Related provisions for MCOB 10.3.12

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MCOB 9.4.1GRP
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 2.88
MCOB 9.4.2RRP
An illustration provided to a customer must:(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;88(2) follow the format of the template in 8the relevant annex to this chapter8, with:(a) prominent use of the Key facts5 logo followed by the text 'about this lifetime mortgage' or 'about this home reversion plan'8;55(b) each section
MCOB 9.4.4RRP
A firm must include in the illustration all prescribed section headings, except that:8(1) in Section 8 of the lifetime mortgageillustration8 (What you owe and when):(a) Section 8 (A) (details of mortgage payments) is only required where the terms of12 the lifetime mortgage either:1277(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
MCOB 9.4.6RRP
As a minimum the illustration must be personalised to reflect the following:(1) the specific equity release transaction8 in which the customer is interested;8(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
MCOB 9.4.7GRP
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 9.4.9GRP
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
MCOB 9.4.10RRP
(1) In estimating the term of a lifetime mortgage or an open-ended instalment reversion plan,8 a firm must:8(a) use an estimate of the life expectancy of the customer that is reasonable and based on evidence12; and2(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
MCOB 9.4.13RRP
The amount to be specified in the illustration and 8referred to in MCOB 9.4.6 R(2) is:(1) the amount that the customer has asked to borrow, release8 or draw down; or(2) where the lifetime mortgage7 is a revolving credit agreement such as a secured overdraft or mortgage credit card:67(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)
MCOB 9.4.16GRP
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
MCOB 9.4.28RRP
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) 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) each part must be numbered for ease of reference in the
MCOB 9.4.32GRP
Examples of text that would satisfy MCOB 9.4.31 R(1), depending on the nature of the7lifetime mortgage,7 are:(1) "This lifetime mortgage will provide a lump sum of £[x].";(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) "You will receive a monthly [or such other frequency as is applicable] payment from the start of your lifetime mortgage. This will be £ [state a
MCOB 9.4.45RRP
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 mortgage777
MCOB 9.4.46RRP
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
MCOB 9.4.54RRP
(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,
MCOB 9.4.63RRP
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
MCOB 9.4.66GRP
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
MCOB 9.4.75RRP
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 9.4.83RRP
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
MCOB 9.4.102RRP
Under the sub-heading "Credit card", the illustration must:(1) state whether a credit card is offered with thelifetime mortgage;7 and7(2) if a credit card is offered and it is a mortgage credit card:(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(b) where the mortgage lender provides the customer with
MCOB 9.4.106RRP
(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) Where additional features are included in accordance with MCOB 9.4.91 R and these are credit facilities that meet the definition of
MCOB 9.4.128RRP
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:77(1) all cash amounts must be given in the relevant currency except where otherwise required by (2)(a) and (3);(2) the following information must be stated under Section 5 "Description of this mortgage"(a) the amount in sterling on which the illustration is based from MCOB 9.4.13 R based
MCOB 9.4.132ARRP
12MCOB 9.4.132DR applies if the terms of a lifetime mortgage contract:(1) (a) require the customer to make regular payments to the mortgage lender; or(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) permit the customer to stop making the payments referred to in paragraph (1) at
MCOB 9.4.132BGRP
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 9.4.132DRRP
12MCOB 9.4 applies to the lifetime mortgageillustration with the following modifications:(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) Section 8(A) of the illustration should be headed “What you will owe and when
CONC 4.2.1RRP
This section, unless otherwise stated in or in relation to a rule: (1) applies to a firm with respect to consumer credit lending;(2) applies to a firm with respect to credit broking where the firm has or takes on responsibility for providing the disclosures and explanations to customers required by this section;(3) does not apply to an agreement under which the lender provides the customer with credit which exceeds £60,260, unless the agreement is a residential renovation agreement5;(4)
CONC 4.2.2GRP
For the agreements referred to in CONC 4.2.1R (3), (4) and (5), a firm within CONC 4.2.1R (1) or CONC 4.2.1R (2) should consider whether it is necessary or appropriate to provide explanations of the matters in CONC 4.2.5R (2); in particular, a firm should consider highlighting the principal consequences to the customer including the consequences of missing payments or under-paying, including, where applicable, the risk of repossession of the customer's property.[Note: section
CONC 4.2.3GRP
(1) The disclosure regulations made under section 55 of the CCA which require information to be disclosed before a regulated credit agreement is made remain in force.(2) Failure to comply with the disclosure regulations has the effect that agreements are enforceable against a borrower or hirer (as defined in the CCA) only with an order of court and enforcement for that purpose includes a retaking of goods or land to which the agreement relates.(3) Other relevant disclosure requirements
CONC 4.2.5RRP
(1) Before making a regulated credit agreement the firm must:(a) provide the customer with an adequate explanation of the matters referred to in (2) in order to place the customer in a position to assess whether the agreement is adapted to the customer's needs and financial situation;(b) advise the customer:(i) to consider the information which is required to be disclosed under section 55 of the CCA; and(ii) where the information is disclosed in person, that the customer is able
CONC 4.2.8RRP
Where the regulated credit agreement is high-cost short-term credit, the lender or a credit broker must explain under CONC 4.2.5R (1)(a) that entering into that agreement would be unsuitable to support sustained borrowing over long periods and would be expensive as a means of longer term borrowing. [Note: paragraph 3.13 (box) of ILG]
CONC 4.2.9RRP
Even where a customer states or implies that there is no need for an explanation of the regulated credit agreement, the lender or credit broker must continue to comply with CONC 4.2.5 R.[Note: paragraph 3.10 of ILG]
CONC 4.2.11RRP
Before a lender concludes that CONC 4.2.5R (1) to CONC 4.2.5R (4) do not apply to it in relation to a regulated credit agreement by virtue of CONC 4.2.5R (5), the lender must take reasonable steps to satisfy itself that an explanation of that agreement complying with CONC 4.2.5 R has been provided to the customer by the credit broker. [Note: paragraph 3.11 (box) of ILG]
CONC 4.2.12RRP
The lender or the credit broker must enable a customer to request and obtain further information and explanation about a regulated credit agreement without incurring undue cost or delay. [Note: paragraph 3.16 (box) of ILG]
CONC 4.2.15RRP
The following information must be provided by the lender or a credit broker as part of, and in addition to that provided under, the adequate explanation required by CONC 4.2.5 R, where applicable, in the specified cases: (1) for credit token agreements:(a) different rates of interest and different charges apply to different elements of the credit provided (for example, a higher cost of withdrawing cash);(b) the implications of only making minimum repayments; (c) interest rates
CONC 4.2.19GRP
For a regulated credit agreement marketed and concluded by electronic means to comply with CONC 4.2.5 R the customer should pass through screens containing the required information and explanations, giving the customer the opportunity to see and read the explanations provided. Merely providing a link to where such information can be found is unlikely to satisfy the requirements in CONC 4.2.5 R, where the agreement can be concluded without accessing the link.[Note: paragraph 3.15
CONC 4.2.21GRP
Where a regulated credit agreement is a modifying agreement under section 82(2) of the CCA, the requirements in CONC 4.2 apply before the agreement is made.[Note: paragraph 3.12 of ILG]
CONC 4.2.22RRP
(1) 4This rule applies if:(a) a firm is to enter into a regulated credit agreement; and(b) an individual other than the borrower (in this rule referred to as “the guarantor”) is to provide a guarantee or an indemnity (or both) in relation to the regulated credit agreement.(2) The firm must, before making the regulated credit agreement, provide the guarantor with an adequate explanation of the matters in (3) in order to place the guarantor in a position to make an informed decision
CONC 4.2.23RRP
(1) 4CONC 4.2.22R does not apply to a lender if a credit broker, a solicitor, a barrister, (in Scotland) an advocate, or a relevant person has complied with that rule in respect of the agreement.(2) Before a lender concludes that CONC 4.2.22R does not apply to it in relation to a regulated credit agreement by virtue of (1), the lender must take reasonable steps to satisfy itself that: (a) an explanation complying with CONC 4.2.22R(2) has been provided to the guarantor; and(b)
CONC App 1.1.1RRP
(1) For the purposes of this section, references to the period for which credit is provided:(a) in the case of a credit agreement under which the period for which credit is to be provided is ascertainable at the date of the making of the credit agreement, are references to the period beginning with the relevant date and ending with the end of the period for which credit is to be provided; (b) in the case of a credit agreement under which the period for which credit is to be provided
CONC App 1.1.2RRP
This section applies to regulated credit agreements which are secured on land or to prospective regulated credit agreements which are to be secured on land, except to the extent that the Consumer Credit (Disclosure of Information) Regulations 2010 apply to such agreements.
