. (4)

    when the fee is payable;

  5. (5)

    whether or not the fee is refundable, and if so, the extent to which it is refundable;

  6. (6)

    which fees (if any) are estimated in accordance with MCOB 9.4.114 R(2) and based on representative information; and

  7. (7)

    if any fee is payable after the start of the lifetime mortgage7 and subject to change in the future, for example a fee payable on final repayment of the lifetime mortgage7, the amount of that fee, along with a statement that this is the 'current fee'.

    77
MCOB 9.4.69 R
  1. (1)

    If a higher lending charge is payable by the customer, the following text must be used to describe such a charge for the purposes of MCOB 9.4.68 R:"A higher lending charge is payable because you are borrowing [insert the ratio of the mortgage amount (from MCOB 9.4.13 R) to the property's price or value (from MCOB 9.4.6 R(3))] of the property's [estimated] [price/value]."

  2. (2)

    If the customer has asked for any fees to be added to the loan, this must be stated alongside each fee.2

  3. (3)

    If the customer has the option of adding to the loan amount any of the fees included in this section, the following text must be included:"If you wish you can add [this/these/the {type of fee}] fee(s) to the lifetime mortgage. This will increase the amount you owe to [insert amount of the lifetime mortgage with the fee(s) included] and will increase the amount you owe shown in Section 8. If you want to do this, you should ask for another illustration that shows the effect of this on the amount you owe"

  4. (4)

    Any fees that are estimated based on representative information in accordance with MCOB 9.4.114 R(2) must include an appropriate explanation of what the fee represents. For example, if this section includes an estimated fee for the legal work that the customer might be charged by his conveyancer for carrying out work on behalf of the mortgage lender, the illustration must explain that the fee is estimated, and that it only covers part of the costs of legal work that the customer might need to pay.

MCOB 9.4.70 G

"Other fees" will include any fee charged by a mortgage intermediary, or another third party, for advising on or arranging alifetime mortgage,7 but not commission or procuration fees (which are dealt with in Section 16 of the illustration).

7
MCOB 9.4.71 R

A mortgage lender must provide a tariff of charges to the customer, if the customer so requests.

Section 12 of a lifetime mortgage illustration8: "Insurance"

MCOB 9.4.72 R
  1. (1)

    Under the section heading "Insurance" the illustration must include details of:

    1. (a)

      insurance which is a tied product and

    2. (b)

      insurance which is required as a condition of the lifetime mortgage7 which is not a tied product

      7
  2. (2)

    Under this section heading a firm may also provide details of insurance which is optional for the customer to take out.

  3. (3)

    It must be clear to the customer which products he is required to purchase under which circumstances (for example, where both a tied product and a mortgage intermediary are involved, whether the policy must be purchased from the mortgage lender or the mortgage intermediary).

MCOB 9.4.73 R

Under the sub-heading 'Insurance you must take out through [insert name of mortgage lender or where relevant the name of the mortgage intermediary, or both]' the following information must be included if the lifetime mortgage7 requires the customer to take out insurance that is a tied product either through the mortgage lender or where relevant the mortgage intermediary:

7
  1. (1)

    details of which insurance is a tied product;

  2. (2)

    for how long the customer is obliged to purchase the insurance;

  3. (3)

    an accurate quotation or a reasonable estimate of any payments the customer needs to make for the insurance;

  4. (4)

    where a quotation is provided for insurance in accordance with (3) on the basis of an estimated sum insured, because the actual required sum insured is unknown, the fact that it is estimated should be stated along with confirmation of the level of cover that has been assumed;

  5. (5)

    details of when the customer's payments for such insurance change, for example, if premiums are reviewed annually; and

  6. (6)

    where a quotation is not provided in accordance with (3), a statement of when and how a quotation will be provided (for example, separately and as soon as possible).

MCOB 9.4.74 G

Firms are reminded that MCOB 5.4.23 R requires a firm to provide a customer with an accurate quotation for any tied products. Where the level of cover the firm requires the customer to take up is known at the outset, then the quotation should reflect that level of cover.

MCOB 9.4.75 R

If the lifetime mortgage7 does not require the customer to take out insurance as a tied product, the sub-heading "Insurance you must take out through [insert name of mortgage lender and where relevant the name of the mortgage intermediary] "must be retained and a statement must be provided under this heading that the customer is not obliged to take out any insurance through the mortgage lender or, where relevant, the mortgage intermediary.

7
MCOB 9.4.76 R

The following information must be included under the sub-heading "Insurance you must take out as a condition of this mortgage but that you do not have to take out through [insert name of mortgage lender or where relevant the name of the mortgage intermediary, or both]":

  1. (1)

    if the lifetime mortgage7 requires the customer to take out an insurance policy (other than that which is a tied product which the customer is obliged to purchase through the mortgage lender or where relevant the mortgage intermediary), a brief statement of the type of insurance the firm requires; a quotation for such insurance may be included in the illustration, estimated where necessary;

    7
  2. (2)

    if the mortgage lender or the mortgage intermediary makes a charge in cases where the customer does not arrange insurance that is a condition of the mortgage through the mortgage lender or the mortgage intermediary, this must be stated, together with the amount of the charge and the frequency with which this charge is payable; and

  3. (3)

    if no insurance policies are required (other than that which is a tied product), the sub-heading "Insurance you must take out as a condition of this mortgage but that you do not have to take out through [insert name of mortgage lender and, where relevant the mortgage intermediary]" must be retained in the illustration and a statement must be provided under this heading that no such insurance is required.1

MCOB 9.4.77 G

Under the sub-heading "Insurance you must take out as a condition of this mortgage but that you do not have to take out through [insert name of mortgage lender or where relevant the name of the mortgage intermediary, or both]", the illustration should not include any insurance policy that may be taken out by a mortgage lender itself to protect its own interests rather than the customer's interests, for example, because of the ratio of the loan amount to the property value.1

MCOB 9.4.78 G

If the cost of any insurance that the mortgage lender might take out to protect its own interests because of the ratio of the loan to the property value is passed on to the customer, it will be shown elsewhere in the illustration, for example as a higher lending charge or in the interest rate charged.

MCOB 9.4.79 R

A firm may include in the illustration, under the sub-heading "Optional insurance", quotations (estimated where necessary) for any insurance products (other than the insurance products covered elsewhere in the illustration in accordance with MCOB 9.4.72 R and MCOB 9.4.76 R) that the firm issuing the illustration wishes to sell to the customer.

MCOB 9.4.80 R

If no quotations are included in the illustration in accordance with MCOB 9.4.79 R, the sub-heading "Optional insurance" must not be included in the illustration.

MCOB 9.4.81 R
  1. (1)

    If any quotations for insurance are included in the illustration in accordance with MCOB 9.4.73 R(3), MCOB 9.4.76 R(1) or MCOB 9.4.79 R, the illustration:

    1. (a)

      must include a brief description only of the type of insurance (full details of the insurance cover may however be provided separately); and

    2. (b)
      1. (i)

        must include the total price to be paid by the customer in a column on the right hand side of the illustration under the heading "[insert frequency of payments quoted] payments"; and

      2. (ii)

        may refer the customer to the individual insurance product disclosure documentation.

  2. (2)

    If the customer has asked to add any insurance premiums or insurance-related charges to the amount borrowed in accordance with MCOB 9.4.21 R(4), the illustration must state that this is the case.2

MCOB 9.4.82 G

The terms on which an insurance premium has been calculated should be presented to the customer in the format determined by the relevant regulatory requirements.

Section 13 of a lifetime mortgage illustration8: "What happens if you do not want this mortgage any more?"

MCOB 9.4.83 R

Under the heading "What happens if you do not want this mortgage any more?", the illustration must include the following information on the lifetime mortgage:7

7
  1. (1)

    under the sub-heading "Early repayment charges":

    1. (a)

      an explanation of whether early repayment charges are payable;

    2. (b)

      an explanation of when early repayment charges are payable;

    3. (c)

      an explanation of any other fees that are payable if the lifetime mortgage7 is repaid early, and the current level of these fees;

      7
    4. (d)

      a basic explanation of the basis on which early repayment charges are calculated (for example, as a percentage of the loan or as so many months" interest), including, where appropriate, details of any cashback or other incentives that must be repaid. The illustration may refer to a separate document for full details of all terms and conditions relating to the charges that apply if the lifetime mortgage7 is repaid early;

      7
    5. (e)

      example cash amounts of any early repayment charges indicating the range of charges that apply over the period during which such charges apply calculated in accordance with MCOB 9.4.88 R, which must be described in the illustration as "cash examples";

    6. (f)

      the maximum early repayment charge that the customer could be charged in accordance with MCOB 12.3 (Early repayment charges), which must be shown as a cash amount and described in the illustration as "the maximum charge you could pay" [add if applicable, "plus (a) fee(s) which (is/are) currently £x"]; and

    7. (g)

      details of whether or not the lifetime mortgage7 is portable on moving house and a brief explanation of any conditions or restrictions that apply including whether there are any restrictions on changing the terms of the lifetime mortgage7 during the period in which any early repayment charges apply (a reference to another document may be made in order to provide the customer with further details of the conditions or restrictions);

      77
  2. (2)

    under the sub-heading "Circumstances in which early repayment charges do not apply", a clear statement of the circumstances in which no early repayment charges will be payable by the customer. (This may include moving to another property, or into sheltered accommodation or residential care.) Where the lifetime mortgage7 is portable on moving house but no early repayment charges are payable by the customer, the remaining information required by MCOB 9.4.83 R(1)(g) should be included here.

    7
MCOB 9.4.84 G

The requirements in MCOB 9.4.83 R(1) may be presented in a tabular format.

MCOB 9.4.85 G

Where a firm does not impose an early repayment charge, it may delete the sub heading 'Circumstances in which early repayment charges do not apply'.

MCOB 9.4.86 R

Where MCOB 9.4.83 R(1)(e) would result in more than three cash amounts being shown in the illustration, the cash amounts shown in the illustration may be restricted to three examples. These three examples are in addition to the maximum early repayment charge required by MCOB 9.4.83 R(1)(f). These examples must be representative of the full range of charges that apply and not be limited to the lowest charges that apply. These three examples are in addition to:

  1. (1)

    any statement of the amount of any fees described in MCOB 9.4.83 R(1)(c); and

  2. (2)

    the maximum early repayment charge required by MCOB 9.4.83 R(1)(f).

MCOB 9.4.87 G

An example which would comply with MCOB 9.4.86R would be if a five year fixed rate mortgage had a charge which reduced linearly by 1% each year from 5% in the first year to 1% in the final year and cash examples were used based on 5% in year 1, 3% in year 3 and 1% in year 5.

MCOB 9.4.88 R
  1. (1)

    In calculating example cash amounts in accordance with MCOB 9.4.83 R(1)(e), it must be assumed that:

    1. (a)

      the lifetime mortgage7 is repaid in full;

      7
    2. (b)

      all payments due (if applicable) on the lifetime mortgage7 are actually paid;

      7
    3. (c)

      additional fees and charges such as insurance premiums have been paid; and

    4. (d)

      no underpayments or overpayments (if applicable) have been made.

  2. (2)

    If:

    1. (a)

      cashbacks or other incentives need to be repaid; or

    2. (b)

      fees need to be paid;

    the amounts that would need to be repaid or paid must be included in the example cash amounts.

  3. (3)

    Where the calculation of the early repayment charge is based on the interest rate charged on thelifetime mortgage,7 or on interest rates generally, the interest rate(s) used for the calculation of the example cash amounts must be those in force at the date that the illustration is issued to the customer.

