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Status: You are viewing the version of the handbook as on 2005-06-30.

MOGI 2.5 Disclosure at start of contract and after sale

Introduction

MOGI 2.5.1G

This section of the Guide sets out the after sale disclosure rules in chapter 7 of MCOB (MCOB 7). These rules apply mainly to mortgage lenders and require them to give out certain information after the mortgage is taken out (such as disclosure at the start of the contract and annual statements). However, the rules on further advances and other post-sale changes to mortgage contracts also apply to mortgage intermediaries where they arrange or give advice on such changes.

Further advances

MOGI 2.5.2G

Where you arrange or give advice on a further advance that the lender must approve, you must give the consumer a KFI before he applies for the further advance, unless one has already been provided or the further advance is for a business purpose (MCOB 7.6.7 R). This KFI must be in the format required by MCOB 5 and be based on the amount of the further advance only. The rules require you to make some changes to the KFI to reflect its use for a further advance. In preparing a KFI for a further advance, you may generally rely on information given by the consumer (such as the amount of his existing mortgage) unless you have reason to doubt it (MCOB 7.6.11 G).

Rate switches

MOGI 2.5.3G

Where you arrange or give advice to a consumer to change all or part of their mortgage from one interest rate to another (such as a transfer from a variable rate to a fixed rate mortgage) you must give the consumer a KFI for the amount of the whole loan before he applies for the new mortgage, unless a KFI has already been provided (MCOB 7.6.18 R). The KFI must be in the format required by MCOB 5, with appropriate changes.

Addition or removal of a party to the contract

MOGI 2.5.4G

Where you arrange or give advice to a consumer to add or remove a party to a mortgage (for example, to remove one partner from the mortgage in the event of divorce) you must give the consumer a KFI before he applies for the revised mortgage (MCOB 7.6.22 R). The KFI must be in the format required by MCOB 5, with appropriate changes.

Two changes at the same time

MOGI 2.5.5G

Where a consumer requests a product switch and the additional or removal of a party to the mortgage at the same time, you can give the consumer a single KFI covering both changes (MCOB 7.6.33 G).