CONC App 1.1.3RRP
(1) Any calculation under this section shall be made on the following assumptions(a) the assumption that the borrower will not be entitled to any income tax relief relating to the transaction other than relief under section 19 of the Income and Corporation Taxes Act 1970 and Schedule 4 to the Finance Act 1976 (which afford relief in respect of premiums under certain policies of insurance) without any deduction under section 21 of the said Act of 1970;(b) the assumption that no
CONC App 1.1.4RRP
For the purposes of the Regulated Activities Order, the total charge for the credit which may be provided under an actual or prospective credit agreement shall be the total of the amounts determined as at the date of the making of the credit agreement of such of the charges specified in CONC App 1.1.5 R as apply in relation to the credit agreement but excluding the amount of the charges specified in CONC App 1.1.6 R.
CONC App 1.1.5RRP
Except as provided in CONC App 1.1.6 R, the amounts of the following charges are included in the total charge for credit in relation to a credit agreement:(a) the total of the interest on the credit which may be provided under the credit agreement;(b) other charges at any time payable under the transaction by or on behalf of the borrower or a relative of his whether to the lender or any other person; and (c) a premium under a contract of insurance, payable under the transaction
CONC App 1.1.6RRP
(1) The amounts of the following items are not included in the total charge for credit in relation to a credit agreement:(a) any charge payable under the transaction to the lender upon failure by the borrower or a relative of his to do or to refrain from doing anything which he is required to do or to refrain from doing, as the case may be;(b) any charge(i) which is payable by the lender to any person upon failure by the borrower or a relative of his to do or to refrain from doing
CONC App 1.1.7RRP
The rate of the total charge for credit in the case of an actual or prospective credit agreement shall be the annual percentage rate of charge determined in accordance with the following provisions of CONC App 1.1.8 R to CONC App 1.1.10 R and (where it has more than one decimal place) rounded to one decimal place in accordance with CONC App 1.1.8 R.
CONC App 1.1.9RRP
(1) Subject to (4) below, the annual percentage rate of charge is the rate for i which satisfies the equation set out in (2) below, expressed as a percentage.(2) The equation referred to in (1) above is(3) In (2) above, references to instalments are references to any payment made by, or on behalf of, the borrower or a relative of his which comprises(a) a repayment of all or part of the credit under the credit agreement;(b) a payment of all or part of the total charge for credit;
(1) The provisions of CONC App 1.1.11 R to CONC App 1.1.18 R shall have effect as the case may require for the purpose of the calculation of the total charge for credit under CONC App 1.1.4 R to CONC App 1.1.6 R above and of the rate of such charge under CONC App 1.1.7 R to CONC App 1.1.10 R above in relation to any actual or prospective credit agreement in respect of matters necessary for the calculation which cannot be ascertained by the lender at the date of the making of
Where the amount of the credit to be provided under the credit agreement cannot be ascertained at the date of the making of the credit agreement,(a) in the case of a credit agreement for running-account credit under which there is a credit limit, that amount shall be taken to be such credit limit; and(b) in any other case, that amount shall be taken to be £100.
Where the period for which credit is to be provided is not ascertainable at the date of the making of the credit agreement, it shall be assumed that credit is provided for one year beginning with the relevant date.
Subject to CONC App 1.1.15 R, where the rate or amount of any item included in the total charge for credit or the amount of any repayment of credit under a transaction falls to be ascertained thereunder by reference to the level of any index or other factor in accordance with any formula specified therein, the rate or amount, as the case may be, shall be taken to be the rate or amount so ascertained, the formula being applied as if the level of such index or other factor subsisting
(1) This rule applies to any land-related agreement which provides for the possibility of any variation of the rate of interest if it is to be assumed, by virtue of CONC App 1.1.3R (1)(e), that the variation will take place but the amount of the variation cannot be ascertained at the date of the making of the credit agreement.(2) In this rule “initial standard variable rate”means(a)the standard variable rate of interest which would be applied by the lender to the credit agreement
Where(a) the period for which the credit or any part thereof is to be or may be provided cannot be ascertained at the date of the making of the credit agreement; and (b) the rate or amount of any item included in the total charge for credit will change at a time provided in the transaction within one year beginning with the relevant date, the rate or amount shall be taken to be the highest rate or amount at any time obtaining under the transaction in that year.
Where the earliest date on which credit is to be provided cannot be ascertained at the date of the making of the credit agreement, it shall be assumed that credit is provided on that date.
In the case of any transaction it shall be assumed(a) that a charge payable at a time which cannot be ascertained at the date of the making of the credit agreement shall be payable on the relevant date or, where it may reasonably be expected that a borrower will not make payment on that date, on the earliest date at which it may reasonably be expected that he will make payment; or(b) where more than one payment of a charge of the same description falls to be made at times which
CONC 15.1.1RRP
This chapter applies to:(1) a firm with respect to consumer credit lending in relation to regulated credit agreements secured on land; and (2) a firm with respect to credit broking in relation to credit agreements secured on land.
CONC 15.1.2GRP
Firms which carry on consumer credit lending or credit broking should comply with all rules which apply to that regulated activity in CONC and other parts of the Handbook. For example, CONC 7 applies to matters concerning arrears, default and recovery (including repossession) and applies generally, including to agreements to which this chapter applies. This chapter sets out specific additional requirements and guidance that apply in relation to credit agreements secured on land
CONC 15.1.3GRP
The financial promotion rules in CONC 3 apply to firms'financial promotions concerning credit agreements secured on land, apart from the extent to which a financial promotion or communication concerns qualifying credit. CONC 3.3.1 R requires financial promotions to be clear fair and not misleading; firms should take particular care with respect to explaining the nature of the credit to be provided and the costs of borrowing.
CONC 15.1.4RRP
A firm must make clear in advance the purpose of any visit off trade premises (which has the same meaning as in section 48 of the CCA) at which the customer may enter into a regulated credit agreement.