    7
  4. (4)

    The example cash amounts must reflect the maximum charge in a particular year. Where it is possible to state exact early repayment charges (that is, where all such charges are based on the original amount borrowed), the illustration must do so.

MCOB 9.4.89 R

Where the cash examples from MCOB 9.4.88 R included in the illustration would vary either if the interest rate charged on the lifetime mortgage7 changed or with changes in interest rates generally, an appropriate warning that the early repayment charges may vary from the cash examples must be included in the illustration.

7
MCOB 9.4.90 R

Where the early repayment charge could be higher than those stated in the illustration if the lifetime mortgage7 continued after the end of the term estimated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R, Section 13 of the illustration must include a clear statement to that effect.

7

Section 14 of a lifetime mortgage illustration8: "Additional features"

MCOB 9.4.91 R

Under the section heading "Additional features" the illustration must include, where relevant, details of how the mortgage lender would treat any payments by the customer in excess of those required, and details of any additional features or facilities under the various sub-headings in MCOB 9.4.93 R.

MCOB 9.4.92 R
  1. (1)

    If none of the features at MCOB 9.4.93 R are applicable to the lifetime mortgage7 to which the illustration relates, the section headed 'Additional features' must be retained, but the sub-headings must not be included and a statement must be added to explain that there are no additional features.

    7
  2. (2)

    Only those features available on the lifetime mortgage7 need be included in the illustration.

    7
  3. (3)

    If a firm provides a customer with supplementary information about any additional features or facilities over and above the information required under MCOB 9.4.91 R to MCOB 9.4.110 R, the firm may include a reference to that supplementary information in Section 14.1

MCOB 9.4.93 R

The relevant sub-headings are as follows:

  1. (1)

    "Overpayments"

  2. (2)

    "Underpayments"

  3. (3)

    "Payment holidays"

  4. (4)

    "Borrow back"

  5. (5)

    "Additional borrowing available without further approval"

  6. (6)

    "Additional secured borrowing"

  7. (7)

    "Credit card"

  8. (8)

    "Unsecured borrowing"

  9. (9)

    "Linked current account" and

  10. (10)

    "Linked savings account".

MCOB 9.4.94 R
  1. (1)

    Under the sub-heading 'Overpayments', the illustration must include details of any restrictions on lump sum and regular overpayments (if payments are required) on thelifetime mortgage,7 together with a statement as to whether or not the amount on which the interest is recalculated is reduced immediately on receipt of any lump sum or regular overpayment.

    7
  2. (2)

    Where such recalculation does not take place immediately (for example, if an annual rest method is used), this statement must be accompanied by an explanation of when the amount on which the interest is recalculated is reduced following a lump sum or regular overpayment.

  3. (3)

    Where early repayment charges apply, this section must not repeat the details provided in Section 13 of the illustration, but may refer to Section 13.

MCOB 9.4.95 G

Where the interest recalculation described in MCOB 9.4.94 R takes place immediately, firms may add a statement in this section explaining that the customer will get the benefit of the overpayment immediately.

MCOB 9.4.96 R

Under the sub-heading "Underpayments", the illustration must include details of whether the customer can make underpayments and a brief statement of any conditions that apply.

MCOB 9.4.97 R

Under the sub-heading "Payment holidays", the illustration must include details of circumstances in which the customer can take payment holidays and a brief statement of any conditions that apply.

MCOB 9.4.98 R

Under the sub-heading "Borrow back", the illustration must include details of circumstances in which the customer can borrow back any monies overpaid and a brief statement of any conditions that apply.

MCOB 9.4.99 R

Under the sub-heading "Additional borrowing available without further approval", the illustration must provide details of circumstances in which additional secured lending is offered with the lifetime mortgage7 that would allow the customer, subject to certain conditions, to increase the amount of the loan on which the illustration is based.

7
MCOB 9.4.100 R

Under the sub-heading "Additional secured borrowing", the illustration must provide details of circumstances in which additional secured lending is offered with the lifetime mortgage7 that would allow the customer, subject to certain conditions, to increase the amount of the loan on which the illustration is based.

7
MCOB 9.4.101 R

Under the sub-heading "Unsecured borrowing", the illustration must provide details of circumstances in which unsecured lending is offered with the lifetime mortgage7 that would allow the customer to increase the amount of the loan on which the illustration is based.

7
MCOB 9.4.102 R

Under the sub-heading "Credit card", the illustration must:

  1. (1)

    state whether a credit card is offered with thelifetime mortgage;7 and

    7
  2. (2)

    if a credit card is offered and it is a mortgage credit card:

    1. (a)

      unless (b) applies, include the following text:"This card will not give you a number of the statutory rights associated with traditional credit cards. Your lifetime mortgage offer will tell you more about the differences." or

    2. (b)

      where the mortgage lender provides the customer with contractual rights in relation to a mortgage credit card equal to or greater than the rights that the customer would have9under the Consumer Credit Act 1974 and CONC if the card were issued under a regulated credit agreement9, include the following text:"This card will not give you a number of the statutory rights associated with traditional credit cards. However, [insert name of mortgage lender] will ensure that you will be treated no differently from the user of a traditional credit card. Your lifetime mortgage offer will tell you more about this."

      9
MCOB 9.4.103 R

Where any of the additional features under MCOB 9.4.99 R to MCOB 9.4.102 R inclusive apply, then the following must also be stated if the amount of additional borrowing that would be available to the customer is stated in the illustration:

  1. (1)

    the maximum additional amount available;

  2. (2)

    if the interest rate payable on any additional borrowing is different to the interest rate in Section 5 and Section 8 of the illustration, the interest rate and the APR charged on the additional borrowing. The APR must be calculated in accordance with MCOB 10 (Annual Percentage Rate), based on the maximum amount of additional borrowing that would be permitted for the customer and the term of the loan from MCOB 9.4.10 R or MCOB 9.4.12 R;

  3. (3)

    the total resulting debt the customer could incur (including the original loan amount);

  4. (4)

    the payments on this total debt based on the frequency of payments in MCOB 9.4.37 R (if payments are required) and the current interest rate(s) applying on the date the illustration is issued;1

  5. (5)

    whether this additional borrowing must be repaid in full if the original loan is repaid in full, along with details of any conditions that apply;

  6. (6)

    if early repayment charges apply to the additional amount borrowed:

    1. (a)

      that early repayment charges are payable;

    2. (b)

      an explanation of when early repayment charges are payable; and

    3. (c)

      the maximum early repayment charge that the customer could be charged in accordance with MCOB 12.3 which must be shown as a cash amount; and

  7. (7)

    if it is the case, that the maximum amount of borrowing available, or the terms and conditions, may change depending on other factors such as ratio of the loan amount to the property value.

MCOB 9.4.104 R

Where more than one additional borrowing facility from MCOB 9.4.99 R to MCOB 9.4.102 R applies, the total debt and total payments due (if payments are required) under all these linked borrowing facilities must be included under a separate sub-section titled 'Total additional borrowing'.1

MCOB 9.4.105 G

The purpose of MCOB 9.4.104 R is to show the total amount of any additional borrowing facilities that would be available to the customer and the cost of utilising these facilities. It must combine the amount available under any linked borrowing facilities including additional secured lending, credit cards and unsecured lending.

MCOB 9.4.106 R
  1. (1)

    Where additional features are included in accordance with MCOB 9.4.91 R and these are credit facilities that do not meet the definition of a regulated mortgage contract or a regulated credit agreement9, the relevant parts of Section 14 of the illustration must include the following text:

    "This additional feature is not regulated by the FCA."1

  2. (2)

    Where additional features are included in accordance with MCOB 9.4.91 R and these are credit facilities that meet the definition of a regulated credit agreement9 regulated by the Consumer Credit Act 1974 and the Act9, the relevant parts of Section 14 of the illustration must include the following text 'This additional feature is regulated under the Consumer Credit Act 1974 and the Financial Services and Markets Act 20009. You will receive a separate credit agreement with any offer document for this additional feature, describing the detailed terms on which this feature is available."

    99
MCOB 9.4.107 R

Where all or part of the maximum amount of additional borrowing is secured on the customer's home, a prominent warning must be included that additional borrowing increases the amount of credit secured on the customer's home.

MCOB 9.4.108 G

Suitable wording for the warning contained in MCOB 9.4.107 R would be:"This will increase the amount of borrowing secured on your home.".

MCOB 9.4.109 R

Under the sub-heading "Linked current account" the illustration must include the following information:

  1. (1)

    whether a linked current account is a compulsory or optional product (if the current account is a compulsory product this must also be stated in Section 5 of the illustration in accordance with MCOB 9.4.24 R(7));

  2. (2)

    an explanation of the interest rates that apply under different circumstances to the linked current account, if different from the interest rate charged on the lifetime mortgage7 (for example, if a different interest rate applies if the account is overdrawn); and

    7
  3. (3)

    the firm providing the linked current account if it is not the mortgage lender.

MCOB 9.4.110 R

Under the sub-heading "Linked savings account" the illustration must include the following information:

  1. (1)

    whether a linked savings account is a compulsory or optional product (if the savings account is a compulsory product this must also be stated in Section 5 of the illustration in accordance with MCOB 9.4.24 R(7));

  2. (2)

    the interest rate paid on the linked savings account if it differs from the interest rate charged on thelifetime mortgage;7 and

    7
  3. (3)

    the firm providing the linked savings account if it is not the mortgage lender.

Section 15 of a lifetime mortgage illustration8: "Overall cost of this mortgage"

MCOB 9.4.111 R

Under the section heading "Overall cost of this mortgage":

  1. (1)

    the following text must be included in the illustration:"The APR helps you to compare lifetime mortgages by giving you one rate that shows the overall cost of the mortgage. It takes into account some fees and charges as well as the interest due, and this means that the APR may be higher than the interest rate shown in Sections 5 and 8. Only use the APR to compare lifetime mortgages of the same type, and where the same example term is used."

  2. (2)

    where the customer is required to make payments on the lifetime mortgage7 the following text must also be included in the illustration:"The overall cost takes into account the payments in Sections 8 and 11 above."; and

    7
  3. (3)

    reference must be made to any other payments that have been included in the APR but not included in Sections 8 and 11 of the illustration if these are relevant to the lifetime mortgage7 that is the subject of the illustration.

    7
MCOB 9.4.112 G

MCOB 9.4.111 R (3) would require, for example, a reference to the fact that the overall cost takes into account mortgage payment protection insurance where this is required as a condition of the lifetime mortgage7 to which the illustration relates. The requirement to take out such insurance must be stated in Sections 5 and 12 of the illustration in accordance with MCOB 9.4.24 R(7), MCOB 9.4.72 R or MCOB 9.4.76 R.

7
MCOB 9.4.113 R

The following text must be included after the text required by MCOB 9.4.111 R with the relevant cost measures shown in the right-hand column of Section 15 in accordance with the layout shown in MCOB 9 Annex 1:

  1. (1)

    "The total amount you would pay back over the example term of [insert number of years in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R] including the amount borrowed is £ [insert total amount payable]", and

  2. (2)

    "The overall cost for comparison is [insert the APR]% APR."

MCOB 9.4.114 R
  1. (1)

    The APR and the total amount payable in MCOB 9.4.113 R must be calculated on the basis of information obtained from the customer in accordance with MCOB 9.4.6 R.

  2. (2)

    Where there is a charge to be included in the APR and total amount payable and the precise amount of that charge is not known at the time that the illustration is provided, MCOB 10.3 (Formula for calculating the APR) sets out a number of relevant assumptions to be used. If the method for including the charge is not addressed in MCOB 10 (Annual Percentage Rate), the charge must be estimated based on information which is known to be representative of the lifetime mortgage7 to which the illustration relates.

