Related provisions for MCOB 13.3.4B
1 - 20 of 36 items.
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) details of which insurance is a tied product;(2) for how long the customer is obliged to purchase the insurance;(3)
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
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:77(1) under the sub-heading "Early repayment charges":(a) an explanation of whether early repayment charges are payable;(b) an explanation of when early repayment charges are payable;(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(d) a
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
An illustration provided to a customer must:(1) contain the material set out in MCOB 5 Annex 1 in the order and using the numbered section headings, sub-headings and prescribed text in MCOB 5 Annex 1, except where provided for in MCOB 5.6;(2) follow the layout of the template in MCOB 5 Annex 1 with:(a) prominent use of the Key facts3 logo followed by the text 'about this mortgage';33(b) each section clearly separated;(c) all the amounts to be paid in Sections 5, 6, 8 and 9 in
As a minimum the illustration must be personalised to reflect the following requirements of the customer:(1) the specific regulated mortgage contract in which the customer is interested;(2) the amount of the loan required;(3) the price or value of the property on which the regulated mortgage contract would be secured (estimated where necessary);(4) the term of the regulated mortgage contract (where the customer is unable to suggest a date at which he expects to repay the loan,
In relation to MCOB 5.6.6 R(3), in orderfor the firm to comply with the principle of 'clear, fair and not misleading' in MCOB 2.2.6, 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 regulated mortgage contract to be illustrated on the basis of a lower ratio of the loan amount to the property
The amount referred to in MCOB 5.6.6 R(2) is:(1) 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 the amount he requested, an estimate of the amount that the customer could borrow based on the information obtained from the customer; or(2) where the regulated mortgage contract is a revolving credit agreement such as a secured overdraft or mortgage credit card:4(a)
The purpose of the illustration is to provide the customer with details of the cost of borrowing the amount required over the term specified in MCOB 5.6.6 R(2) and MCOB 5.6.6 R(4). Section 12 has been designed specifically to illustrate any additional features of the regulated mortgage contract such as a linked current account, a linked savings account or the availability of unsecured lending. These features should therefore be shown in section 12 and not in section 3 of the
Under the section heading 'Description of this mortgage' the illustration must:(1) state the name of the mortgage lender providing the regulated mortgage contract to which the illustration relates (a trading name used by the mortgage lender may also be stated in accordance with MCOB 5.6.2 R(6)), and the name, if any, used to market the regulated mortgage contract;(2) (a) provide a description of the interest rate type and rate of interest that applies in accordance with the format
Where the loan under the regulated mortgage contract 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:(1) the following text must be used to introduce the table 'As this mortgage is made up of more than one part, these parts are summarised below:';(2) each part must be numbered for ease of reference in the
Where all or part of the regulated mortgage contract to which the illustration relates is an interest-only mortgage:(1) the illustration must include the sub-heading 'Cost of repaying the capital' with the following text under it:'You will still owe [insert amount of loan on an interest-only basis] 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
Where the loan under the regulated mortgage contract 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 5.6.42 R(3) and MCOB 5.6.46 R do not apply; instead:(1) each part must be numbered for ease of reference in the illustration;(2) the loan amounts must be totalled;(3)
(1) Under the section heading 'Insurance' the illustration must include details of:(a) insurance which is a tied product; and(b) insurance which is required as a condition of the regulated mortgage contract which is not a tied product.(2) A firm may also provide details of insurance which it is optional for the customer to take out under this section heading.(3) It must be clear to the customer which products he is required to purchase under which circumstances (for example, where
(1) If none of the features at MCOB 5.6.94 R are applicable to the regulated mortgage contract 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.(2) Only those features available on the regulated mortgage contract need be included in the illustration.(3) If a firm provides a customer with supplementary information
Under the sub-heading 'Additional secured borrowing', the illustration must provide details of circumstances in which additional secured lending is offered with the regulated mortgage contract that would allow the customer, subject to certain conditions, to increase the amount of the loan on which the illustration is based.
(1) A firm must provide the customer with an illustration for a regulated mortgage contract before the customer submits an application for that particular regulated mortgage contract to a mortgage lender, unless an illustration for that particular regulated mortgage contract has already been provided.(2) A firm must provide the customer with an illustration for a regulated mortgage contract when any of the following occurs, unless an illustration for that regulated mortgage contract
The effect of the requirements at MCOB 5.3.1 R and MCOB 5.5.1 R(1) is that if a customer's application to enter into a regulated mortgage contract with a mortgage lender, made via a mortgage intermediary, is subsequently passed by that mortgage intermediary to another mortgage lender, then the mortgage intermediary must ensure that the application is amended and the customer is provided with an illustration for the other mortgage lender'sregulated mortgage contract before the
Where a firm has already provided an illustration in accordance with MCOB 5.5.1 R and the terms for the proposed regulated mortgage contract are subsequently materially altered, the firm must ensure that the customer is provided with a revised illustration, before acting on the amendment, when the change occurs at the point at which a customer submits an application for the regulated mortgage contract.