CONC 15.1.5RRP
In good time before a credit agreement is made and, where section 58 applies, before an unexecuted agreement is sent to the customer for signature a firm must:(1) disclose key contract terms and conditions of the prospective credit agreement;(2) disclose any features of the prospective credit agreement which carry a particular risk to the customer;(3) inform the customer of the consequences of missing payments or of making underpayments, including the imposition of default charges,
CONC 15.1.7RRP
Where a firm has reasonable grounds to suspect that the customer does not understand material aspects of the obligations they will take on and the resulting risks, under a regulated credit agreement, the firm:(1) must not enter into a regulated credit agreement; and (2) must provide further explanation of any such obligations or risks.
CONC 15.1.8RRP
Before a customer enters into a regulated credit agreement, the firm must:(1) encourage the customer to read all contractual documentation carefully; (2) take reasonable steps to ensure the customer has understood the nature of the obligations the customer will take on and the resulting risks;(3) encourage the customer to obtain independent advice; and(4) permit the customer an adequate opportunity to seek and obtain such advice.
CONC 15.1.9GRP
Before a regulated credit agreement secured on land is entered into: (1) the firm should consider the adequate explanations it should give to the customer under CONC 4.2; and[Note: paragraph 3.1 (box) of ILG](2) the firm is required under CONC 5.2.2 R (1) to assess the potential for commitments under the agreement to adversely impact the customer's financial situation.[Note: paragraphs 1.14 and 4.1 of ILG]
CONC 15.1.10GRP
In accordance with PRIN 9 (customer: relationships of trust):(1) a firm must take reasonable steps to ensure the suitability of its advice, which would include acting in the best interests of a customer where the firm makes a recommendation; (2) if it appears to the firm that entering into a regulated credit agreement secured on land is not in the best interests of the customer, that fact should be made clear to the customer; and (3) the firm should encourage the customer to consider
CONC 15.1.11RRP
A firm must set out the nature and purpose of the fees and charges payable by the customer, including any fees or charges payable on the customer's default:(1) in the credit agreement; and(2) in any booklet or leaflet relating to the agreement.
CONC 15.1.12RRP
Where rates and charges under a credit agreement are variable, a firm must:(1) before entering into the agreement, explain to the customer the consequences of such variations on the amount of periodic instalments payable and on the total amount payable;(2) only increase rates or charges to recover genuine increases in costs of the firm which have an effect on the credit provided under the agreement; and (3) explain to the customer before changing any rate or charge under the
MCOB 8.5A.1GRP
(1) 1MCOB 8.5A sets out standards to be observed by firms when advising a particular customer on equity release transactions.(2) The rules at MCOB 8.6A require firms selling equity release transactions to provide advice to the customer, subject to the customer's right to reject advice which has been given and to proceed on an execution-only basis.
MCOB 8.5A.2RRP
If a firm gives advice to a particular customer to enter into an equity release transaction, or to vary an existing equity release transaction, it must take reasonable steps to ensure that the equity release transaction is, or after the variation will be, suitable for that customer.
MCOB 8.5A.3RRP
In MCOB 8.5A, a reference to advice to enter into an equity release transaction is to be read as including advice to vary an existing equity release transaction.
MCOB 8.5A.5RRP
For the purposes of MCOB 8.5A.2 R: (1) an equity release transaction will not be suitable for a customer unless the equity release transaction is appropriate to the needs and circumstances of the customer; (2) a firm must base its determination of whether an equity release transaction is appropriate to a customer's needs and circumstances on the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware;(3) no
MCOB 8.5A.6RRP
When a firm assesses whether the equity release transaction is appropriate to the needs and circumstances of the customer for the purposes of MCOB 8.5A.5 R, the factors it must consider include the following:(1) whether the benefits to the customer outweigh any adverse effect on:(a) the customer's entitlement (if any) to means-tested benefits; and(b) the customer's tax position (for example the loss of an Age Allowance);(2) alternative methods of raising the required funds such
MCOB 8.5A.7GRP
Examples of eligibility criteria in MCOB 8.5A.6R (3) are: the amount that the customer wishes to borrow or to release; the loan-to-value ratio; the age of the customer; the value of the property which would be the subject of the equity release transaction.
MCOB 8.5A.10RRP
If for any reason a customer: (1) declines to seek further information on means-tested benefits, tax allowances or the scope for local authority (or other) grants; or(2) rejects the conclusion of a firm that alternative methods of raising the required funds are more suitable;a firm can advise the customer (in accordance with the remaining requirements of this chapter) to enter into an equity release transaction where there is an equity release transaction (or more than one equity
MCOB 8.5A.11RRP
In relation to MCOB 8.5A.5R (1), when a firmadvises a customer in relation to entering into an equity release transaction where the main purpose for doing so is the consolidation of existing debts by the customer, it must also take account of the following in assessing whether the equity release transaction is suitable for the customer: (1) the costs associated with increasing the period over which a debt is to be repaid; (2) whether it is appropriate for the customer to secure
MCOB 8.5A.13RRP
Where the customer is looking to increase the borrowing secured on the property which is the subject of an existing regulated mortgage contract, a firm must inform the customer (either orally or in writing) that it may be possible, and more appropriate, for the customer to take a further advance with the existing lender rather than entering into an equity release transaction with another provider.
MCOB 8.5A.15RRP
When advising a customer on the suitability of an equity release transaction, a firm must explain to the customer that the assessment of whether the equity release transaction is appropriate to his needs and circumstances is based on the customer's current circumstances, which may change in the future.
MCOB 8.5A.17GRP
MCOB 8.5A.5R (3) means that where the advice provided is based on a selection of equity release transactions from a single or limited number of providers, the assessment of suitability should not be limited to the types of equity release transactions which the firm offers. A firm cannot recommend the 'least worst' equity release transaction where the firm does not have access to products appropriate to the customer's needs and circumstances. This means, for example, that if a
MCOB 8.5A.19RRP
(1) A firm must make and retain a record: (a) of the customer information, including that relating to the customer's needs and circumstances and the customer's apparent satisfaction of the equity release provider's known eligibility criteria, that it has obtained for the purposes of MCOB 8.5A; (b) that explains why the firm has concluded that any advice given to a customer complies with MCOB 8.5A.2 R and satisfies the suitability requirement in MCOB 8.5A.5R (1); (c) of any advice
PERG 2.7.7EGRP
15There are six activities that fall within credit broking. These are:(1) effecting an introduction of an individual who wishes to enter into a credit agreement to another person, with a view to that person entering as lender into a credit agreement by way of business;(2) effecting an introduction of an individual who wishes to enter into a consumer hire agreement to another person, with a view to that person entering as owner into a consumer hire agreement by way of business
PERG 2.7.7FGRP
15An activity is not credit broking within PERG 2.7.7EG (1), PERG 2.7.7EG (4), PERG 2.7.7EG (5) or PERG 2.7.7EG (6) if the exemption relating to the number of repayments to be made would apply to the credit agreement, see PERG 2.7.19G G.
PERG 2.7.7HGRP
(1) 15This activity is aimed at what are sometimes referred to as peer-to-peer lending platforms. A person ("A") will be operating an electronic system in relation to lending if he operates an electronic system which enables him to facilitate persons ("B" and "C") becoming the lender and borrower under an article 36H agreement. (2) To be caught, all of the following conditions must be met:(a) the electronic system operated by A must be capable of determining which agreements should
PERG 2.7.8BGRP
15This activity comprises:(1) negotiating with the lender or owner, on behalf of the borrower or hirer, terms for the discharge of a debt;(2) taking over, in return for payments by the borrower or hirer, that person's obligation to discharge a debt; or(3) any similar activity concerned with the liquidation of a debt;when carried on in relation to debts due under a credit agreement or consumer hire agreement.