    7
  3. (3)

    Where the lifetime mortgage7 is an interest roll-up mortgage12, the total amount payable must be based on the total amount that the customer would owe at the end of the example term.

    7
MCOB 9.4.115 G

In relation to MCOB 9.4.114 R(2), the cost of conveyancing would be an example of a charge for which representative information may need to be used in the calculation of the APR and the total amount payable.

MCOB 9.4.116 R

At the end of Section 15 the following text must be included, if relevant:"The figures in this section will vary following interest rate changes."

MCOB 9.4.117 G

The prescribed text at MCOB 9.4.116 R would not be relevant if the illustration is for a lifetime mortgage7 that has a fixed interest rate throughout the life of the mortgage.

7
MCOB 9.4.118 G

The purpose of the illustration is to provide the customer with details of the cost of borrowing the amount required over the example term from MCOB 9.4.6 R and MCOB 9.4.10 R (or MCOB 9.4.12 R). Section 14 has been designed specifically to allow examples of the effect of any additional features of the lifetime mortgage7 such as a linked current account. Examples of these features should therefore be shown in Section 14 and not in Section 15 or Section 8 of the illustration.

7

Section 16 of a lifetime mortgage illustration8: "Using a mortgage intermediary"

MCOB 9.4.119 R

Where the illustration is issued to a customer by, or on behalf of, a mortgage intermediary, Section 16 "Using a mortgage intermediary" must be included in the illustration and must include the following:

  1. (1)

    unless MCOB 9.4.120 R applies, a clear statement of the amount payable (either directly or indirectly) by the mortgage lender to the mortgage intermediary, or to any third parties; and

  2. (2)

    the name of the mortgage lender who will make the payment, the name of the mortgage intermediary and the names of any third parties who will be paid.

MCOB 9.4.120 R

If the amount payable by the mortgage lender to the mortgage intermediary and to third parties is £250 or less, the mortgage intermediary need only state that the amount of the payment is "no more than £250", unless the customer requests the actual amount.

MCOB 9.4.121 R

If the mortgage intermediary will pass to the customer all or part of the amount payable to the mortgage intermediary under MCOB 9.4.119 R(1) or MCOB 9.4.120 R, that fact may be stated in this section, along with the amount payable to the customer.

MCOB 9.4.122 R

If the mortgage lender will make no payment to the mortgage intermediary or any third party, this section may state that the mortgage intermediary will receive no payment.

MCOB 9.4.123 R

The amount payable in MCOB 9.4.119 R(1) or MCOB 9.4.120 R must include, but is not limited to:1

  1. (1)

    any procuration fee; and

  2. (2)

    a cash value for any material non-cash inducements that the mortgage lender provides to a mortgage intermediary or third party, whether payable directly or indirectly.

MCOB 9.4.124 G

MCOB 2.3.7 R requires any material inducements provided by a mortgage lender, whether directly or indirectly, to a mortgage intermediary or third party (unless the payment only reflects the cost of outsourcing work relating to the processing of mortgage applications by a firm unconnected to the mortgage intermediary) to be quantified in cash terms, which will enable the cash values to be included in the illustration in accordance with MCOB 9.4.123 R.1

MCOB 9.4.125 G

An example of a statement which would comply with MCOB 9.4.119 R and MCOB 9.4.123 R would be:"[name of mortgage lender] will pay [name of mortgage intermediary] an amount of £350 in cash and benefits if you take out this lifetime mortgage."

Contact details

MCOB 9.4.126 R

This section must:

  1. (1)

    follow Section 15 "Overall cost of this mortgage", unless the illustration is issued by a mortgage intermediary, in which case it must follow Section 16 "Using a mortgage intermediary"; and

  2. (2)

    include the name, address and contact point of the firm providing the illustration.

MCOB 9.4.127 G

An example of wording which would comply with MCOB 9.4.126 R(2) would be:"If you wish to discuss this lifetime mortgage illustration please contact [name of individual] at [address] or on [telephone number]."

Foreign currency mortgages

MCOB 9.4.128 R

If the customer's liability under a lifetime mortgage7 is in a currency other than sterling, MCOB 9.4 applies to the illustration for that lifetime mortgage7 with the following modifications:

7 7
  1. (1)

    all cash amounts must be given in the relevant currency except where otherwise required by (2)(a) and (3);

  2. (2)

    the following information must be stated under Section 5 "Description of this mortgage"

    1. (a)

      the amount in sterling on which the illustration is based from MCOB 9.4.13 R based on the exchange rate in (2)(b);

    2. (b)

      the exchange rate used; and

    3. (c)

      when the exchange rate quoted applied;

  3. (3)

    the following text must be added at the end of Section 5 "Description of this mortgage":"This illustration is based on the sterling equivalent of [insert details from (2)(a)] based on [insert details from (2)(b)] as at [insert details from (2)(c)]. Exchange rates can vary significantly. The effect of a 5% decrease in the value of sterling to the [insert name of relevant currency] would increase your total borrowing to [insert amount to which the amount borrowed from MCOB 9.4.13 R would increase in sterling]. [Insert if payments are required: This would increase your [insert frequency of payments from MCOB 9.4.37 R] payments by the sterling equivalent of £ [insert amount in sterling]]."The following information must be added to this text:

    1. (a)

      the cash amount to which the amount borrowed would increase in sterling if there was a decline of 5% in the value of sterling when compared to the relevant currency; and

    2. (b)

      if payments are required, the amount by which (2)(b) would increase the customer's payments based on the frequency of payments from MCOB 9.4.37 R, shown as a sterling equivalent cash amount.

Risk warning

MCOB 9.4.129 R

The text at MCOB 9.4.33 R(8) must be immediately followed by the following additional text, prominently displayed: "Changes in the exchange rate may increase the sterling equivalent of your debt."

10

Shared appreciation mortgages

MCOB 9.4.130 R

If the lifetime mortgage7 is a shared appreciation mortgage, MCOB 9.4 applies to the illustration with the following modifications:

7
  1. (1)

    Section 5 "Description of this mortgage" must contain the following additional information and text in this order after the details required by MCOB 9.4.24 R to MCOB 9.4.29 R:

    1. (a)

      "This lifetime mortgage involves [name of mortgage lender] taking a percentage share in any increase in the value of your property [insert details of all occasions when the share will be payable to the mortgage lender, for example, "after x years, or when this lifetime mortgage comes to an end or is terminated early"]. The amount [name of mortgage lender] will take depends on any increase in the value of your property." [Include if relevant: "If your property falls in value between now and the end of this lifetime mortgage you will be required to pay [add details of what the customer will need to pay the mortgage lender if the property falls in value]."

    2. (b)
      1. (i)

        a basic explanation of how the amount of the share payable to the mortgage lender is calculated including the proportions of any given increase in the value of the property and whether this is dependent on the level of growth (for example, that the share payable to the mortgage lender is all of the increase in value of the property for the first 5% increase in value, plus half of the additional increase in the value of the property above this);

      2. (ii)

        a reference to a separate document for full details of the terms and conditions relating to the amount of the share payable followed by:"The example below shows how this works. EXAMPLE: Based on the current [estimated] value of your home of [insert details from MCOB 9.4.6 R(3)], the example(s) below show(s) what the value of your home would be and what share of that value [name of mortgage lender] would take after [insert example term of the loan in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R or the term after which the equity share becomes payable if less] if the value of your home increased. [Include if relevant: "and what would happen if your home decreased in value".] Please note that you should add this payment to the amount of any early repayment charges that may be payable " see Section 13"

    3. (c)

      except where (g) applies, example cash amounts for the value of the property and the corresponding amount of the equity share payable, assuming an average annual increase in the value of the property secured by the lifetime mortgage7 of 1%, 5% and 10% over the example term from (i) below;

      7
    4. (d)

      if the customer would be required to pay the mortgage lender an amount because the value of the property on which the lifetime mortgage7 would be secured had decreased from its value at the start of the term of thelifetime mortgage,7 include example cash amounts for the value of the property and the corresponding amount payable assuming an average annual decrease, in the value of the property secured by the lifetime mortgage7 of 1%, 5% and 10% over the term from (i) below;

      777
    5. (e)

      if the amount of the equity share payable cannot go above or below a certain level, an explanation that this is the case along with a cash example described as "the maximum amount you could pay";

    6. (f)

      include this text after the cash examples in (c) (or, if applicable, after the cash examples in (d) or (e)):2"This is not an indication of how the actual value of your home may change."

    7. (g)

      where (c) or (d) apply and the maximum percentage equity share payable is less than the example percentages in (c) or (d), only cash examples for those percentages required by (c) or (d) which are below this maximum need be quoted, along with the maximum in accordance with (e);

    8. (h)

      if there are no restrictions on the amount of the equity share payable, the following text should follow the text in (f):"The amount you will need to pay could be much higher than this." and

    9. (i)

      for the purposes of the examples required by (c) or (d), the example term used must be stated and must be the estimated term of the lifetime mortgage7 in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R or the term after which the equity share becomes payable, if less;

      7
  2. (2)

    Section 10: "How the value of your home could change" of the illustration must contain the following text at the end of the section:"You also need to think about the cost of paying any share in the value of your home to [insert name of mortgage lender] - see Section 5."

  3. (3)

    Section 13 " What happens if you do not want this mortgage any more?" must contain the following text at the end of the first sub-heading "Early repayment charges":"Remember to add the cost of paying any share in the value of your home to [insert name of mortgage lender] " see Section 5."

  4. (4)

    Section 15 "Overall cost of this mortgage" of the illustration must contain the following text at the end of the section:"The APR and the total amount you must pay do not take account of the share that [insert name of mortgage lender] takes in any increase in the value of your home as described in Section 3. So you should not use these measures to compare this lifetime mortgage with other lifetime mortgages that do not involve [insert name of mortgage lender] taking a share in any increase in the value of your home."

MCOB 9.4.131 G

The requirements in MCOB 9.4.130 R(1)(c) and (d) may be presented in a tabular format.

Risk warning

MCOB 9.4.132 R

The requirements at MCOB 9.4.130 R(1) must be immediately followed by the following additional text, prominently displayed:"You will need to pay this share in the value of your home to [name of mortgage lender] [insert time at which share must be paid - for example 'when your lifetime mortgage is repaid']. Think carefully about how this will affect the amount left over for you or your estate."

10

Certain lifetime mortgages

MCOB 9.4.132A R

12 MCOB 9.4.132DR applies if the terms of a lifetime mortgage contract:

  1. (1)
    1. (a)

      require the customer to make regular payments to the mortgage lender; or

    2. (b)

      expect that the customer will make regular payments to the mortgage lender,

    in respect of all or part of the interest, or part of the capital, due under those terms, either over the duration of the lifetime mortgage or until a specified date; but

  2. (2)

    permit the customer to stop making the payments referred to in paragraph (1) at any time of his or her choosing (which may be a time before the specified date, if there is one); and

  3. (3)

    provide that, if the customer does stop making the payments referred to in paragraph (1), no payment in respect of interest or capital due under those terms is payable to the mortgage lender until the lifetime mortgage comes to an end.

MCOB 9.4.132B G

12The type of lifetime mortgage described in MCOB 9.4.132AR starts out with the customer making regular payments as they would with a regular (non-lifetime) interest-only mortgage or repayment mortgage, but converts into an interest roll-up mortgage if and when the customer chooses to stop making payments.

