Related provisions for MCOB 1.1.1

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To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004 (From field only).

MCOB 1.2.1RRP
1(1) This sourcebook3 applies to every firm that:113(a) carries on a home finance activity3 (subject to 31the business loan application provisions3); or3(b) communicates or approves a financial promotion of qualifying credit, of a home purchase plan,6of a home reversion plan3or of a regulated sale and rent back agreement.636(2) Where a firm has outsourced activities to a third party processor, any rule in MCOB which requires the third party processor, when acting as such, to disclose
MCOB 1.2.3RRP
In relation to a regulated mortgage contract for a business purpose(1) MCOB applies if the customer is not a large business customer; and(2) if MCOB applies, a firm must either:(a) comply with MCOB in full (disregarding the tailored provisions for regulated mortgage contracts for a business purpose in the remainder of MCOB); or(b) comply with MCOB taking account of those tailored provisions, including MCOB 1.2.7 R.
MCOB 1.2.9GRP
The disclosure rules in MCOB place particular emphasis on the description of borrowing. Where the regulated mortgage contract is for a business purpose, a firm should reflect this emphasis in any disclosure by first describing any borrowing before addressing the other facilities provided under the regulated mortgage contract.
MCOB 1.2.10RRP
MCOB does not apply to an authorised professional firm with respect to its non-mainstream regulated activities except for:(1) MCOB 2.2 (Communications);(2) MCOB 3 (Financial promotion); and
MCOB 1.2.12RRP
In MCOB the activities of a home finance provider which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts or plans 3to which the arranger is a party), are to be treated as arranging and therefore also as home finance activities.33
MCOB 1.2.13GRP
The effect of article 28A of the Regulated Activities Order would normally mean that arrangements made by a party to a home finance transaction3 would not fall within the home finance activity3 of arranging. So in a direct sale, a home finance provider3 would not be carrying on the regulated activity of arranging but, where the transaction proceeds to completion, would instead be involved in a regulated activity comprising entering into a home finance transaction3. However, the
MCOB 1.6.1GRP
MCOB applies to regulated mortgage contracts entered into on or after 31 October 2004. Variations made on or after that date to contracts entered into before that date are not subject to FCA regulation but may be subject to the Consumer Credit Act 1974. PERG 4.4.13G2 contains guidance on the variation of contracts entered into before 31 October 2004.12
MCOB 1.6.3RRP
Before a firm enters into a mortgage, it must take all reasonable steps to establish whether that mortgage will be a regulated mortgage contract and therefore subject to MCOB.
MCOB 1.6.4RRP
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 FCA regulation,
MCOB 1.6.5GRP
(1) MCOB 1.6.4 R(2) means, for example, that if a firm discovered immediately after completion that a loan was a regulated mortgage contract, the firm would be required to comply with MCOB 7.4 (Disclosure at the start of the contract).(2) Although MCOB 1.6.4 R recognises that firms may become aware that a mortgage is a regulated mortgage contract at a late stage, the FCA expects this to be an extremely rare occurrence. It could arise, for example, if a firm has acted on the understanding,
MCOB 2.8.1GRP
MCOB 2.8 provides details of the standard expected of firms where there is an obligation in MCOB requiring firms to maintain adequate records to evidence compliance. An overall view of the record keeping requirements in MCOB is in MCOB Sch 1.
MCOB 2.8.2RRP
The records required in MCOB must be readily accessible for inspection by the FCA.
MCOB 2.8.5GRP
Each rule in MCOB that requires a record also sets out a period that the record must be kept for. While not a requirement of MCOB, firms may choose to keep records for longer periods, for example, where there is the possibility of customer complaint or legal action against the firm.
MCOB 1.3.1RRP
Except as set out in this section, MCOB applies if the customer of a firm carrying on home finance activities2 is resident in:2(1) the United Kingdom; or(2) another EEA State, but in this case only if the activity is carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom;at the time that the home finance activity2 is carried on.2
MCOB 1.3.5GRP
Parts of MCOB relate to distance contracts (or distance mortgage mediation contracts and distance home purchase mediation contracts2) with consumers3. These expressions are derived from the Distance Marketing Directive, and the following paragraphs provide some guidance to firms on their meaning:3(1) consumer3The Distance Marketing Directive applies for distance contracts with 'any natural person who is acting for purposes which are outside his trade, business or profession',
MCOB 2.5.2RRP
A firm will be taken to be in compliance with any rule in MCOB that requires a firm to obtain information to the extent that the firm can show that it was reasonable for it to rely on information provided to it by another person.
MCOB 2.5.4RRP
(1) Any information which a rule in MCOB requires to be sent to a customer may be sent to another person on the instruction of the customer, so long as the recipient is not connected with the firm. (2) There is no need for a firm to send information to a customer where it has taken reasonable steps to establish that this has been or will be supplied by another person.
MCOB 1.1.2GRP
The purpose of this chapter is to set out to whom, for what activities, and within what territorial limits the rules, evidential provisions and guidance in MCOB apply. 1
MCOB 2.3.5GRP
MCOB 2.3.2 R does not prevent a firm: (1) assisting a home finance intermediary2 so that the quality of the home finance intermediary's2 service to customers is enhanced; or 22(2) giving or receiving indirect benefits (such as gifts, hospitality and promotional competition prizes); providing in either case this is not likely to give rise to a conflict with the duties that the recipient owes to the customer. In particular, such benefits should not be of a kind or value that is
MCOB 2.3.8GRP
(1) Quantification of any material inducement offered by the mortgage lender or reversion provider2 supports the disclosure requirements elsewhere in MCOB. Further guidance on the disclosure of any inducement in cash terms is provided in MCOB 5.6.118 G for regulated mortgage contracts other than lifetime mortgages, MCOB 9.4.124 G for lifetime mortgages and MCOB 9.4.173 G for home reversion plans.2(1A) Quantification of any material inducement offered by a SRB agreement provider
MCOB 12.6.2GRP
1 Firms are also reminded that in accordance with MCOB 1.2.3 R, they should either comply in full with MCOB or comply with all tailored provisions in MCOB that relate to business loans.
MCOB 10.1.1RRP
This chapter applies to a firm which, under rules elsewhere in MCOB, is required to calculate an annual percentage rate of charge (APR) or is required to use an approach equivalent to that set out in this chapter in calculating a comparative cost measure equivalent to an APR1.
MCOB 1.5.1GRP
(1) Although MCOB does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of MCOB, anything done or omitted by a firm's appointed representative (when acting as such) will be treated as having been done or omitted by the
MCOB 12.2.1GRP
(1) Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm is also under an obligation, as a consequence of this sourcebook's disclosure requirements,1 to make charges transparent to customers. This chapter reinforces these requirements by preventing a firm from imposing unfair and excessive charges.1(2) The level of charges under a regulated mortgage contract,2home reversion plan1 or regulated sale and rent back agreement2
MCOB 13.7.2GRP
1 Firms are reminded that in accordance with MCOB 1.2.3R, they should either comply in full with MCOB or comply with all tailored provisions in MCOB that relate to business loans. Therefore, a firm may only follow the tailored provisions in MCOB 13.7, if it also follows all other tailored provisions in MCOB.
MCOB 6.7.1AGRP
1 Firms are reminded that in accordance with MCOB 1.2.3 R, they should either comply in full with MCOB or comply with all tailored provisions in MCOB that relate to business loans. Therefore, a firm may only follow the tailored provisions in MCOB 6.7 if it also follows all other tailored provisions in MCOB.
MCOB 7.7.1AGRP
2Firms are reminded that in accordance with MCOB 1.2.3 R, they should eithercomply in full with MCOB or comply with all tailored provisions in MCOB that relate to business loans. Therefore, a firm may only follow the tailored provisions in MCOB 7.7 if it also follows all other tailored provisions in MCOB.
MCOB 10.3.2GRP
This calculation method is the same (with the exception of MCOB 10.3.8 R(1) and (2)) as that described in the Consumer Credit (Total Charge for Credit) Regulations 1980 (SI 1980/51) as amended. Because of this, some of the terminology is different from that used elsewhere in MCOB, e.g. the references to 'transactions' should be read as relating to secured lending. As a guide for firms, MCOB 10 Annex 1 G lists the substantively identical provisions in MCOB 10 and the 1980 Regu
CREDS 10.1.3GRP