PERG 2.7.8CGRP
15Giving advice to a borrower about the liquidation of a debt due under a credit agreement is a regulated activity. Giving advice to a hirer about the liquidation of a debt due under a consumer hire agreement is a regulated activity. See PERG 17 for further guidance on debt-counselling.
PERG 2.7.8DGRP
(1) 15Taking steps to procure the payment of a debt due under a credit agreement or a consumer hire agreement is a regulated activity.(2) Taking steps to procure the payment of a debt due under an article 36H agreement (see PERG 2.7.7HG (3)) which has been entered into with the facilitation of an operator of an electronic system in relation to lending is also a regulated activity.(3) The activity is not a regulated activity in so far as the activity is operating an electronic
PERG 2.7.8EGRP
(1) 15Taking steps to perform duties or to exercise or to enforce rights under a credit agreement or a consumer hire agreement on behalf of the lender or owner is a regulated activity.(2) Taking steps to perform duties or to exercise or to enforce rights under an article 36H agreement (see PERG 2.7.7HG (3)) which has been entered into with the facilitation of an operator of an electronic system in relation to lending is also a regulated activity.(3) In so far as the activity is
PERG 2.7.16FGRP
18Under article 53DA of the Regulated Activities Order, advising a person (“P”) is a regulated activity if:19(1) the advice is given to P in P’s capacity as a recipient of credit, or potential recipient of credit, under a regulated credit agreement;(2) P intends to use the credit to acquire or retain property rights in land or in an existing or projected building; and(3) the advice consists of the provision of personal recommendations to P in respect of one or more transactions
PERG 2.7.19BGRP
(1) A credit agreement entered into before 1 April 2014 is a regulated credit agreement for the purposes of PERG 2.7.19AG if it was a ‘regulated agreement’ within the meaning of the CCA when it was entered into, or became such a ‘regulated agreement’ by virtue of being varied or supplemented by another agreement before 1 April 2014. But a credit agreement is not a regulated credit agreement for the purposes of PERG 2.7.19AG if was entered into before 1 April 2014 and, if it had
PERG 2.7.19CGRP
15A credit agreement is an exempt agreement17 in the following cases:(1) if:33(a) by entering into the agreement as lender, a person is or was carrying on the regulated activity of entering into regulated mortgage contracts; or33(b) by entering into the agreement as home purchase provider, a person is or was carrying on a regulated activity of the kind specified by article 63F(1) of the Regulated Activities Order (entering into regulated home purchase plans); or33(c) by administering
PERG 2.7.19DGRP
15If a credit agreement includes a declaration which:(1) is made by the borrower;(2) provides that the agreement is entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower; and(3) complies with the rules in CONC App 1.4;the credit agreement is to be presumed to have been entered into by the borrower wholly or predominantly for business purposes. This presumption does not apply, however, if the
PERG 2.7.19EGRP
15A credit agreement is an exempt agreement17 if, at the time it is entered into:(1) any sums due under it are secured by a legal or equitable mortgage on land; 20(2) less than 40% of the land is used, or is intended to be used, as or in connection with a dwelling:(a) by the borrower or a related person of the borrower; or(b) in the case of credit provided to trustees, by an individual who is a beneficiary of the trust or a related person20 of a beneficiary; and2020(2A) the credit
PERG 2.7.19FGRP
15A credit agreement is an exempt agreement17 in the following cases:(1) if the credit agreement is a relevant credit agreement relating to the purchase of land and the lender is a local authority;(2) if the credit agreement is a relevant credit agreement relating to the purchase of land specified in CONC App 1.3 and the lender is a person or within a class of persons specified in CONC App 1.3;(3) if the credit agreement is secured by a legal or equitable mortgage on land, that
PERG 2.7.19FBGRP
(1) 33In PERG 2.7.19FG(3), ‘housing authority’ has the same meaning as in article 60E(7) of the Regulated Activities Order. The definition of ‘housing authority’ in article 60E includes housing associations registered under the relevant housing legislation. (2) The effect of the definition of ‘regulated credit agreement’ in the Regulated Activities Order is that credit agreements entered into by housing associations and other housing authorities before 1 April 2014 that were
PERG 2.7.19GGRP
15A credit agreement is also an exempt agreement in the following cases:(1) if (subject to PERG 2.7.19H G):(a) the agreement is a borrower-lender-supplier agreement for fixed-sum credit;(b) the number of payments to be made by the borrower is not more than 1221;(c) those payments are required to be made within a period of 12 months or less (beginning on the date of the agreement); and(d) the credit is:(i) secured on land; or(ii) provided without interest or other charges;(2) if
PERG 2.7.19HGRP
15The exemptions in PERG 2.7.19GG (1) and PERG 2.7.19GG (2) do not apply to:(1) credit agreements financing the purchase of land;(2) conditional sale agreements or hire-purchase agreements; or(3) credit agreements secured by a pledge (other than a pledge of documents of title or of bearer bonds).
PERG 2.7.19IGRP
15A credit agreement is also an exempt agreement17 in the following cases:(1) if it is a borrower-lender agreement, the lender is a credit union and the rate of the total charge for credit (see CONC App 1) does not exceed 42.6 per cent provided that:33(a) the agreement is not an MCD regulated mortgage contract or an article 3(1)(b) credit agreement; or33(b) the agreement is an MCD regulated mortgage contract or an article 3(1)(b) credit agreement but:33(i) the agreement is of
PERG 2.7.19JGRP
15A credit agreement is an exempt agreement17 if:(1) the borrower is an individual;(2) the agreement is either:1818(a) secured on land; or(b) for credit which exceeds £60,260 and, if entered into on or after 21 March 2016, is33 for a purpose other than:23(i) the renovation of residential property; or(ii) to acquire or retain property rights in land or in an existing or projected building;33(3) the agreement includes a declaration, made by the borrower which provides that the borrower
PERG 2.7.19NGRP
15As in the case of a credit agreement (see PERG 2.7.19D G), if a consumer hire agreement includes a declaration which:(1) is made by the hirer;(2) provides that the agreement is entered into by the hirer wholly or predominantly for business purposes; and(3) complies with CONC App 1.4;the consumer hire agreement is to be presumed to have been entered into by the hirer for business purposes. This presumption does not apply, however, if the owner or any person who has acted on behalf
PERG 2.7.19PGRP
15This exemption is substantially the same as the one for credit agreements in PERG 2.7.19J G.