MCOB 9.4.132C G

If only part of the loan under the lifetime mortgage is of the type described in MCOB 9.4.132AR (for example, if part of the loan is on an interest roll-up basis from the outset, and part is convertible from interest-paying to interest roll-up):

  1. (1)

    the modifications set out in MCOB 9.4.132DR apply only to that part of the loan that is of the type described in MCOB 9.4.132AR; and

  2. (2)

    the projection of roll-up of interest on the part of the loan that is on an interest roll-up basis from the outset should also be shown in Section 8B of the illustration, added to the projection of roll-up of interest on the convertible part of the loan.

MCOB 9.4.132D R

12 MCOB 9.4 applies to the lifetime mortgageillustration with the following modifications:

  1. (1)

    Section 7 of the illustration (“Risks – important things you must consider”) must also include information about any fees that may be charged, and other adverse consequences (such as a change in interest rate) that may occur, as a result of the customer choosing to convert the mortgage to interest roll-up.

  2. (2)

    Section 8(A) of the illustration should be headed “What you will owe and when (A) Details of mortgage payments.” It should be completed on the assumption that the required or expected regular payments are made until the date on which the lifetime mortgage converts automatically to an interest roll-up mortgage or, if there is no such date, throughout the life of the lifetime mortgage as calculated according to MCOB 9.4.10R.

  3. (3)

    The text accompanying the illustration in Section 8(A) must explain the basis on which it was prepared.

  4. (4)

    The following text must be shown in a box immediately under the heading to the table in Section 8(A) of the illustration (“What you will owe and when: Details of mortgage payments”) as referred to in MCOB 9.4.36G: “This shows the amounts you will pay if you keep up mortgage payments [throughout the estimated life of the lifetime mortgage][until [the date of automatic conversion to interest roll-up], when [Part [the number of the part] of] the mortgage will convert to an interest roll-up mortgage.] Under the terms of this mortgage, you can choose at any time to stop making payments and instead have interest added to the amount you owe. The illustration in Section 8(B) shows an example of how choosing to stop making payments could affect the amount you would owe under this lifetime mortgage.”

  5. (5)

    Section 8(B) of the illustration, referred to in MCOB 9.4.49G, should be headed “What you will owe and when (B) Projection of roll-up of interest”. It must be based on the assumption that the interest due is added to the loan from an assumed date of conversion to an interest roll-up mortgage until the end of its term.

  6. (6)

    For the purpose of MCOB 9.4.132DR(5), the assumed date of conversion must be:

    1. (a)

      if the customer has estimated the date at which they will decide to convert the mortgage to an interest roll-up basis, that date; or

    2. (b)

      in the absence of such an estimate, the earlier of:

      1. (i)

        the date (if any) on which the lifetime mortgage converts automatically to an interest roll-up mortgage, or

      2. (ii)

        the date at which one-third of the assumed term for the lifetime mortgage (calculated as set out in MCOB 9.4.10R) has passed.

  7. (7)

    If the customer must pay an additional fee for converting the loan to an interest roll-up basis at a time of their choosing, that fee must be included in the column headed “Fees charged during the year” for the year of conversion assumed for the purposes of Section 8(B) of the illustration.

  8. (8)

    Immediately under the heading of the table required by MCOB 9.4.51R, instead of the text set out in MCOB 9.4.50R, the following text must appear:

    “This shows how the amount(s) paid to you and the interest and any fees that we charge mount up over [insert number of years estimated in accordance with MCOB 9.4.10R or MCOB 9.4.12R] years. It has been calculated based on the assumption that [Part [the number of the part] of] the mortgage converts to an interest roll-up basis after [insert number of years used for purposes of the illustration, as determined under MCOB 9.4.132DR(6)] years. The amounts are calculated using the current interest rate(s) of [insert interest rate(s)]. After conversion to interest roll-up, interest is added to the amount you owe [insert frequency of roll-up of interest - e.g. monthly]. Remember that you may choose to convert [Part [the number of the part] of the mortgage] to interest roll-up earlier than after the [insert number of years used for the purposes of the illustration, as determined under MCOB 9.4.132DR(6)] years assumed, and that the mortgage could run for a longer time than [insert number of years estimated in accordance with MCOB 9.4.10R or MCOB 9.4.12R] years. If you decide to convert earlier, or if the mortgage runs for longer than assumed, the amount you owe will be more than the amount shown in this illustration.”

  9. (9)

    In Section 15 of the illustration (“Overall cost of this mortgage”), the calculation of the total amount paid and the APR must be based on the assumption that the expected payments are made until the date on which the lifetime mortgage converts automatically to an interest-roll-up mortgage or, if there is no such date, throughout the life of the lifetime mortgage as calculated according to MCOB 9.4.10R. An explanation of the assumption used should be included with the illustration, in addition to the text prescribed by MCOB 9.4.111R.

MCOB 9.4.132E G
  1. (1)

    12An illustration for the type of lifetime mortgage described in MCOB 9.4.132AR will include both Section 8(A) and Section 8(B). Section 8(A) will show the number and amount of required or expected regular payments from the start of the lifetime mortgageuntil maturity (i.e. what will happen if the mortgage never converts to an interest roll-up basis), or until the date (if any) at which the mortgage automatically converts. Section 8(B) will show what happens if the mortgage converts to interest roll-up at the date assumed for the purpose of the illustration. The first line of the table in Section 8(B) will show the number of years for which it is assumed payments will be made, referring to Section 8(A) for the number and amounts, and subsequent lines will show how the interest rolls up from the date of conversion onwards.

  2. (2)

    For this type of lifetime mortgage, Section 8(B) may appear immediately after Section 8(A), or at the end of the illustration, or in a separate document.

8Section 1 of a home reversion plan illustration: "About this information"

MCOB 9.4.133 R

8Under the section heading "About this information", the prescribed text under this heading in the home reversion planillustration must be included.

8Section 2 of a home reversion plan illustration: "Which service are we providing you with?"

MCOB 9.4.134 R
  1. (1)

    8Unless (2) applies, under the section heading "Which service are we providing you with?" the prescribed text in the home reversion planillustration under this heading must be included with a "check box" for each statement, one of which must be marked prominently to indicate the level of service provided to the customer;

  2. (2)

    If the level of service described in the illustration is provided by another firm, (1) may be replaced by the following: under the section heading "Which service are we providing you with?" the following text should be presented as two options with a "check box" for each option, one of which must be marked prominently to indicate the level of service provided to the customer: "[name of the firm] recommends, having assessed your needs, that you take out this home reversion plan." "[name of the firm] is not recommending a particular home reversion plan for you. However, based on your answers to some questions, it is giving you information about this home reversion plan so that you can make your own choice, or find out about other ways in which you may be able to release equity from your home.".

8Section 3 of a home reversion plan illustration: "What is a home reversion plan?"

MCOB 9.4.135 R

8Under the section heading "What is a home reversion plan?", the prescribed text in the home reversion planillustration under this heading must be included.

8Section 4 of a home reversion plan illustration: "What you have told us"

MCOB 9.4.136 R
  1. (1)

    8Under the section heading "What you have told us", the illustration must state the minimum information a firm must obtain from the customer (apart from details of the plan that the customer is interested in, which is in Section 5 of the illustration), and can include brief details of any other information that has been obtained from the customer and used to produce the illustration.

  2. (2)

    For an instalment reversion plan, where the customer requests an additional illustration showing a term of their choice, the term chosen by the customer must be stated in this section, together with a statement to the effect that the term is the customer's choice.

  3. (3)

    If the amount on which the illustration is based includes the amount that the customer wants to release less charges and other payments that have been deducted from the amount to be released:

    1. (a)

      except where there are some fees or charges that have not been deducted, this section must include the following text after the amount to be released: " less £ [insert total amount of fees and other charges deducted from the amount to be released] for fees that have been deducted from the amount to be released - see Section 9 for details."; or

    2. (b)

      where there are other fees or charges that the customer must pay that have not been deducted this section must include the following text after the amount to be released: "less £ [insert total amount of fees and other charges deducted from the amount to be released] for fees that have been deducted from the amount to be released. These and the additional fees that you need to pay are shown in Section 9.".

  4. (4)

    If the amount on which the illustration is based includes the amount that the customer wants to release less insurance premiums or insurance-related charges that have been deducted from the amount to be released:

    1. (a)

      except where there are other insurance premiums or insurance-related charges that have not been deducted, this section must include the following text after the amount to be released (which may be combined with the prescribed text in (3) if applicable): "less £ [insert amount of premium or charges, or both, to be deducted from the amount to be released] for insurance [premiums] [and] [charges] that have been deducted from the amount to be released - see Section 10 for details."; or

    2. (b)

      where there are other insurance premiums or insurance-related charges, or both, this section must include the following text after the amount to be released (which may be combined with the prescribed text in (3) if applicable): "less £ [insert amount of premium or charges, or both, to be deducted from the amount to be released] for insurance [premiums] [and] [charges] that have been deducted from the amount to be released. These and any additional insurance [premiums] [and] [charges] that you need to pay are shown in Section 10.".

  5. (5)

    If the amount on which the illustration is based does not involve any charges or payments being deducted from the amount to be released, but there are charges that must be paid by the customer, Section 4 of the illustration must include the following text after the amount to be released: "No fees have been deducted from this amount but the fees you need to pay are shown in Section 9. For details of any insurance charges, see Section 10.".

  6. (6)

    If the home reversion plan on which the illustration is based has no charges that must be paid by the customer, and no insurance premiums are being deducted from the amount to be released, Section 4 of the illustration must include the following text after the amount to be released: "We do not charge any fees for this home reversion plan.".

MCOB 9.4.137 R

8At the end of Section 4 of the illustration a statement must be included making clear that changes to any of the information obtained from the customer, and where appropriate to the valuation of the property, could alter the details elsewhere in the illustration and encouraging the customer to ask for a revised illustration in this event.

MCOB 9.4.138 G

8An example is: "An independent valuation will be carried out and this, or changes to any of the information that you have given us, could alter the information in this illustration. If this is the case please ask for a revised illustration."

8Section 5 of a home reversion plan illustration: "Description of this home reversion plan"

MCOB 9.4.139 R

8Under the section heading "Description of this home reversion plan" the illustration must:

  1. (1)

    state the name of the reversion provider providing the home reversion plan to which the illustration relates (a trading name used by the reversion provider may also be stated), and the name, if any, used to market the home reversion plan;

  2. (2)

    include a statement describing the home reversion plan;

  3. (3)

    if the home reversion plan is linked to an investment, and payments required from the customer on the home reversion plan will be deducted from the income from the investment, include a statement that this is the case;

  4. (4)

    if the customer is obliged to buy any tied products under the home reversion plan, include the following information:

    1. (a)

      details of the tied products required;

    2. (b)

      the following text: "You are obliged to take out [insert details of the tied product(s)] through [insert name of reversion provider or reversion intermediary] as a condition of this home reversion plan", and if the tied product is an insurance policy, "Please refer to Section 10 of this illustration for further details [of the insurance policies].";

  5. (5)

    state the term or estimated term of the home reversion plan;

  6. (6)

    state very briefly any restrictions that apply to the availability of the home reversion plan (for example, it is only available to certain types of customer or cannot be transferred to another property).

MCOB 9.4.140 R

8Further information about the home reversion plan may be included as long as it does not significantly:

  1. (1)

    duplicate information contained elsewhere in the illustration; and

  2. (2)

    extend the length of this section.

MCOB 9.4.141 G

8An example of further information that may be included might be that an "approval in principle" has been granted subject to valuation.