Module

Relevance to Credit Unions

The Principles for Businesses (PRIN)

The Principles for Businesses (PRIN) set out, high-level requirements, some of which are imposed by the FCA and some by the PRA.12 They provide a general statement of regulatory requirements. The Principles apply to all12credit unions. In applying the Principles to credit unions, the appropriate regulator12 will be mindful of proportionality. In practice, the implications are likely to vary according to the size of the credit union.

121212

Senior Management Arrangements, Systems and Controls (SYSC)

SYSC 1 and SYSC 4 to 10 apply to all credit unions in respect of the carrying on of their regulated activities and unregulated activities in a prudential context. SYSC 18 applies to all credit unions without restriction.

Threshold Conditions (COND)

In order to become authorised under the Act all firms must meet the threshold conditions. The threshold conditions must be met on a continuing basis by credit unions. Failure to meet one of the conditions is sufficient grounds for the exercise by the appropriate regulator12 of its powers.

1212

Statements of Principle and Code of Practice for Approved Persons (APER)

The purpose of the Statements of Principle contained in APER 2 is to provide guidance to approved persons in relation to the conduct expected of them in the performance of a controlled function. The Code of Practice for Approved Persons sets out descriptions of conduct which, in the opinion of the appropriate regulator12, do not comply with a Statement of Principle and, in the case of Statement of Principle 3, conduct which tends to show compliance within that statement.

12

The Fit and Proper test for Approved Persons (FIT)

The purpose of FIT is to set out and describe the criteria that the appropriate regulator12 will consider when assessing the fitness and propriety of a person in respect of whom an application is being made for approval to undertake a controlled function under the approved persons regime. The criteria are also relevant in assessing the continuing fitness and propriety of persons who have already been approved.