CONC 6.7.5RRP
(1) A firm must set the minimum required repayment under a regulated credit agreement for a credit card or a store card at an amount equal to at least that amount which repays the interest, fees and charges that have been applied to the customer's account, plus one percentage of the amount outstanding. [Note: paragraph 6.4 of ILG](2) Where (1) applies and a firm applies interest to a period of more than one month, for the purpose of calculating the amount of the interest part
CONC 6.7.6RRP
A firm under a regulated credit agreement for a credit card or a store card must provide a customer with the option to pay any amount they choose (equal to or more than the minimum required repayment but less than the full outstanding balance) on a regular basis, when making automated repayments. [Note: paragraph 6.5 of ILG]
CONC 6.7.8RRP
A firm under a regulated credit agreement for a credit card or a store card must: (1) permit a customer at any time to reduce or decline offers to increase the credit limit; and(2) permit a customer to decline to receive offers of credit limit increases.[Note: paragraphs 6.8 and 6.9 of ILG]
CONC 6.7.9RRP
A firm under a regulated credit agreement for a credit card or store card must notify the customer of a proposed increase in the credit limit under the agreement at least 30 days before the increase comes into effect, except where: 1[Note: paragraph 6.17 of ILG](1) the increase is at the express request of the customer: or11(2) the increase is proposed by the firm, but the customer agrees to it at that time and wishes it to come into effect in less than 30 days.11
CONC 6.7.10RRP
Where a customer is at risk of financial difficulties, a firm under a regulated credit agreement for a credit card or a store card must, other than where a promotional rate of interest ends, not increase the rate of interest under the agreement. [Note: paragraph 6.10 of ILG]
CONC 6.7.13RRP
Where a firm proposes to exercise a power under a regulated credit agreement for a credit card or store card to increase the interest rate, the firm must: (1) permit the customer sixty days, from the date of the firm's notice of the proposed increase during which period the customer may give notice to the firm requiring it to close the account;(2) permit the customer to pay off the outstanding balance at the rate of interest before the proposed increase and over a reasonable
CONC 6.7.14RRP
Where a firm has a right to increase the interest rate under a regulated credit agreement, the firm must not increase the interest rate unless there is a valid reason for doing so.[Note: paragraph 6.20 of ILG]
CONC 6.7.15GRP
Examples of valid reasons for increasing the rate of interest in CONC 6.7.14 R include:(1) recovering the genuine increased costs of funding the provision of credit under the agreement; and (2) a change in the risk presented by the customer which justifies the change in the interest rate, which would not generally include missing a single repayment or failing to repay in full on one or two occasions [Note: paragraph 6.20 (box) of ILG]
CONC 6.7.17RRP
(1) In CONC 6.7.18 R to CONC 6.7.23 R “refinance” means to extend, or purport to extend, the period over which one or more repayment is to be made by a customer whether by:(a) agreeing with the customer to replace, vary or supplement an existing regulated credit agreement;(b) exercising a contractual power contained in an existing regulated credit agreement; or(c) other means, for example, granting an indulgence or waiver to the customer. (2) “Exercise forbearance” means to refinance
CONC 6.7.18RRP
A firm must not encourage a customer to refinance a regulated credit agreement if the result would be the customer's commitments are not sustainable. [Note: paragraph 4.27 of ILG]
CONC 6.7.19RRP
A firm must not refinance a customer's existing credit with the firm (other than by exercising forbearance), unless: (1) the firm does so at the customer's request or with the customer's consent; and (2) the firm reasonably believes that it is not against the customer's best interests to do so. [Note: paragraph 6.24 of ILG]
CONC 6.7.25ARRP
(1) 2Paragraph (2) applies if an individual other than the borrower (in this rule referred to as “the guarantor”) has: (a) provided a guarantee or an indemnity (or both) in relation to: (i) a regulated credit agreement; or(ii) a P2P agreement in respect of which the borrower is an individual; and(b) granted a continuous payment authority.(2) CONC 6.7.24R and CONC 6.7.25R apply in respect of the guarantor as if references to the customer were references to the guarantor.(3) For
CONC 3.6.1RRP
This section applies:(1) to a financial promotion in relation to consumer credit lending in relation to regulated credit agreements secured on land; and(2) to a financial promotion in relation to credit broking in relation to regulated credit agreements secured on land; and in both cases other than financial promotions to the extent that they relate to qualifying credit.
CONC 3.6.2RRP
In this section, for a financial promotion relating to credit to be provided under a credit agreement “relevant date” means:(1) in a case where a date is specified in or determinable under the agreement at the date of its making as that on which the customer is entitled to require provision of anything the subject of the agreement, the earliest such date; and(2) in any other case, the date of the making of the agreement.
CONC 3.6.3RRP
A financial promotion must not be communicated where it indicates a firm is willing to provide credit under a regulated restricted-use credit agreement secured on land relating to goods or services to be supplied by any person, when at the time the financial promotion is communicated, the firm or any supplier under such an agreement does not hold itself out as prepared to sell the goods or provide the services (as the case may be) for cash.[Note: section 45 of CCA]
CONC 3.6.5RRP
(1) Where a financial promotion concerns a facility for which security is or may be required, the promotion must:(a) state that security is or may be required; and(b) specify the nature of the security.[Note: regulation 7(1) of CCAR 2004](2) Where, in the case of a financial promotion, the security comprises or may comprise a mortgage or charge on a property used by the customer as a dwelling (whether or not the customer’s primary residence)4:(a) except where (c) applies, the
CONC 3.6.6RRP
(1) A financial promotion must specify the typical APR if the promotion:(a) specifies any other rate of charge;(b) includes any of the items of information listed in CONC 3.6.10R (5) to (7);(c) indicates in any way, whether expressly or by implication,3 including by means of the name given to a business or of an address used by a business for the purposes of electronic communication, that:(i) credit is available to persons who might otherwise consider their access to credit restricted;
CONC 3.6.7GRP
Whether or not a reference to speed or ease in CONC 3.6.6R (1)(e) constitutes an incentive to apply for credit or enter into an agreement under which credit is provided would depend upon the circumstances, including whether it is likely to persuade or influence a customer to take those steps or is merely a factual statement about the product or service.