8Section 6 of a home reversion plan illustration: "Benefits"

MCOB 9.4.142 R

8Under the section heading "Benefits", the illustration must include:

  1. (1)

    a description of the monetary amount(s), and in a box aligned to the right of the document, the monetary amount(s), that the customer will receive as a lump sum and/or as a regular payment;

  2. (2)

    if the home reversion plan is linked to an investment and the payments required from the customer on the home reversion plan will be deducted from the income from the investment, the monetary amount of the net income the customer will receive;

  3. (3)

    if applicable, statements of any other benefits, incentives and guarantees that apply to the home reversion plan;

  4. (4)

    an explanation of how the monetary amount that the customer will receive was calculated; and

  5. (5)

    if the home reversion plan is an instalment reversion plan:

    1. (a)

      whether the monetary amount that the customer will receive is guaranteed or variable (for example, because it is linked to the performance of another investment);

    2. (b)

      an explanation of what happens to the monetary amount(s) not yet paid by the reversion provider if the customer (and, in the case of a joint plan, the surviving spouse or civil partner) dies; and

    3. (c)

      if the monetary amount that the customer will receive is subject to the customer selling further parts of a qualifying interest in land to the reversion provider, whether these further sales are optional or compulsory.

MCOB 9.4.143 G

8Examples that may be appropriate to describe what the customer will receive are:

  1. (1)

    "Subject to the independent valuation, this home reversion plan will provide you with a lump sum of £[x] [or [state number of instalments] lump sums of £[x]].";

  2. (2)

    "The amount you are releasing will automatically be used to purchase a [name of linked investment product] from [name of provider]. The amount is £[x]."; and

  3. (3)

    "Subject to the independent valuation, this home reversion plan will provide you with a monthly payment from the start of your plan for [state period]. This will be £[x].".

MCOB 9.4.144 G

8An example that may be appropriate to explain how the amount the customer will receive was calculated is: "How we calculate this sum: Your property is worth about £[x]. Taking the information in Section 4 above into consideration, this plan will pay you [x] % [the amount, as a percentage, that the reversion provider will pay for the property] of the full market value of any portion of the property you decide to sell. For a lump sum of about £ [x] [insert the amount that the customer wants to release from the property], you will need to sell [x]% [state the proportion of the property, as a percentage, that the customer needs to sell to release the amount required] of your home. This will leave you with [x]% [state the proportion of the property, as a percentage, that will still be owned by the customer] of your property. At current values, this would be worth £[x] though the value of property may rise or fall in the future."

8Section 7 of a home reversion plan illustration: "Risks - important things you must consider"

MCOB 9.4.145 R

8The illustration must include under the heading "Risks - important things you must consider" brief statements and warnings on all material risks involving a home reversion plan, including:

  1. (1)

    prominently at the beginning of the section: "A home reversion is a complex property transaction. You should seek legal advice to ensure that you fully understand all of the implications for you and your home and for anyone who might otherwise inherit the property.";

  2. (2)

    the effect of the customer wanting or needing to move home (whether into another property, sheltered accommodation, long-term care or residential care), covering the circumstances in which the home reversion plan is portable;

  3. (3)

    the effect on the home reversion plan of another party moving into the property (for example on marriage or the formation of a civil partnership or where a family member acts as a carer);

  4. (4)

    the reversion provider's requirements for repair and maintenance of the property, including the reversion provider's right (if any) to enter the property to effect essential repairs, and the circumstances in which this may occur;

  5. (5)

    a warning that taking out the home reversion plan may affect the customer's tax and welfare benefits position, that tax and welfare benefits can change and that the customer should consider seeking further information from HM Revenue and Customs, Benefits Agency or another source of advice such as a Citizens' Advice Bureau;

  6. (6)

    a warning that under a home reversion plan the customer will cease to own any part of the property sold to the reversion provider, and so will neither benefit from any increase in the value of that part nor be able to leave his home to his beneficiaries on his death;

  7. (7)

    a warning (where appropriate) that the right to occupy the property will depend on the customer fulfilling the terms of the home reversion plan;

  8. (8)

    that the illustration contains a statement about the duration of the home reversion plan, and that the customer should ensure that the duration will be adequate given the customer's circumstances;

  9. (9)

    whether the customer can, in the future, secure borrowing from any other source on the property (and if applicable a warning that an increasing debt may mean that it may not be possible to borrow more in the future); and

  10. (10)

    if the provider is an unauthorised reversion provider, a warning that:

    1. (a)

      the provider is not authorised or regulated by the FCA, and that key protections under the regulatory system will not apply; and

    2. (b)

      the provider is not subject to the jurisdiction of the Financial Ombudsman Service, and that the customer will not be entitled to refer complaints against the provider to the Financial Ombudsman Service.

MCOB 9.4.147 R

8Under the heading "Risks - important things you must consider" the illustration must also include the following if they apply:

  1. (1)

    for an instalment reversion plan, a statement that if the customer dies in the early years of the plan, income payments will cease and therefore the full expected benefits of the plan will not be obtained;

  2. (2)
    1. (a)

      for an instalment reversion plan where there is a regular cash sum payable; and

    2. (b)

      where:

      1. (i)

        the home reversion plan is linked to an investment; and

      2. (ii)

        the payments required from the customer on the home reversion plan will be deducted from the income from the investment; and

      3. (iii)

        the customer will receive a fixed net income;

    a statement that inflation can erode the value of the cash sum over time; and

  3. (3)

    for all home reversion plans, a statement or warning with regard to any material issue not covered elsewhere in this section of the illustration.

8Section 8 of a home reversion plan illustration: "What you will have to pay and when"

MCOB 9.4.148 R

8The heading of the right-hand column of Section 8 of the illustration must state the frequency with which payments must be made by the customer. (For example, if payments are to be made on a monthly basis, the heading for this section must be "What you will have to pay and when" and the column must be headed "Monthly payments").

MCOB 9.4.149 R

8All the payments in Section 8 must be calculated based on the frequency used for the purposes of the heading in the right-hand column of the section and must be shown in that column.

MCOB 9.4.150 R

8Section 8 of the illustration must contain the following information:

  1. (1)

    a statement at the beginning of the section regarding rent and charges using the following text: "A home reversion plan is not a loan. Once you have paid the fees shown in section 9, you will only have to pay the charges shown below.";

  2. (2)

    the amount and frequency of annual rent, if any, to be paid by the customer; and

  3. (3)

    a description and the amount of other periodic charges to be paid by the customer.

MCOB 9.4.151 R

8Where the payment due to the reversion provider is to be deducted from the income provided by a linked investment product (such as an annuity) such that the customer receives the net income, the firm must make a clear statement to this effect.

8Section 9 of a home reversion plan illustration: "What fees must you pay?"

MCOB 9.4.152 R

8Under the section heading "What fees must you pay?" the illustration must:

  1. (1)

    itemise all the fees that the customer must pay, excluding any charges for insurance set out in Section 10 of the illustration; and

  2. (2)

    include a statement regarding taxes and costs using the following text: "You may have to pay other taxes or costs in addition to any fees shown here.".

MCOB 9.4.153 G

8An example of a fee that would not be included would be a fee payable by the customer to insure their property elsewhere (however this would need to be stated in the separate "Insurance" section).

MCOB 9.4.154 R

8The fees included in this section must be itemised under the relevant sub-headings as follows:

  1. (1)

    the fees that are payable by the customer to the reversion provider must be itemised under the sub-heading "Fees payable to [name of reversion provider]";

  2. (2)

    the remaining fees must be itemised under the sub-heading: "Other fees"; and

  3. (3)
    1. (a)

      if there are no fees to be itemised in accordance with (1), the sub-heading must be retained and a statement must be included that no fees apply;

    2. (b)

      if there are no fees to be itemised in accordance with (2), the sub-heading must be retained and only the text in MCOB 9.4.152R (2) applies.

MCOB 9.4.155 R

8The following information must be provided for each fee included in this section of the illustration:

  1. (1)

    a description of the fee;

  2. (2)

    the amount payable by the customer specified in the column on the right-hand side of the section;

  3. (3)

    for fees included under the sub-heading "Other fees", to whom the fee is payable;

  4. (4)

    when the fee is payable;

  5. (5)

    whether or not the fee is refundable, and if so, the extent to which it is refundable;

  6. (6)

    which fees (if any) are estimated and based on representative information; and

  7. (7)

    if any fee is payable after the start of the home reversion plan and subject to change in the future, the amount of that fee, along with a statement that this is the 'current fee'.

MCOB 9.4.156 R
  1. (1)

    8If any fees are to be deducted from the amount to be released, this must be stated alongside each fee.

  2. (2)

    If the customer has the option of deducting from the amount to be released any of the fees included in this section, the following text must be included: "If you wish you can deduct [this/these/the {type of fee}] fee(s) from the amount to be released under this home reversion plan. This will reduce the amount you get to £ [insert amount of the amount to be released minus the fee(s)]. If you want to do this, you should ask for another illustration that shows the effect of this on the amount you will get.".

MCOB 9.4.157 G

8"Other fees" will include any fee charged by a reversion intermediary, or another third party, for advising on or arranging a home reversion plan, but not commission or procuration fees (which are dealt with in Section 12 of the illustration).

MCOB 9.4.158 R

8A reversion provider must provide a tariff of charges to the customer, if the customer so requests.

8Section 10 of a home reversion plan illustration: "Insurance"

MCOB 9.4.159 R
  1. (1)

    8Under the section heading "Insurance" the illustration must include details of:

    1. (a)

      insurance which is a tied product; and

    2. (b)

      insurance which is required as a condition of the home reversion plan which is not a tied product.

  2. (2)

    Under this section heading a firm may also provide details of insurance which is optional for the customer to take out.

  3. (3)

    It must be clear to the customer which products he is required to purchase under which circumstances (for example, where both a tied product and a reversion intermediary are involved, whether the policy must be purchased from the reversion provider or the reversion intermediary).

MCOB 9.4.160 R

8The following information must be included if the home reversion plan requires the customer to take out insurance that is a tied product either through the reversion provider or the reversion intermediary:

  1. (1)

    details of which insurance is a tied product;

  2. (2)

    the name of the firm imposing the requirement for the insurance;

  3. (3)

    for how long the customer is obliged to purchase the insurance;

  4. (4)

    an accurate quotation or a reasonable estimate of any payments the customer needs to make for the insurance;

  5. (5)

    where a quotation is provided for insurance on the basis of an estimated sum insured, because the actual required sum insured is unknown, the fact that it is estimated should be stated along with the level of cover that has been assumed;

  6. (6)

    details of when the customer's payments for such insurance change, for example, if premiums are reviewed annually; and

  7. (7)

    where a quotation is not provided, a statement of when and how a quotation will be provided (for example, separately and as soon as possible).

MCOB 9.4.161 G

8A firm must provide a customer with an accurate quotation for any tied products (see MCOB 5.4.23 R). Where the level of cover the firm requires the customer to take up is known at the outset, then the quotation should reflect that level of cover.

MCOB 9.4.162 R

8If the home reversion plan does not require the customer to take out insurance as a tied product, a statement must be provided under this section that the customer is not obliged to take out insurance through the reversion provider or the reversion intermediary.

MCOB 9.4.163 R

8The following information must be included if the insurance required, as a condition of the home reversion plan, is not a tied product:

  1. (1)

    a brief statement of the type of insurance the firm requires; a quotation for such insurance may be included in the illustration, estimated where necessary; and

  2. (2)

    if a charge is made if the customer does not arrange insurance through the reversion provider or the reversion intermediary, this must be stated, together with the amount of the charge and the frequency with which this charge is payable.

MCOB 9.4.164 R

8A firm may include in the illustration, quotations (estimated where necessary) for any insurance products (other than the insurance products covered elsewhere in the illustration) that the firm issuing the illustration wishes to sell to the customer.