(1) If, at the point an illustration must be provided in accordance with MCOB 5.5.1 R, a firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:(a) provide an illustration; or(b) seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.(2) Where (1)(b) applies, an illustration must be provided, unless, on the basis of the information the customer provides,
If the firm has reasonable evidence that the contract is not a regulated mortgage contract and has not provided an illustration before a customer submits an application, and it is subsequently found that the contract is a regulated mortgage contract, there is no requirement to provide a separate illustration at that stage. However, the requirement to integrate an illustration into the offer document at MCOB 6.4.1 R will apply.
Where the customer requests written information from the firm that is specific to the amount that the customer wants to borrow on a particular regulated mortgage contract under MCOB 5.5.1 R(2)(c), the purpose of MCOB 5.5.15 R, MCOB 5.5.16 R and MCOB 5.5.17 G is to ensure that the customer receives an illustration without unnecessary delay. These requirements do not restrict the information that the firm may obtain from the customer after it has provided the customer with an i
In meeting a request under MCOB 5.5.1 R (2)(c), the firm must not delay the provision of the illustration by requesting information other than:(1) the information necessary to personalise the illustration in accordance with MCOB 5.6.6 R, if the firm does not already know it;(2) where the firm acts in accordance with MCOB 5.5.11 R(2), such information as is necessary to ascertain whether or not the contract will be a regulated mortgage contract;(3) where the regulated mortgage
If, on the basis of the information obtained from the customer or on the basis of information that the firm already holds on the customer, the firm would do business with the customer, but not on the terms requested, the firm may provide the customer with an illustration in respect of a different regulated mortgage contract if it chooses to do so.
The purpose of MCOB 5.4.8 R is not to require a firm to ascertain whether a customer is eligible for a particular regulated mortgage contract before providing an illustration. Instead, the purpose is to ensure that the firm takes into account the information it has obtained from the customer before providing an illustration to the customer.
Where the illustration provided to the customer does not contain an accurate quotation or a reasonable estimate of the payments the customer will need to make in connection with any tied product that the customer must take out with the regulated mortgage contract, and the customer applies for that regulated mortgage contract:(1) the firm must provide the customer with an accurate quotation as soon as possible after he has applied, and in good time before the offer document is
The rules on the content of an illustration at MCOB 5.6 (Content of illustrations) mean that if the regulated mortgage contract requires the customer to take out a tied product, the illustration must include an accurate quotation or a reasonable estimate of the payments the customer would need to make for the tied product (see MCOB 5.6.52 R(2) on a repayment vehicle that is a tied product and MCOB 5.6.74 R on insurance that is a tied product). If it is not possible to include
A firm must give the customer reasonable notice, in advance, of:(1) any changes to the payments that the customer is required to make resulting from interest rate changes; and(2) any material change by the firm (other than changes which come within MCOB 7.6.2 R) to the terms and conditions of the regulated mortgage contract, where that change is permitted without the customer's prior consent.
A firm must notify a customer, as soon as the details are known, of who will be responsible for setting interest rates and charges on the regulated mortgage contract if any interest in the regulated mortgage contract is to be sold, assigned, or transferred, and the firm will no longer be responsible for this.
Where the customer has, in accordance with the terms of the regulated mortgage contract, taken up an additional tranche of borrowing on a mortgage that is released in tranches and this did not require any further approval of the mortgage lender, a firm must provide confirmation as soon as possible of:(1) the new amount owed by the customer under the regulated mortgage contract; (2) the amount of each payment that is due; and(3) the interest rate charged.
For the purposes of MCOB 7.6.9 R(3) and (4):(1) a customer's existing mortgage includes a mortgage entered into prior to 31 October 2004 as well as a regulated mortgage contract;(2) the frequency of payments is that in MCOB 5.6.40 R; and (3) a firm may generally rely on information provided by the customer unless, taking a common-sense view of this information, it has reason to doubt it.