CONC 3.6.8RRP
(1) A financial promotion must not include:(a) the word “overdraft” or any similar expression as describing any agreement for running-account credit, except where the agreement enables a customer to overdraw on a current account; (b) the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be liable to pay as a cash purchaser for the like transaction, except
CONC 3.6.9RRP
(1) In the case of a financial promotion about running-account credit, the following assumptions have effect for the purpose of calculating the total charge for credit and any APR, notwithstanding the terms of the transaction advertised and in place of any assumptions in CONC App 1.1.11 R to CONC App 1.1.18 R that might otherwise apply:(a) the amount of the credit to be provided must be taken to be £1,500 or, in a case where credit is to be provided subject to a credit limit
CONC 3.6.10RRP
(1) The amount of credit which may be provided under a credit agreement or an indication of one or both of the maximum amount and the minimum amount of credit which may be provided. [Note: paragraph 1 of schedule 2 to CCAR 2004]Deposit of money in an account(2) A statement of any requirement to place on deposit any sum of money in any account with any person. [Note: paragraph 2 of schedule 2 to CCAR 2004]Cash price(3) In the case of a financial promotion about credit to be provided
CONC 3.5.1RRP
This section applies:(1) to a financial promotion in relation to consumer credit lending;(2) to a financial promotion in relation to credit broking in relation to regulated credit agreements;(3) to a financial promotion in relation to activities specified in article 36A(1)(a) or (c) of the Regulated Activities Order in relation to what would be regulated credit agreements but for a relevant provision, but only where the firm also carries on such activities in relation to regulated
CONC 3.5.2RRP
A financial promotion must not be communicated where it indicates a firm is willing to provide credit under a regulated restricted-use credit agreement relating to goods or services to be supplied by any person, when at the time the financial promotion is communicated, the firm or any supplier under such an agreement does not hold itself out as prepared to sell the goodsor provide the services (as the case may be) for cash. [Note: section 45 of CCA]
CONC 3.5.3RRP
(1) Where a financial promotion indicates3 a rate of interest or an amount relating to the cost of credit whether expressed as a sum of money or a proportion of a specified amount, the financial promotion must also: (a) include a representative example in accordance with CONC 3.5.5 R, and (b) specify a postal address at which the person making the financial promotion may be contacted.[Note: regulation 4(1) of CCAR 2010](2) Paragraph (1)(a) does not apply where the financial promotion:
CONC 3.5.5RRP
(1) The representative example in CONC 3.5.3R (1) must comprise the following items of information: (a) the rate of interest, and whether it is fixed or variable or both, expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down;(b) the nature and amount of any other charge included in the total charge for credit;(c) the total amount of credit;(d) the representative APR;(e) in the case of credit in the form of a deferred payment
CONC 3.5.7RRP
(1) A financial promotion must include the representative APR if it: (a) states or implies that credit is available to individuals who might otherwise consider their access to credit restricted; or323(b) includes a favourable comparison relating to the credit, whether express or implied, with another person, product or service; or3(c) includes an incentive 3to apply for credit or to enter into an agreement under which credit is provided.[Note: regulation 6 of CCAR 2010]3(2) The
CONC 3.5.12RRP
(1) A financial promotion must not include: (a) the word “overdraft” or any similar expression as describing any agreement for running-account credit, except where an agreement enables a customer to overdraw on a current account;(b) the expression “interest free” or any similar expression indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than he would be liable to pay as a cash purchaser for the like transaction, except
CONC 3.5.13RRP
(1) Where a financial promotion is about running-account credit and the credit limit applicable is not yet known on the date the financial promotion is made, but it is known that it will be less than £1,200, the credit limit must be assumed to be an amount equal to that maximum limit. [Note: paragraph 1 of schedule to CCAR 2010](2) The assumption in (1) applies in place of the assumption in CONC App 1.2.5 R for the purpose of calculating the total charge for credit.Total charge
CONC App 1.4.1RRP
(1) For the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order and of CONC 1.2.10R(2), a declaration made by the borrower or hirer which provides that the borrower or hirer agrees to forgo the protection and remedies that would be available to the borrower or hirer if the agreement were a regulated credit agreement or a regulated consumer hire agreement must comply with CONC App 1.4.2R and either CONC App 1.4.6R or, in the case of an MCD article 3(1)(b)
CONC App 1.4.2RRP
A declaration for the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order and of CONC 1.2.10R(2) shall 2(1) be set out in the credit agreement or consumer hire agreement no less prominently than other information in the agreement and be readily distinguishable from the background medium; and(2) be signed by the borrower or hirer, unless the agreement is so signed.
CONC App 1.4.4RRP
A person3 who is(1) the lender or owner;(2) an employee or agent of the lender or owner or a person who otherwise acts on behalf of the lender or owner in relation to the credit agreement or consumer hire agreement; or(3) an associate of the lender or owner, may only make a statement of high net worth if the lender or owner is a person who has Part 4A permission to accept deposits.
CONC App 1.4.5RRP
A declaration for the purposes of articles 60C or 60O of the Regulated Activities Order shall(1) comply with CONC App 1.4.8 R;(2) be set out in the credit agreement or consumer hire agreement no less prominently than other information in the agreement and be readily distinguishable from the background medium; and(3) be signed by the borrower or hirer or where the borrower or hirer is a partnership or unincorporated body of persons be signed by, or on behalf of, the borrower or
CONC App 1.4.6RRP
The declaration for the purposes of articles 60H(1)(c) and 60Q(b) of the Regulated Activities Order must have the following form and content- 2“Declaration by high net worth borrower or hirer(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)2I confirm that I have received a copy of the statement of high net worth made in relation to me for the purposes of article 60H(1)(d) 2or article 60Q(c) of the Financial Services and
2Declaration by high net worth borrower under an MCD article 3(1)(b) credit agreementThe declaration for the purposes of article 60H(1)(c) of the Regulated Activities Order and of CONC 1.2.10R(2) must have the following form and content- “Declaration by high net worth borrower under an MCD article 3(1)(b) credit agreement (article 60H(1)(c) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)I confirm that I have received a copy of the statement of
CONC App 1.4.7RRP
A statement of high net worth for the purposes of articles 60H(1)(d) and 60Q(c) of the Regulated Activities Order must have the following form and content: 2“Statement of High Net Worth(articles 60H(1) and 60Q of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)2I/We* (insert full name) .............................................................. of (insert address and postcode).............................................................. confirm
CONC App 1.4.8RRP
A declaration for the purposes of articles 60C or 60O of the Regulated Activities Order must have the following form and content“Declaration for exemption relating to businesses(articles 60C and 60O of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001)I am/We are* entering this agreement wholly or predominantly for the purposes of a business carried on by me/us or intended to be carried on by me/us.I/We* understand that I/We* will not have the benefit
PERG 4.10B.4GRP
There are three main conditions for regulated mortgage activities to be CBTL business:(1) the activities must relate to buy-to-let credit agreements (see PERG 4.10B.5G);(2) the borrower must be acting as a consumer (see PERG 4.10B.10G(2)); and(3) the activities must come within the definition of CBTL business (see PERG 4.10B.8G).
PERG 4.10B.5GRP
(1) A buy-to-let credit agreement means either:(a) a contract that at the time it is entered into has the following characteristics:(i) a lender provides credit to an individual or trustees (the 'borrower');(ii) the contract provides for the obligation of the borrower to repay to be secured by a mortgage on land in the EEA;(iii) at least 40% of that land is used, or is intended to be used, as or in connection with a dwelling2 (or, where trustees are the borrower, by an individual
PERG 4.10B.9GRP
Table: Definition of consumer buy-to-let businessActivityExplanationEntering into, or promising to enter into, aCBTL credit agreement in the course of a trade, business or profession (acting as a CBTL lender)See PERG 4.10B.11G(1)Administering a CBTL credit agreement in the course of a trade, business or profession (acting as a CBTL lender)See PERG 4.10B.11G(2)Acting as a CBTL arranger in relation to a CBTL credit agreementSee PERG 4.10B.12GActing as a CBTL adviser in relation
PERG 4.10B.10GRP
A CBTL credit agreement means a contract that meets the following conditions: (1) it meets the definition of a buy-to-let credit agreement in PERG 4.10B.5G; and(2) it is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower.
PERG 4.10B.11GRP
(1) PERG 4.4.32G explains when a borrower is regarded as entering into a buy-to-let credit agreement for the purpose of a business carried on, or intended to be carried on, by the borrower.(2) A person administers a CBTL credit agreement if the person carries on administering a regulated mortgage contract in respect of the CBTL credit agreement, or would carry on that regulated activity in respect of the CBTL credit agreement if it was not a person included on the FCA register
PERG 4.10B.12GRP
A person is acting as a CBTL arranger if the person:(1) is not a lender as described in the first row of the table in PERG 4.10B.9G;(2) is not merely introducing, either directly or indirectly, a borrower to a lender or credit intermediary;(3) is acting in the course of the person’s trade, business or profession, for remuneration, which may take a pecuniary form or any other agreed form of financial consideration; and(4) meets one or more of the following conditions:(a) the person
PERG 4.10B.13GRP
Under article 6(1) of the MCD Order a person is acting as a CBTL adviser if in the course of that person’s trade, business or profession, the person provides personal recommendations to a consumer in respect of one or more transactions relating to CBTL credit agreements.