MCOB 9.4.165 R
  1. (1)

    8If any quotations for insurance are included in the illustration it:

    1. (a)

      must include a brief description of the type of insurance;

    2. (b)

      must include the total price to be paid by the customer in a column on the right hand side of the illustration under the heading "[insert frequency of payments quoted] payments"; and

    3. (c)

      may refer the customer to the relevant insurance product disclosure documentation.

  2. (2)

    If the customer has asked to deduct any insurance premiums or insurance-related charges from the amount released, the illustration must state that this is the case.

MCOB 9.4.166 G

8The terms on which an insurance premium has been calculated should be presented to the customer in the format determined by the relevant regulatory requirements.

8Section 11 of a home reversion plan illustration: "What happens if you do not want this home reversion plan any more?"

MCOB 9.4.167 R

8Under the heading "What happens if you do not want this home reversion plan any more?", the illustration must set out whether the customer can cancel the home reversion plan and if so, explain any relevant conditions attached and costs.

8Section 12 of a home reversion plan illustration: "Using a home reversion intermediary"

MCOB 9.4.168 R

8Where the illustration is issued to a customer by, or on behalf of, a reversion intermediary Section 12 "Using a home reversion intermediary" must be included in the illustration and must include the following:

  1. (1)

    a clear statement of the amount payable (either directly or indirectly) by the reversion provider to the reversion intermediary, or to any third parties; and

  2. (2)

    the name of the reversion provider who will make the payment, the name of the reversion intermediary and the names of any third parties who will be paid.

MCOB 9.4.169 R

8If the amount payable by the reversion provider to the reversion intermediary and to third parties is £250 or less, the reversion intermediary need only state that the amount of the payment is "no more than £250", unless the customer requests the actual amount.

MCOB 9.4.170 R

8If the reversion intermediary will pass to the customer all or part of the amount payable to the reversion intermediary by the reversion provider, that fact may be stated in this section, along with the amount payable to the customer.

MCOB 9.4.171 R

8If the reversion provider will make no payment to the reversion intermediary or any third party, this section may state that the reversion intermediary will receive no payment.

MCOB 9.4.172 R

8The amount disclosed as payable to the reversion intermediary or third parties must include, but is not limited to:

  1. (1)

    any procuration fee; and

  2. (2)

    a cash value for any material non-cash inducements that the reversion provider provides, whether payable directly or indirectly.

MCOB 9.4.173 G

8Any material inducements provided by a reversion provider, whether directly or indirectly, to a reversion intermediary or third party (unless the payment only reflects the cost of outsourcing work relating to the processing of home reversion applications by a firm unconnected to the reversion intermediary) must be quantified in cash terms (see MCOB 2.3.7 R). This enables the cash values to be included in the illustration.

MCOB 9.4.174 G

8An example of a statement which would comply with MCOB 9.4.168 R would be: "[name of reversion provider] will pay [name of reversion intermediary] £[x] in cash and benefits, if you proceed with this home reversion plan."

8Contact details

MCOB 9.4.175 R

8This section must:

  1. (1)

    follow Section 11 "What happens if you do not want this home reversion plan any more?", unless the illustration is issued by a reversion intermediary, in which case it must follow Section 12 "Using a home reversion intermediary"; and

  2. (2)

    include the name, address and contact point of the firm providing the illustration.

MCOB 9.4.176 G

8An example would be: "If you wish to discuss this home reversion plan illustration, please contact [name of individual] at [address] or call [him/her] on [telephone number]."

MCOB 9.5 Disclosure at the offer stage for 3equity release transactions3

MCOB 9.5.1 R
  1. (1)

    MCOB 6.1 to MCOB 6.6 (with the modifications stated in MCOB 9.5.2 R to MCOB 9.5.4 R) apply to an equity release provider where the home finance transaction is an equity release transaction, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans (see MCOB 9.1.2A G).

    3
  2. (2)

    The table in MCOB 9.5.2 R shows how the relevant rules and guidance in MCOB 6 must be modified by replacing the cross-references with the relevant cross-references to rules and guidance in MCOB 9.4, and MCOB 9.5.

  3. (3)

    The table in MCOB 9.5.3 R replaces certain rules and guidance in MCOB 6 with rules and guidance from MCOB 9.5.

  4. (4)

    The terms and expressions in the rules and guidance in MCOB 6 that by their nature are only connected to regulated mortgage contracts must be replaced with the appropriate equivalent terms and expressions for home reversion plans (see MCOB 9.3.1A G).3

MCOB 9.5.2 R

Table of modified cross-references to other rules:

This table belongs to MCOB 9.5.1 R.

Subject

Rule or guidance

Reference in rule or guidance

To be read as a reference to:

Application: What?

MCOB 6.1.5R

MCOB 6

MCOB 6 as modified by MCOB 9.5

Content of offer document

MCOB 6.1.6G

MCOB 5.6

MCOB 9.4

Purpose

MCOB 6.2.1G

MCOB 6

MCOB 6 as modified by MCOB 9.5

General

MCOB 6.3.2R

Records

MCOB 6.4.3R

Modifications to the illustration

MCOB 6.4.5G

MCOB 6.4.4R(5)(b)

MCOB 9.5.4R(6)(b)

Modifications to the illustration

MCOB 6.4.6R

MCOB 6.4.4(1)

MCOB 9.5.4R(1)

Modifications to the illustration

MCOB 6.4.6R(1) and (2)

MCOB 5.6

MCOB 9.4

Modifications to the illustration

MCOB 6.4.7R

MCOB 6.4.4R(1)

MCOB 9.5.4R(1)

Modifications to the illustration

MCOB 6.4.7R(2)

MCOB 5

MCOB 9

Modifications to the illustration

MCOB 6.4.7R(3)

MCOB 5.6.73R to MCOB 5.6.83G

MCOB 9.4.72R to MCOB 9.4.82G

Modifications to the illustration

MCOB 6.4.7R(3)

MCOB 5.6.92R to MCOB 5.6.112G

MCOB 9.4.91R to MCOB 9.4.110R

Other information contained in the offer document

MCOB 6.4.13R

MCOB 5.6.122R

MCOB 9.4.126R

Offer documents in place of illustrations

MCOB 6.6.1R

MCOB 5.4 and MCOB 5.5

MCOB 5.4 and MCOB 5.5 as modified by MCOB 9

MCOB 9.5.3 R

Table of rules in MCOB 6 replaced by rules in MCOB 9:

This table belongs to MCOB 9.5.1 R

Subject

Rule

Rule replaced by

Modifications to the illustration

MCOB 6.4.4R

MCOB 9.5.4R

MCOB 9.5.4 R

The illustration provided as part of the offer document in accordance with MCOB 6.4.1 R(1) must meet the requirements of MCOB 9.4, with the following modifications:

  1. (1)

    the illustration must be suitably adapted and revised to reflect the fact that the firm is making an offer to a customer and updated to reflect changes to, for example, for a lifetime mortgage3 the interest rate, charges, the exchange rate or the APR required by MCOB 10 (Annual Percentage Rate) at the date the illustration is issued;

  2. (2)

    the illustration must be based on the example term estimated in accordance with MCOB 9.4.10 R;

  3. (3)

    MCOB 9.4.2 R(2)(a) does not apply;

  4. (4)

    MCOB 9.4.17 R (Information to be included at the head of the illustration) does not apply;

  5. (5)

    Section 1: 'About this information'3 is replaced by the following: "Section 1: 'About this offer document'. Under the section heading 'About this offer document', the following text must be included:

    3
    1. (a)

      "You are not bound by the terms of this offer document until [insert relevant circumstances, including the names of any documents that must be signed. For example "you have signed the legal charge and the funds are released for your lifetime mortgage"] or "you have signed the agreement to sell your property to the reversion provider"]3. We are required by the Financial Conduct Authority (FCA) - the independent watchdog that regulates financial services - to provide you with this offer document."

    2. (b)

      (unless the offer document is being provided in place of an illustration3)"You should compare this offer document with the key facts illustration given to you before you applied for this [lifetime mortgage] [home reversion plan]3, to see how the details may have changed."

      33
  6. (6)

    either:3

    3
    1. (a)

      The heading for Section 2 is replaced with 'Which service did we provide you with?' and3 the following text should be presented as two options each with a 'check box', one of which must be marked prominently to indicate the level of service provided to the customer: "We have recommended, having assessed your needs, that you take out this [lifetime mortgage] [home reversion plan]." "We have not recommended a particular [lifetime mortgage] [home reversion plan] for you. You must make your own choice whether to accept this [lifetime mortgage] [home reversion] offer."; or3

      3333
    2. (b)

      if the service described in Section 2 of the earlier illustration was provided by another firm, the heading for Section 2 is replaced by 'Which service were you provided with?' and the following text should be presented as two options each with a 'check box' one of which must be marked prominently to indicate the level of service provided to the customer: "[name of firm] recommended that you take out this [lifetime mortgage] [home reversion plan]." "[name of firm] did not recommend a particular [lifetime mortgage] [home reversion plan], for you. You must make your own choice whether to accept this [mortgage] [home reversion] offer.";3

      333333
  7. (7)

    the fees recorded in the illustration that is part of the offer document must include any fees paid or payable by the customer;1

    3
  8. (8)

    any requirements to disclose whether a fee is refundable must be read as including fees that have already been paid;3

    33
  9. (9)

    [deleted]2

    2
  10. (10)

    for a lifetime mortgage:3

    33
    1. (a)

      where additional features are included in accordance with MCOB 9.4.91 R and these are credit facilities that meet the definition of a regulated credit agreement4 regulated by the Consumer Credit Act 1974 and the Act4, the relevant parts of Section 14 of the illustration that is part of the offer document must include the following text: "This credit facility is regulated under the Consumer Credit Act 1974 and the Financial Services and Markets Act 20004. Please refer to the separate credit agreement which describes the facility and the terms on which the credit is available.";3

    2. (b)

      The text required by MCOB 9.4.102 R (2)(a) or MCOB 9.4.102 R (2)(b) should be adapted to include, or tell the customer where they can find, the information required by MCOB 6.5.4 R; and3

    3. (c)

      MCOB 9.4.119 R and MCOB 9.4.120 R apply to the illustration that is part of the offer document if the illustration given out in accordance with MCOB 9 was issued by, or on behalf of, a mortgage intermediary.3

MCOB 9.5.5 R

3For home reversion plans, the firm must provide the customer with copies of the valuation report for the property and the terms of the home reversion plan including the terms on which he will occupy the property, together with the offer document.

MCOB 9.6 Disclosure at the start of the contract and after sale for 3equity release transactions3

MCOB 9.6.1 R
  1. (1) 3
    1. (a)

      MCOB 7.1 to MCOB 7.3, MCOB 7.5 and MCOB 7.6 (as modified by this section) apply to a firm where the home finance transaction is a lifetime mortgage.3

    2. (b)

      MCOB 7.1 to MCOB 7.3 (as modified by this section) apply to a firm where the home finance transaction is a home reversion plan, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans (see MCOB 9.1.2A G).3

  2. (2)

    The table in MCOB 9.6.2 R shows how the relevant rules and guidance in MCOB 7 must be modified by replacing the cross-references with the relevant cross-references to rules and guidance in MCOB 9.4 to MCOB 9.8.

  3. (3)

    The table in MCOB 9.6.3 R replaces certain rules and guidance in MCOB 7 with rules and guidance from MCOB 9.7 and MCOB 9.8.

