Related provisions for MCOB 7.6.6
An example of how the information required by MCOB 5.6.52 R (1), MCOB 5.6.52 R (3) and MCOB 5.6.52 R (5) may be presented is as follows:
Cost of repaying the capitalYou will still owe £Z at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage, remember to add any money that you may need to pay into a separate savings plan to build up a lump sum to repay this amount. |
|
Savings plan that you do not have to take out through [insert name of mortgage lender or mortgage intermediary] |
Monthly payments |
XYZ savings plan (see separate product disclosure document) |
£C |
What you will need to pay each month including the cost of a savings plan to repay the capital |
|
36 payments at a fixed rate currently x% followed by: |
£(A+C) |
264 payments at a variable rate currently y%. |
£(B+C) |
Typical recommendations and whether they will be regulated as advice under article 53A of the Regulated Activities Order
This table belongs to PERG 4.6.5 G and PERG 4.6.6 G.
Recommendation |
Regulated or not? |
I recommend you take out the ABC Building Society 2 year fixed rate mortgage at 5%. |
Yes. This is advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into. |
I recommend you do not take out the ABC Building Society 2 year fixed rate mortgage at 5%. |
Yes. This is advice which steers the borrower away from a particular mortgage which the borrower could have entered into. |
I recommend that you take out either the ABC Building Society 2 year fixed rate mortgage at 5% or the XYZ Bank standard variable rate mortgage. |
Yes. This is advice which steers the borrower in the direction of more than one particular mortgage which the borrower could enter into. |
I recommend you take out (or do not take out) an ABC Building Society fixed rate mortgage. |
This will depend on the circumstances. If, for example, the society only offers one such mortgage, this would be a recommendation intended implicitly to steer the borrower in the direction of that particular mortgage which the borrower could enter into and therefore would be advice. |
I suggest you take out (or do not take out) a mortgage with ABC Building Society. |
No. This is not advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into. However, if the society only offers one mortgage, this would be a recommendation intended implicitly to steer the borrower in the direction of that particular mortgage which the borrower could enter into and therefore would be advice. |
I suggest you change (or do not change) your current mortgage from a variable rate to a fixed rate. |
No in respect of the advice about rate type, as this does not steer the borrower in the direction of a particular mortgage which the borrower could enter into. Yes in respect of the advice about varying the terms of the particular mortgage that the borrower had already entered into. |
I suggest you take out (or do not take out) a variable rate mortgage. |
No. This is not advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into. |
I recommend you take out (or do not take out) a mortgage. |
No. This is not advice which steers the borrower in the direction of a particular mortgage which the borrower could enter into. |
I would always recommend buying a house and taking out a mortgage as opposed to renting a property. |
No. This is an example of generic advice which does not steer the borrower in the direction of a particular mortgage that he could enter into. |
I recommend you do not borrow more than you can comfortably afford. |
No. This is an example of generic advice. |
If you are looking for flexibility with your mortgage I would recommend you explore the possibilities of either a flexible mortgage or an off-set mortgage. There are a growing number of lenders offering both. |
No. This is an example of generic advice. |