12

General Provisions (GEN)

GEN contains rules and guidance on general matters, including interpreting the Handbook, statutory status disclosure, the appropriate regulator's12 logo and insurance against financial penalties.

Fees manual (FEES)

This manual sets out the fees applying to credit unions.

Conduct of Business sourcebook (COBS)

A credit union which acts as a CTF provider or provides a cash-deposit ISA will need to be aware of the relevant requirements in COBS. COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Systems and controls and approving and communicating financial promotions), COBS 13 (Preparing product information) and COBS 14 (Providing product information to clients) apply with respect to accepting deposits as set out in those provisions, COBS 4.1 and BCOBS.

Banking: Conduct of Business sourcebook (BCOBS)

BCOBS sets out rules and guidance for credit unions on how they should conduct their business with their customers. In particular there are rules and guidance relating to communications with banking customers and financial promotions (BCOBS 2), distance communications (BCOBS 3), information to be communicated to banking customers (BCOBS 4), post sale requirements (BCOBS 5), and cancellation (BCOBS 6). BCOBS 5.1.13 R (Value dating) does not apply to credit unions. The rules in BCOBS 3.1 that relate to distance contracts for accepting deposits are likely to have limited application to a credit union. This is because the Distance Marketing Directive only applies where there is "an organised distance sales or service-provision scheme run by the supplier" (Article 2(a)). If, therefore, the credit union normally operates face to face and has not set up facilities to enable customers to deal with it at a distance, such as facilities for a customer to deal with it purely by post, telephone, fax or the Internet, the provisions will not be relevant.

Supervision manual (SUP)

The following provisions of SUP are relevant to credit unions: 13SUP 1A13 (The appropriate regulator's12 approach to supervision), SUP 2 (Information gathering by the appropriate regulator12 on its own initiative), SUP 3.1 to SUP 3.8 (Auditors), SUP 5 (Skilled persons), SUP 6 (Applications to vary or cancel Part 4A12permission), SUP 7 (Individual requirements), SUP 8 (Waiver and modification of rules), SUP 9 (Individual guidance), 13SUP 10A and SUP 10B13 (Approved persons), SUP 11 (Controllers and Close links), SUP 15 (Notifications to the appropriate regulator12) and SUP 16 (Reporting Requirements).

Credit unions are reminded that they are subject to the requirements of the Act and SUP 11 on

controllers and close links, and are bound to notify the appropriate regulator12 of changes. It may be unlikely, in practice, that credit unions will develop such relationships. It is possible, however, that a person may acquire control of a credit union within the meaning of the Act by reason of holding the prescribed proportion of deferred shares in the credit union.

In relation to SUP 16, credit unions are exempted from the requirement to submit annual reports of

controllers and close links.

1212121212

Decision, Procedure and Penalties manual (DEPP)

DEPP is relevant to credit unions because it sets out:

(1) the FCA's12 decision-making procedure for giving statutory notices. These are warning notices, decision notices and supervisory notices (DEPP 1.2 to DEPP 5); and

(2) the FCA's12 policy with respect to the imposition and amount of penalties under the Act (see DEPP 6).

1212

Dispute Resolution: Complaints (DISP)

DISP sets out rules and guidance in relation to treating complainants fairly and the Financial Ombudsman Service.

Compensation (COMP)

COMP sets out rules relating to the scheme for compensating consumers when authorised firms are unable, or likely to be unable, to satisfy claims against them.12

The Enforcement Guide (EG)

The Enforcement Guide (EG) describes the FCA's12 approach to exercising the main enforcement powers given to it by the Act and by regulation 12 of the Unfair Terms Regulations.

12

Financial crime: a guide for firms (FC)

FC provides guidance on steps that a firm can take to reduce the risk that it might be used to further financial crime.
MCOB 2.7.1GRP
GEN 2.2.14 R (References to writing) has the effect that electronic media may be used to make communications that are required by the Handbook to be 'in writing' unless a contrary intention appears. In MCOB, the use of an electronic medium is restricted in certain circumstances to a durable medium as required by the Distance Marketing Directive.
MCOB 4.9.1AGRP
1Firms are reminded that in accordance with MCOB 1.2.3 R, they should either comply in full with MCOB or comply with all tailored provisions in MCOB that relate to business loans. Therefore, a firm may only follow the tailored provisions in MCOB 4.9 if it also follows all other tailored provisions in MCOB.
SUP 12.4.5EGRP
(1) 1Under the relevant provisions in COBS, ICOBS7 and MCOB, the customer will receive details of how to complain to the appointed representative and, when a product is purchased, details of the complaints procedure for the product provider, insurer or home finance provider.2772(2) Under DISP 1.2.1 R4, a firm must among other things, supply summary details of its internal process for dealing promptly and fairly with complaints4 to the customer when it receives a complaint4. In
GEN 5.1.10RRP
12A firm must not use the FCA logo (and must take all reasonable steps to ensure that its representatives do not use the FCA logo) in any communication with a client other than in accordance with any individual licence granted by the FCA to the firm or its representatives.