  4. (4)

    The table in MCOB 9.6.4 R disapplies certain rules in MCOB 7 for the purposes of MCOB 9.

  5. (5)

    The terms and expressions in MCOB 7 that by their nature are only connected to regulated mortgage contracts must be replaced with the appropriate equivalent terms and expressions for home reversion plans (see MCOB 9.3.1A G).3

MCOB 9.6.2 R

Table of modified cross-references to other rules:

This table belongs to MCOB 9.6.1R.

1

Subject

Rule or guidance

Reference in rule or guidance

To be read as a reference to:

Application

MCOB 7.1.4R

MCOB 7.6.7R - MCOB 7.7.4R

MCOB 7.6.7R - MCOB 7.6.33G as modified by MCOB 9.8.5R - 9.8.9R

Application

MCOB 7.1.5R

MCOB 7.5 - MCOB 7.7.4R

MCOB 7.5 -MCOB 7.6.33G as modified by MCOB 9.8

Information in more than one document

MCOB 7.3.3R

MCOB 7

MCOB 7 as modified by MCOB 9

Frequency of statements

MCOB 7.5.6G

MCOB 7.5.3R(2)

MCOB 9.8.1R(2)

Annual statement - additional content

MCOB 7.5.9G

MCOB 7.5.3R(2)(b)

MCOB 9.8.1R

Further advances

MCOB 7.6.7R

MCOB 5

MCOB 9.4

Further advances

MCOB 7.6.10G

MCOB 7.6.9R(10

MCOB 9.8.5R(1)

Further advances

MCOB 7.6.10G

MCOB 5.6.34

MCOB 9.4.114R

Further advances

MCOB 7.6.11G

MCOB 7.6.9R(3) and (4)

MCOB 9.8.5R(3)

Further advances

MCOB 7.6.11G(2)

MCOB 5.6.40R

MCOB 9.4.37R

Further advances

MCOB 7.6.12G

MCOB 7.6.9R(3)

MCOB 9.8.5R(3)

Further advances

MCOB 7.6.13R

MCOB 5.6.25R(2)(a)

MCOB 9.4.24R(4)(a)

Further advances

MCOB 7.6.13R

MCOB 7.6.9R(3)(b)

MCOB 9.8.5R(3)(b)

Further advances

MCOB 7.6.14R

MCOB 5

MCOB 9

Rate switches

MCOB 7.6.20R

MCOB 5

MCOB 9

Rate switches

MCOB 7.6.20R

MCOB 5

MCOB 9

Addition or removal of party to contract

MCOB 7.6.22R

MCOB 5

MCOB 9

Addition or removal of party to contract

MCOB 7.6.25R

MCOB 5

MCOB 9

Changes to payments

MCOB 7.6.29R

MCOB 7.6.28R

MCOB 9.8.9R or MCOB 9.8.10R

Changes to payments

MCOB 7.6.30R

MCOB 7.6.28R

MCOB 9.8.9R or MCOB 9.8.10R

Use of illustrations

MCOB 7.6.31R

MCOB 7.6.28R

MCOB 9.8.9R or MCOB 9.8.10R

Use of illustrations

MCOB 7.6.31R

MCOB 5

MCOB 9

Use of illustrations

MCOB 7.6.32R

MCOB 7.6.28R

MCOB 9.8.9R or MCOB 9.8.10R

Use of illustrations

MCOB 7.6.32R

MCOB 7.6.18R and MCOB 7.6.22R

MCOB 7.6.18R and MCOB 7.6.22R as modified by MCOB 9

Simultaneous requests

MCOB 7.6.33G

MCOB 7.6.18R and MCOB 7.6.22R

MCOB 7.6.18R and MCOB 7.6.22R as modified by MCOB 9

Simultaneous requests

MCOB 7.6.33G

MCOB 5

MCOB 9

MCOB 9.6.3 R

Table of rules in MCOB 7 replaced by rules in this chapter:

This table belongs to MCOB 9.6.1R.

Subject

Rule or guidance

Rule replaced by:

Information at start of contract

MCOB 7.4

MCOB 9.7

Content of statement

MCOB 5.3R

MCOB 9.8.1R

Frequency of statements

MCOB 7.5.5R

MCOB 9.8.2R

Event-driven information

MCOB 7.6.1R

MCOB 9.8.3R

Release of additional borrowing

MCOB 7.6.6G

MCOB 9.8.4G

Further advances

MCOB 7.6.9R

MCOB 9.8.5G

Further advances

MCOB 7.6.16R

MCOB 9.8.7R

Addition or removal of party to contract

MCOB 7.6.27R

MCOB 9.8.8R

Changes to payments

MCOB 7.6.28R

MCOB 9.8.9R and MCOB 9.8

MCOB 9.6.4 R

Table of rules in MCOB 7 which do not apply in relation to2 lifetime mortgage2:

This table belongs to MCOB 9.6.1R.

Subject

Rule

Annual statements: content

MCOB 7.5.4R

Business loans

MCOB 7.7

MCOB 9.7 Disclosure at the start of the contract: lifetime mortgages2

MCOB 9.7.1 G

MCOB 9.7 applies to a firm when it enters into a lifetime mortgage.1

1

Disclosure requirements where interest payments are required

MCOB 9.7.2 R

A firm that enters into a lifetime mortgage1 with a customer where interest payments are required (whether or not they will be collected by deduction from the income from an annuity or other linked investment product) must provide the customer with the following information before the customer makes the first payment under the contract:

1
  1. (1)

    the amount of the first payment required;

  2. (2)

    the amount of the subsequent payments;

  3. (3)

    the method by which the payments will be collected (for example, by direct debit or by deduction from a linked investment product such as an annuity) and the frequency of such payments and the date of collection of the first and subsequent payments;

  4. (4)

    the net amount which the customer will receive, where the interest payment is deducted from the income generated by a linked investment product such as an annuity, and the method by which this amount will be paid to the customer;

  5. (5)

    confirmation of whether in connection with the lifetime mortgage1 insurance products such as buildings and contents insurance or payment protection insurance) have been purchased through the firm;

    1
  6. (6)

    the first premium (and subsequent premiums where different) for insurance products purchased through the firm in connection with the lifetime mortgage;1

    1
  7. (7)

    confirmation of whether the insurance premiums are to be collected with the mortgage payment or separately (where the latter applies, the firm must give details or state that these will be confirmed separately);

  8. (8)

    confirmation that the lifetime mortgage1 is on an interest-only basis, and details of how the firm expects the capital to be repaid (for example, from the proceeds of the sale of the property);

    1
  9. (9)

    if it is possible for a payment shortfall to occur, what to do if the customer has a payment shortfall3, explaining the benefit of making early contact with the firm, providing the name, address and telephone of a contact point with the firm, and drawing the customer's attention to the arrears charges set out in the tariff of charges;

    3
  10. (10)

    confirmation of any linked borrowing and linked deposits that are available; and

  11. (11)

    whether the lifetime mortgage1 permits the customer to make any overpayments or underpayments of the amounts due.

    1
MCOB 9.7.3 R

The information in MCOB 9.7.2 R must be provided to the customer in a single communication, except (5), (6) and (9) which may be provided separately.

Disclosure requirements where the regulated lifetime mortgage contract is a drawdown mortgage with fixed payments to the customer

MCOB 9.7.4 R

A firm that enters into a lifetime mortgage1 which is a drawdown mortgage, with fixed payments to the customer, must provide the customer with the following information before the first payment is drawn down by the customer:

1
  1. (1)

    the amount of the first payment to be made;

  2. (2)

    the amount of subsequent payments, if different;

  3. (3)

    the method by which the payment will be made (for example, by transfer to the customer's bank account) and the date of issue of the first and subsequent payments;

  4. (4)

    confirmation of whether in connection with the lifetime mortgage1 insurance products such as buildings and contents insurance or payment protection insurance) have been purchased through the firm;

    1
  5. (5)

    the first premium (and subsequent premiums where different) for insurance products purchased through the firm in connection with the lifetime mortgage;1

    1
  6. (6)

    confirmation of the method and date of collection of the premiums for insurance products purchased through the firm;

  7. (7)

    details of how the firm expects the capital and interest to be repaid (for example from the proceeds of the sale of the property);

  8. (8)

    confirmation of any linked borrowing and linked deposits that are available; and

  9. (9)

    whether the lifetime mortgage1 permits the customer to make any repayments on the lifetime mortgage 1

    11
MCOB 9.7.5 R

The information in MCOB 9.7.4 R must be provided to the customer in a single communication, except (4), (5) and (6) which may be provided separately.

MCOB 9.7.6 R

Where the lifetime mortgage1 is a drawdown mortgage and the customer can choose the amount and frequency of the payments they receive, or the amount and frequency of payments can vary for other reasons (for example in line with interest rates) the firm must provide the customer with the following information before the first payment is drawn down by the customer:

1
  1. (1)
    1. (a)

      where the customer can choose the amount and frequency of the payments they receive, details of any limitations to the amount and frequency of the payments which the customer may request; or

    2. (b)

      where the amount and frequency of payments can vary for other reasons (for example in line with interest rates), the amount of the first payment and details of how the amount and frequency of the payments can be varied in future;

  2. (2)

    the method by which the payment will be made (for example, by transfer to the customer's bank account);

  3. (3)

    confirmation of whether in connection with the lifetime mortgage1 insurance products such as buildings and contents insurance or payment protection insurance) have been purchased through the firm.

    1
  4. (4)

    the first premium (and subsequent premiums where different) for insurance products purchased through the firm in connection with the lifetime mortgage;1

    1
  5. (5)

    confirmation of the method and date of collection of the premiums for insurance products purchased through the firm;

  6. (6)

    details of how the firm expects the capital and interest to be repaid (for example from the proceeds of the sale of the property;

  7. (7)

    confirmation of any linked borrowing and linked deposits that are available; and

  8. (8)

    whether the lifetime mortgage.1permits the customer to make any repayments on the lifetime mortgage.1

    11
MCOB 9.7.7 R

The information in MCOB 9.7.6 R must be provided to the customer in a single communication, except (3), (4) and (5) which may be provided separately

Disclosure requirements where a lump sum payment is made to the customer and interest is rolled up

MCOB 9.7.8 R

Where thelifetime mortgage1 provides for a lump sum payment to be made to the customer, and all or part of the interest will be rolled up during the life of the mortgage, the firm must provide the customer with the following information before the customer makes the first payment under the contract, or if no payments are required from the customer, within seven days of completion of the mortgage:

1
  1. (1)

    if no payments are required from the customer, confirmation that no payments are required and details of how the firm expects the capital and interest to be repaid (for example from the proceeds of the sale of the property);

  2. (2)

    if payments are required from the customer:

    1. (a)

      the amount of the first payment required;

    2. (b)

      the amount of the subsequent payments;

    3. (c)

      the method by which the payments will be collected, the frequency of such payments and the date of collection of the first and subsequent payments; and

    4. (d)

      what to do if the customer has a payment shortfall3, explaining the benefit of making early contact with the firm, providing the name, address and telephone of a contact point with the firm, and drawing the customer's attention to the arrears charges set out in the tariff of charges;

      3
  3. (3)

    confirmation of whether in connection with the lifetime mortgage1 insurance products such as buildings and contents insurance or payment protection insurance) have been purchased through the firm.

    1
  4. (4)

    the amount of the first premium (and subsequent premiums where different) for insurance products purchased through the firm in connection with the lifetime mortgage;1

    1
  5. (5)

    confirmation of the method and date of collection of the premiums for insurance products purchased through the firm in connection with the lifetime mortgage;1

    1
  6. (6)

    confirmation of any linked borrowing and linked deposits that are available; and

  7. (7)

    whether the lifetime mortgage1 permits the customer to make any overpayments or underpayments of the amounts due.