If a customer requests, or agrees to, a change to a regulated mortgage contract (other than a change as described in MCOB 7.6.7 R to MCOB 7.6.26 G44) that changes the amount of each payment due, a firm must provide the customer with the following information, in a single communication (subject to MCOB 7.6.28AR (3))4, before the change takes effect:(1) the amount outstanding on the regulated mortgage contract at the date the change is requested;(2) the payment due and the frequency
(1) 4MCOB 7.6.28 R (5) does not apply where the regulated mortgage contract is changing to an interest-only mortgage and interest is being deferred and capitalised by the firm as a result of the customer having payment difficulties.(2) Where (1) applies, the firm must instead provide a prominent reminder to the customer of the amount outstanding together with an explanation of the implications of deferred payments being capitalised, before the change in the regulated mortgage
Subject to MCOB 7.5.2 R, a firm must provide the customer with a statement at least once a year (or, in relation to the first statement, within the first 13 months)2:(1) covering the regulated mortgage contract and any tied product purchased through the firm; and(2) giving information about the existence of any linked borrowing or linked deposits, or any other products purchased through the firm where the payments for those products are combined with the payments on the regulated
Where a tied product is operated separately from the regulated mortgage contract, for example where the premiums on a tied insurance product are not combined with payments on the regulated mortgage contract, the statement required by MCOB 7.5.1 R in relation to the tied product may be provided in a separate communication.
The statement required by MCOB 7.5.1 R must contain the following:(1) except in the case of mortgage credit cards, information on the type of regulated mortgage contract, including:(a) a clear statement of whether the regulated mortgage contract is an interest-only mortgage, or repayment mortgage, or a combination of both; and(b) a prominent reminder, where all of the regulated mortgage contract is an interest-only mortgage, that:(i) the customer's payments to the firm do not
Whether a firm is likely to provide the information set out in MCOB 7.5.3 R(2) more frequently than once a year will depend on the nature of the regulated mortgage contract. In determining how frequently to provide that information, a firm should take into account the need to keep the customer informed of any changes in the amount they owe, the customer's expectations and, where appropriate, the duration of the loan. For example, for a mortgage credit card the information might
If the tariff of charges has changed since the last annual statement was sent to the customer (or, where the annual statement is the first statement, since the customer entered into the regulated mortgage contract) and a firm has not already sent a revised tariff of charges to the customer, it must include one with the annual statement.
A business illustration provided to a customer must:(1) use the headings and prescribed text in MCOB 5 Annex 1 (except as provided in MCOB 5.7) but need not follow the format;(2) include the content required by MCOB 5.6.3 R to MCOB 5.6.130 G (except MCOB 5.6.5 R, MCOB 5.6.101 R, MCOB 5.6.109 R to MCOB 5.6.112 G, MCOB 5.6.120 R and MCOB 5.6.121 R);1(3) use the key facts logo followed by the text 'about this [term used by the firm to describe the borrowing, for example 'mortgage']';(4)
(1) MCOB 5.7.2 R(1) means that firms do not have to follow the ordering of sections set down in MCOB 5.6, although they may choose to do so.(2) In accordance with MCOB 5.7.2 R(8) an example of an appropriate variation to the risk warning would be:'Your home may be repossessed if you are unable to fulfil the terms of this secured overdraft'.(3) A firm may also choose to include other information beyond that required by MCOB 5.6. However, when adding additional material a firm should
(1) When providing a business illustration in accordance with MCOB 5.7.2 R a firm should describe facilities provided under the regulated mortgage contract that are not a loan within section 12 (Additional features) of the business illustration.(2) In complying with (1), a firm should follow the requirements in MCOB 5.6.92 RMCOB 5.6.108 G where these are relevant. Where the facility is of a type not considered in MCOB 5.6.92 RMCOB 5.6.108 G the firm should provide in section 12:(a)
A firm must ensure that the offer document contains a prominent statement:(1) of the period for which the offer is valid;(2) explaining, where the regulated mortgage contract contains features, such as additional unsecured borrowing facilities, which could result in the customer borrowing more money, that where such features are used, the amount of the customer's debt will increase;(3) explaining when any interest rate change on the regulated mortgage contract takes effect. This
A firm must ensure that the contact details section of the offer document (as required by MCOB 5.6.122 R) also includes information on how to complain to the firm about the services provided by the firm in relation to the regulated mortgage contract and whether or not complaints may subsequently be referred to the Financial Ombudsman Service.
In addition to the information required by MCOB 6.4.13 R, a firm may include information about how to complain to any other firm about the services that firm provided to the customer in relation to the regulated mortgage contract. For example, where the customer received advice from another firm, a mortgage lender may include contact details for the firm that provided the advice.
If the firm knows at the point that the offer is made to the customer that its interest in the regulated mortgage contract will be assigned (by sale or transfer) and the firm will no longer be responsible for setting interest rates and charges, the offer document must:(1) state this; and(2) state, where known, who will be responsible for setting interest rates and charges after the sale or transfer.