PERG 4.10B.14GRP
Under article 6(2) of the MCD order a person who provides personal recommendations to a consumer in respect of one or more transactions relating to CBTL credit agreements is not acting as a CBTL adviser if the recommendations are provided:(1) in an incidental manner in the course of a professional activity and that activity is regulated by legal or regulatory provisions or a code of ethics governing the profession which do not exclude the making of those recommendations; or(2)
PERG 4.10B.15GRP
(1) The definitions of CBTL arranger and CBTL adviser are largely the same as those under the Mortgage Credit Directive.(2) There is guidance on these terms in PERG 4.10A (Activities regulated under the Mortgage Credit Directive).(3) The main difference between the definitions in this section and those in PERG 4.10A is that this section only relates to CBTL credit agreements.
MCOB 10.3.3RRP
(1) The APR must be calculated on the basis of the following assumptions:(a) the assumption that the customer will not be entitled to any income tax relief relating to the transaction other than relief under sections 266-7 of the Income and Corporation Taxes Act 1988 and Schedule 14-15 to the same Act without any deduction under section 274 of the Income and Corporation Taxes Act 1988;(b) the assumption that no assistance is given under the Home Purchase Assistance and Housing
MCOB 10.3.6RRP
(1) MCOB 10.3.7 R to MCOB 10.3.13 R apply for the purpose of the calculation of the total charge for credit and of the rate of that charge in respect of matters necessary for the calculation which cannot be ascertained by the mortgage lender or mortgage administrator at the date of the making of the agreement.(2) In a case where MCOB 10.3.7 R and one or more of MCOB 10.3.8 R to MCOB 10.3.13 R are applicable, MCOB 10.3.7 R must be applied first.
MCOB 10.3.7RRP
(1) Where the amount of the credit to be provided under the agreement cannot be ascertained at the date of the making of the agreement:(a) in the case of an agreement for running-account credit under which there is a credit limit, that amount must be taken to be that credit limit; and(b) in any other case, that amount shall be taken to be £100.(2) Where a mortgage lender makes a further advance to the customer in addition to the amount originally borrowed under the regulated mortgage
MCOB 10.3.9RRP
Subject to MCOB 10.3.10 R, where the rate or amount of any item included in the total charge for credit, or the amount of any repayment of credit under a transaction, is to be ascertained by reference to the level of any index or other factor in accordance with a specified formula, the rate or amount must be taken to be the rate or amount so ascertained. The formula must be applied as if the level of the index or other factor subsisting at the date of the making of the agreement
MCOB 10.3.10RRP
(1) The assumptions in MCOB 10.3.10 R(3) and (4) apply to any secured lending contracts which provide for the possibility of any variation of the rate of interest if it is to be assumed, under MCOB 10.3.3 R(1)(e), that the variation will take place but the amount of the variation cannot be ascertained at the date of the making of the agreement.(2) In this paragraph:(a) 'initial standard variable rate' means:(i) the standard variable rate of interest which would be applied by the
MCOB 10.3.11RRP
Where:(1) the period for which the credit, or any of it, is to be or may be provided cannot be ascertained at the date of the making of the agreement; and(2) the rate or amount of any item included in the total charge for credit will change at a time provided in the transaction within one year beginning with the relevant date;the rate or amount must be taken to be the highest rate or amount under the transaction at any time in that year.
MCOB 10.3.13RRP
In the case of any transaction, it must be assumed:(1) that a charge payable at a time which cannot be ascertained at the date of the making of the agreement is to be payable on the relevant date or, where it may reasonably be expected that a customer will not make payment on that date, on the earliest date at which it may reasonably be expected that he will make payment; or(2) where more than one payment of a charge of the same description is to be made at times which cannot
CONC 2.10.1GRP
This section applies: (1) to a firm;(2) in relation to the following decisions:(a) granting credit under a regulated credit agreement;(b) significantly increasing the amount of credit under a regulated credit agreement; and (c) setting a credit limit for running account credit.
CONC 2.10.9GRP
(1) A firm should not unfairly discriminate against a customer who it understands, or reasonably suspects, has a mental capacity limitation, in particular, by inappropriately denying the customer access to credit. [Note: paragraph 4.8 of MCG](2) It would not be inappropriate not to grant credit nor significantly increase the amount of credit under an agreement nor set a credit limit for running account credit where the firm reasonably believes the agreement or decision would be
CONC 2.10.11GRP
A firm should document practices and procedures to set out the steps that it takes when it receives applications for credit from such customers. [Note: paragraph 4.2 of MCG]
CONC 2.10.14GRP
Firms should present clear, jargon-free information in explaining credit agreements in a way that makes it as easy as possible for the customer to understand. Firms should consider ways to present information in alternative, more 'user-friendly' formats where it appears appropriate to do so, subject to compliance with the relevant statutory requirements. [Note: paragraph 4.20 of MCG]
CONC 2.10.15GRP
Where a firm knows, or reasonably suspects, that a customer has or may have one of the conditions in CONC 2.10.6 G this could justifiably act as a trigger for the firm to consider the potential specific steps in giving effect to the firm's practices and procedures for assessing: (1) whether or not the customer appears able to understand, remember, and weigh up the information and explanations provided and, when having done so, make an informed borrowing decision;(2) whether the
CONC 2.10.18GRP
Where a firm understands, or reasonably suspects, a customer has or may have a mental capacity limitation it should apply a high level of scrutiny to the customer's application for credit, in order to mitigate the risk of the customer entering into unsustainable borrowing (see CONC 5.2 and CONC 5.3). [Note: paragraphs 4.32 and 4.33 of MCG]
CONC 2.10.20GRP
Where a firm understands, or reasonably suspects, a customer has or may have a mental capacity limitation the firm should take particular care that the customer is not provided with credit which the firm knows, or reasonably believes, to be unsuitable to the customer's needs, even where the credit would be affordable.[Note: paragraph 4.43 of MCG]
MCOB 11.6.40AGRP
3A shared equity credit agreement may be an interest-only mortgage.
MCOB 11.6.42GRP
Firms are reminded that:(1) interest-only mortgages include those where some, but not all, interest is payable at the end of the term. Accordingly, the requirement in MCOB 11.6.41R (1)(b) applies equally to such interest-only mortgages as it does to those where all of the interest is accrued until the end of the term; and (2) a lifetime mortgage is a type of interest-only mortgage, as full repayment of capital and interest is not required over the term. Accordingly, the requirements
MCOB 11.6.45GRP
The following are examples of repayment strategies that may, subject to the circumstances of the customer, be acceptable for the purposes of MCOB 11.6.41R (1):(1) regular deposits into a savings or investment product;(2) the periodic repayment of capital from irregular sources of income (such as bonuses or some sources of income from self-employment);3(3) the sale of assets such as another property or other land owned by the customer; and3(4) for a shared equity credit agreement
MCOB 11.6.47GRP
In complying with MCOB 11.6.41R (1), where a customer'srepayment strategy is the sale of the property which is the subject of the regulated mortgage contract, a mortgage lender may wish to consider, as part of its assessment of that repayment strategy, factors such as the equity in the property when considered in relation to the level of property prices in the relevant area at the time of the consideration or, for a lifetime mortgage, the borrower’s life expectancy.