    1
MCOB 9.7.9 R

The information in MCOB 9.7.8 R must be provided to the customer in a single communication, except (3) (4) and (5) which may be provided separately

Record keeping requirements

MCOB 9.7.10 R
  1. (1)

    A firm must make and retain an adequate record of the information that it provides to each customer at the start of the lifetime mortgage1 in accordance with this section.

    1
  2. (2)

    The record required by (1) must be maintained for a year from the date that the information is provided to the customer.

MCOB 9.8 Disclosure after sale4: lifetime mortgages4

Annual statements: content

MCOB 9.8.1 R

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

  1. (1)

    except in the case of mortgage credit cards, information on the type oflifetime mortgage,3 (for example, fixed rate or variable rate) including a clear statement of how the firm expects the capital, or capital and interest (whichever is applicable) to be repaid (for example, from the proceeds of the sale of the property);

    3
  2. (2)

    details of the following transactions and information on the lifetime mortgage3 during the period since the last statement (or, where the statement is the first statement, since the customer entered into the lifetime mortgage3):

    33
    1. (a)

      (if applicable) the date and amount of each payment made by the customer;

    2. (b)

      (if applicable) the amount of each payment that was due from the customer during the statement period;

    3. (c)

      for drawdown mortgages, the date and amount of each payment made to the customer;

    4. (d)

      the rates(s) of interest applicable to the lifetime mortgage3 during the statement period and, if applicable, the date(s) on which the rate(s) of interest changed;

      3
    5. (e)

      the amount of interest charged under the lifetime mortgage3 during the statement period; and

      3
    6. (f)

      any other amounts charged under the lifetime mortgage3 during the statement period, including fees and any amounts due in relation to tied products;

      3
  3. (3)

    where it is possible for arrears to occur, a reminder that the customer should contact the firm if they are unable to make their regular payments under thelifetime mortgage;3 and

    3
  4. (4)

    information at the date the statement is issued on:

    1. (a)

      the amount owed by the customer under the lifetime mortgage;3

      3
    2. (b)

      the date at which any early repayment charges on the lifetime mortgage3 cease to apply, and the circumstances under which they will not apply;

      3
    3. (c)

      where applicable, the early repayment charge that applies, expressed as a monetary amount (see MCOB 9.4.83 R);

    4. (d)

      the cost of redeeming the lifetime mortgage3 at the date that the statement is issued (this must be shown as the sum of MCOB 9.8.1 R(4)(a) and MCOB 9.8.1 R(4)(c) 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 arrears) a warning must be included to that effect; and1

      3
    5. (e)

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

MCOB 9.8.2 R

Where a firm provides a customer with a statement containing the information set out in MCOB 9.8.1 R(2) more frequently than once a year, the information set out in MCOB 9.8.1 R(1), MCOB 9.8.1 R(3) and MCOB 9.8.1 R(4) may be provided in a separate communication, but must be provided at least once a year.

Event driven information

MCOB 9.8.3 R

A firm must give the customer reasonable notice, in advance, of any of the following:

  1. (1)

    any changes to the payments that the customer is required to make (where payments are required, and whether or not they are collected by deduction from the income provided by a linked investment product such as annuity) resulting from interest rate changes;

  2. (2)

    the exercising of the firm's right (if allowed by the terms of the lifetime mortgage3 ) to enter the property to carry out essential repairs and maintenance (the cost must be confirmed to the customer where this will be added to the mortgage debt); and

    3
  3. (3)

    any material change by the firm (other than changes which come within MCOB 7.6.2 R or are included in MCOB 9.8.3 R(1) and (2)) to the terms and conditions of thelifetime mortgage,3 where that change is permitted without the customer's prior consent.

    3

1Notification where additional borrowing taken up

MCOB 9.8.4 G

Examples of where MCOB 7.6.5 R will apply are the release of tranches of money to the customer in relation to a self-build mortgage or other instalment mortgage, but not a drawdown mortgage.

Further advances

MCOB 9.8.5 R

The illustration provided in accordance with MCOB 7.6.7 R must;

  1. (1)

    be based on the amount of the further advance only;

  2. (2)

    use the term 'additional borrowing' in place of the term 'lifetime mortgage' where appropriate throughout the titles and text of the illustration;

  3. (3)

    include an additional section headed: 'Total borrowing' and numbered '9' after Section 8, (with subsequent sections of the illustration renumbered accordingly) including the following text:

    1. (a)

      "This section gives you information about how your lifetime mortgage will be affected by taking out this additional borrowing. Talk to [your mortgage lender] [insert name of mortgage lender] if you are not sure of the details of your current lifetime mortgage.";

    2. (b)

      a clear statement explaining the total amount that the customer will owe if they take5 out the additional borrowing; and,

      1. (i)

        where payments are required on thelifetime mortgage,3 what the customer's new payments will be; or

        3
      2. (ii)

        where the lifetime mortgage3 is an interest roll-up mortgage5, the effect on the amount the customer would owe at the end of the estimated term and details of the estimated term that has been used (see MCOB 9.8.6 G for guidance on the estimated term).

        3
MCOB 9.8.6 G

The estimated term required at MCOB 9.8.5 R(3)(b)(ii) may be:

  1. (1)

    the term originally estimated in accordance with MCOB 9.4.10 R; or

  2. (2)

    where the term originally estimated in accordance with MCOB 9.4.10 R has expired, a revised estimate in accordance with MCOB 9.4.10 R; or

  3. (3)

    a term of the customer's choice, if the customer expresses a preference.

MCOB 9.8.7 R

MCOB 9.4.18 R is replaced with the following: "Section 1: 'About this information' Under the section heading 'About this information', the following text must be included:"We are required by the Financial Conduct Authority (FCA) - the independent watchdog that regulates financial services - to provide you with this illustration. All firms selling lifetime mortgages are required to give illustrations, like this one, that contain similar information presented in the same way."

MCOB 9.8.8 R

[deleted]2

2

Changes to payments, amounts drawn down and amount owed

MCOB 9.8.9 R

If a customer requests, or agrees to, a change to a lifetime mortgage3 (other than a change as described in MCOB 7.6.7 R to MCOB 7.6.27 R (as modified by MCOB 9)) that changes the amount of each payment due (where payments are required), a firm must provide the customer with the following information, in a single communication, before the change takes effect:

3
  1. (1)

    the amount outstanding on the lifetime mortgage3 at the date the change is requested;

    3
  2. (2)

    the payment due and the frequency of payments; where it is known that the payment will change (for example at the end of a fixed rate period), the new payment and the date of the change must also be shown;

  3. (3)

    the rate of interest applying to thelifetime mortgage;3 where it is known that the rate of interest will change, the new rate and the date of the change must also be shown;

    3
  4. (4)

    the type of interest rate (for example fixed, or discounted); where it is known that the type of interest rate will change the new type and the date of the change must also be shown;

  5. (5)

    details of any charges that apply for changing the lifetime mortgage.3

    3
MCOB 9.8.10 R

If a customer requests, or agrees to, a change to a lifetime mortgage.3(other than a change as described in MCOB 7.6.7 R to MCOB 7.6.27 R (as modified by MCOB 9)) that changes the amount paid to the customer under a drawdown mortgage, or the amount that the customer will owe under an interest roll-up mortgage5, or both, a firm must provide the customer with the following information, in a single communication, before the change takes effect:

3
  1. (1)

    the amount outstanding on the lifetime mortgage3 at the date the change is requested;

    3
  2. (2)

    (if applicable) the revised amount to be paid to the customer under the drawdown mortgage and the frequency of payments;

  3. (3)
    1. (a)

      an estimate of the revised amount that will be owed at the end of the term; or

    2. (b)

      (if the original term has expired) a revised estimate;

    in accordance with MCOB 9.4.10 R;

  4. (4)

    the rate of interest applying to thelifetime mortgage;3 where it is known that the rate of interest will change, the new rate and the date of the change must also be shown;

    3
  5. (5)

    the type of interest rate (for example fixed, or discounted); where it is known that the type of interest rate will change the new type and the date of the change must also be shown; and

  6. (6)

    details of any charges that apply for changing the lifetime mortgage.3

    3

MCOB 9.9 1 2Disclosure after sale: home reversion plans

Provision of statements: instalment reversion plans2

MCOB 9.9.1 R
  1. (1)

    1In relation to an instalment reversion plan, 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 of the plan term):

    1. (a)

      covering the instalment reversion plan and any tied product purchased through the firm; and

    2. (b)

      giving information of any other product purchased through the firm where the payments for those products are combined with amounts released under the instalment reversion plan.

  2. (2)

    A firm need not provide a statement if it has provided an offer document to the customer in respect of the instalment reversion plan within the previous year.

MCOB 9.9.2 R

Where a tied product is operated separately from the instalment reversion plan, for example where the premiums on a tied insurance product are not combined with amounts released under the instalment reversion plan, the statement relating to the tied product may be provided in a separate communication.

Annual statement for instalment reversion plans2: content

MCOB 9.9.3 R

The statement must contain:

  1. (1)

    details of the following transactions during the period since the last statement (or, where it is the first statement, since the customer entered into the instalment reversion plan):

    1. (a)

      the date and amount of each payment made by the reversion provider; and

    2. (b)

      any amounts charged under the instalment reversion plan during the statement period, including fees and any amounts due in relation to tied products;

  2. (2)

    information at the date the statement is issued on:

    1. (a)

      the amount owed by the reversion provider to the customer under the instalment reversion plan;

    2. (b)

      if the amount to be received by the customer under the instalment reversion plan is linked to the performance of another investment, the amount to be received (or estimated amount likely to be received) by the customer;

    3. (c)

      the actual remaining term of the instalment reversion plan (but if the term of the instalment reversion plan is open-ended this should be clearly stated);

    4. (d)

      where applicable, the date on which the requirement for the customer to purchase any tied products from the firm ends; and

    5. (e)

      the proportion of the property that is owned by the reversion provider and reversion occupier respectively.

Annual statement for instalment reversion plans2: additional content if tariff of charges has changed

MCOB 9.9.4 R

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

Event-driven information for instalment reversion plans2: material changes

MCOB 9.9.5 R

A firm must give the customer reasonable notice of any material change by the firm to the terms of the instalment reversion plan, where the change is permitted without the customer's prior consent.

Responsibilities of reversion providers and administrators: instalment reversion plans2

MCOB 9.9.6 R

The reversion administrator and reversion provider may agree who will be responsible for producing and providing to the customer the statement and information required by this section.

MCOB 9.9.7 R

The reversion administrator is solely responsible for producing and providing to the customer the information required by this section if the provider is an unauthorised reversion provider.

Further releases: all home reversion plans2

MCOB 9.9.8 R

If the customer wants to release further equity from the property through a home reversion plan, the firm must treat this transaction as a new home reversion plan, even if the parties to the arrangement are the same.

MCOB 9 Annex 1 The illustration: table of contents, prescribed text and prescribed section headings and subheadings

R

This annex consists only of one or more forms. Forms are to be found through the following address:

The illustration: table of contents, prescribed text and prescribed section headings and subheadings 4 MCOB 9 Annex 1 4

2 3

MCOB 9 Annex 2 The illustration: table of contents, prescribed text and prescribed section headings and sub-headings

R

This annex forms part of MCOB 9.4.2 R.

This annex consists only of one or more forms. Forms are to be found through the following address:

The illustration: table of contents, prescribed text and prescribed section headings and sub-headings: - MCOB 9 Annex 2

2