3In complying with MCOB 13.3.2AR(6):(1) a firm must consider whether, given the individual circumstances of the customer, it is appropriate to do one or more of the following in relation to the regulated mortgage contract or home purchase plan with the agreement of the customer:(a) extend its term; or(b) change its type; or(c) defer payment of interest due on the regulated mortgage contract or of sums due under the home purchase plan (including, in either case, on any sale shortfall);
In relation to a regulated mortgage contract for a business purpose, if a firm has opted for the tailored route, it must adopt the following modifications to the sourcebook:333(1) (except in relation to sections 6 and 8 of any initial disclosure document3 or sections 5 and 8 of any combined initial disclosure document3) substitute an alternative description of the facility provided under the regulated mortgage contract for 'mortgage' where that term is used in any disclosure;33(2)
The potential for variation in the form, content and manner of scripted questioning is considerable, but there are two broad types. The first type involves providing questions and answers which are confined to factual matters (for example, whether a borrower wishes to pay a fixed or variable rate of interest or the size of deposit available). In the FSA's view, this does not of itself amount to advising on regulated mortgage contracts, as it involves the provision of information
If a firm makes an offer to a consumer2 with a view to entering into a regulated mortgage contract a which is a distance contract, it must provide the consumer2 with the following information with the offer document:22(1) the EEA State or States whose laws are taken by the firm as a basis for the establishment of relations with the customer prior to the conclusion of the regulated mortgage contract;(2) any contractual clause on law applicable to the regulated mortgage contract
(Subject to MCOB 7.7.5 R) a firm that enters into a regulated mortgage contract with a customer must provide the customer with the following information before the customer makes the first payment under that regulated mortgage contract:1(1) the amount of the first payment required;(2) the amount of the subsequent payment(s) if different from the first payment;(3) the method by which the payment will be collected (for example, by direct debit) and the date of collection of the
(1) A firm must make and retain an adequate record of the information that it provides to each customer at the start of the regulated mortgage contract in accordance with this section.(2) The record required by (1) must be maintained for a year from the date that the information is provided to the customer.
A firm must ensure that, as soon as possible after the sale of a repossessed property, if the proceeds of sale are less than the amount due under the regulated mortgage contract or home purchase plan1, the customer is informed in a durable medium of:1(1) the sale shortfall; and(2) where relevant, the fact that the sale shortfall1may be pursued by another company (for example, a mortgage indemnity insurer).1
(1) If the decision is made to recover the sale shortfall,1 the firm must ensure that the customer is notified of this intention.1(2) The notification referred to in (1) must take place within five years of the date of the sale (if the regulated mortgage contract or home purchase plan1is subject to Scottish law) or within six years (in all other cases).
A firm must ensure that, on the sale of a repossessed property, if the proceeds of sale are more than the amount due under the regulated mortgage contract or home purchase plan1, reasonable steps are taken, as soon as possible after the sale, to inform the customer in a durable medium of the surplus and, subject to the rights of any subsequent mortgage or charge holders, to pay it to him.1
If, notwithstanding the steps taken by a firm to comply with MCOB 1.6.3 R, it transpires that a mortgage which the firm has treated as unregulated is in fact a regulated mortgage contract, the firm must as soon as practicable after the correct status of the mortgage has been established:(1) contact the customer and provide him with the following information in a durable medium:(a) a statement that the mortgage contract is a regulated mortgage contract subject to FSA regulation,
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 a roll-up of interest mortgage, or both, a firm must provide the customer with the following information, in a single communication, before the change takes effect:3(1) the amount outstanding on the
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 |
|
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 |
|
Applying for a lifetime mortgage2 2 |
MCOB 5.3.2G |
||
MCOB 5.4.24G |
MCOB 5.6.74R |
||
Issue of offer document in place of illustration |
MCOB 5.5.3G |
||
Customer's credit record |
MCOB 5.5.16R |
MCOB 5.5.15R(4) |
MCOB 9.3.12R(3) |
12(1) Principle 6 (Customers' interests) requires that a firm must pay due regard to the interests of its customers and treat them fairly. This means, for example, that a firm should avoid selling practices that commit customers (or lead customers to believe that they are committed) to any regulated mortgage contract or home reversion plan before they have been able to consider the illustration and offer document. One such practice might be to present a new customer with an illustration,
Principle 7 (Communications with clients) requires that a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. This means, for example, that a firm should avoid giving any customer a false impression about the availability of a regulated mortgage contract, home reversion plan1 or regulated sale and rent back agreement2, such as describing it as a 'special offer' not available after