MCOB 11.6.49RRP
(1) This rule applies in relation to all interest-only mortgages which a mortgage lenderenters into on or after 26 April 2014 except:(a) lifetime mortgages7;(aa) retirement interest-only mortgages;7(b) bridging loans; and(c) any other case where the repayment of capital borrowed and, if applicable, interest accrued, is certain.(2) Except as set out in (3), a mortgage lender must carry out a review (as a minimum, once) during the term of the mortgage, in which contact is made with
MCOB 11.6.50RRP
A mortgage lender which enters intointerest-only mortgages (unless they are only lifetime mortgages) must include in the policy which is required by MCOB 11.6.20 R (Responsible lending and financing policy) a policy on interest-only mortgages, setting out its processes and procedures for ensuring compliance with MCOB 11.6.41R (1) and for safeguarding the interests of customers during the term of interest-only mortgages. This policy must include:(1) details of the mortgage lender's
MCOB 11.6.57RRP
The requirements in MCOB 11.6.2 R (and any Handbook provisions applicable only to that rule) do not apply in relation to an interest roll-up mortgage, or to the type of lifetime mortgage described in MCOB 9.4.132AR6.
MCOB 11.6.57AGRP
6The type of lifetime mortgage described in MCOB 9.4.132AR is one under which the customer makes payments to start with, but which can be converted to an interest roll-up mortgage at any time of the customer’s choosing.
MCOB 11.6.58RRP
A mortgage lender may not enter into an interest roll-up mortgage, or vary an existing regulated mortgage contract so that it becomes an interest roll-up mortgage, unless it is:(1) a lifetime mortgage; or(2) a bridging loan; or(3) a loan to a high net worth mortgage customer; or(4) a loan solely for business purposes; or3(5) a shared equity credit agreement.3
MCOB 11.6.59AGRP
3A shared equity credit agreement may be an interest roll-up mortgage.
CONC 4.4.1RRP
This section applies to a firm carrying on credit broking in relation to a regulated credit agreement.
CONC 4.4.1ARRP
1CONC 4.4.3 R applies to a firm carrying on credit broking whether or not it is in relation to a regulated credit agreement.
CONC 4.4.2RRP
(1) A firm must disclose to the customer the fee, if any, payable by a customer to the firm for its services. [Note: section 160A(4) of CCA] (2) Any fee to be paid by the customer to the firm must be agreed between the customer and the firm, and that agreement must be recorded in writing or other durable medium before a regulated credit agreement is entered into.[Note: section 160A(4) of CCA] (3) A firm must disclose to the lender the fee, if any, for its activity payable by the
CONC 4.4.4RRP
1CONC 4.4.3 R does not apply where:(1) the customer indicates to the firm that he wishes to enter into a credit agreement secured by a legal or equitable mortgage on land;(2) the firm makes it clear to the customer that it is willing to carry on credit broking for that customer only in relation to credit agreements secured by a legal or equitable mortgage on land; and(3) the firm does not indicate (by express words or otherwise) that it is willing to carry on credit broking for
CONC 4.4.5GRP
(1) 1CONC 4.4.3 R prohibits a firm from asking a customer for any payment details, including the card number and security code of a debit card or a credit card, or using those payment details, without first sending an information notice to the customer and receiving a customer confirmation. (2) CONC 4.4.3 R applies in respect of any sum due from a customer, however it is described and irrespective of whether it is payable to the firm or a third party (for example, a firm cannot
CONC 5.2.1RRP
(1) Before making a regulated credit agreement the firm must undertake an assessment of the creditworthiness of the customer.[Note: section 55B(1) of CCA](2) A firm carrying out the assessment required in (1) must consider: (a) the potential for the commitments under the regulated credit agreement to adversely impact the customer's financial situation, taking into account the information of which the firm is aware at the time the regulated credit agreement is to be made; and [Note:
CONC 5.2.2RRP
(1) Before entering into a regulated credit agreement which is excluded from CONC 5.2.1 R (see (4), (5) and (6)), a firm must carry out an assessment of the potential for the commitments under the agreement to adversely impact the customer's financial situation, taking into account the information of which the firm is aware at the time the agreement is to be made.[Note: paragraphs 1.14 and 4.1 of ILG] (2) Paragraph (1) does not apply to an agreement to which CONC 4.7.2R (1) applies
CONC 5.2.3GRP
The extent and scope of the creditworthiness assessment or the assessment required by CONC 5.2.2R (1), in a given case, should be dependent upon and proportionate to factors which may include one or more of the following:(1) the type of credit; (2) the amount of the credit;(3) the cost of the credit;(4) the financial position of the customer at the time of seeking the credit;(5) the customer's credit history, including any indications that the customer is experiencing or has experienced
CONC 5.2.4GRP
(1) To consider all of the factors set out in CONC 5.2.3 G in all cases is likely to be disproportionate. [Note: paragraph 4.11 of ILG](2) A firm should consider what is appropriate in any particular circumstances dependent on, for example, the type and amount of the credit being sought and the potential risks to the customer. The risk of credit not being sustainable directly relates to the amount of credit granted and the total charge for credit relative to the customer's financial
CONC 5.2.5RRP
(1) 1This rule applies if, in relation to a regulated credit agreement: (a) an individual other than the borrower (in this rule referred to as “the guarantor”) is to provide a guarantee or an indemnity (or both); and(b) the lender is required to undertake an assessment of the customer under CONC 5.2.1R or CONC 5.2.2R.(2) Before entering into the regulated credit agreement, the lender must undertake an assessment of the potential for the guarantor’s commitments in respect of the
CONC App 1.2.1RRP
(1) In this section(a) a reference to a rate of interest is a reference to the interest rate expressed as a fixed or variable percentage applied on an annual basis to the amount of credit drawn down;(b) a reference to an open-end regulated credit agreement is to a regulated credit agreement of no fixed duration and includes credits which must be repaid in full within or after a period but, once repaid, become available to be drawn down again.
CONC App 1.2.2RRP
This section shall not apply to regulated credit agreements which are secured on land or to prospective regulated credit agreements which are to be secured on land except to the extent that the Consumer Credit (Disclosure of Information) Regulations 2010 apply to such agreements.
CONC App 1.2.3RRP
(1) The total charge for credit which may be provided under an actual or prospective regulated credit agreement shall be the total cost of credit to the borrower determined in accordance with the requirements in (2) to (5) below.(2) Subject to (3), the following costs shall be included in the total cost of credit to the borrower:1(-a) any fee or charge payable by the borrower to a credit broker in connection with the agreement (if the fee or charge is known to the lender);1(a)
1The total cost of credit to the borrower includes fee or charge payable by the borrower to a credit broker, if the fee or charge is known to the lender. CONC 4.4.2R(3) requires the credit broker to disclose their fee to the lender. Lenders should take reasonable steps to ascertain whether a fee is payable to the credit broker and, if so, the amount of the fee.
CONC App 1.2.5RRP
For the purposes of calculating the total charge for credit and the annual percentage rate of charge:2(a) it shall be assumed that the regulated credit agreement is to remain valid for the period agreed and that the lender and the borrower will fulfil their obligations under the terms and by the dates specified in that agreement;(b) in the case of a regulated credit agreement allowing variations in(i) the rate of interest, or(ii) where applicable, charges contained in the annual
2The assumptions set out in CONC App 1.2.5R are intended to ensure that the total charge for credit and the annual percentage rate of charge are calculated in a consistent way to promote the comparability of different offers. The use of the term ‘where necessary’ in assumptions (c) to (o) in that rule makes clear that these assumptions only apply where they are necessary in relation to the specific agreement, for example, where key features such as the amount or duration of credit
CONC 2.5.2GRP
The scope of credit broking for the introducing activities (article 36A(a) to (c) of the Regulated Activities Order) covers regulated credit agreements and regulated consumer hire agreements. But additionally in relation to credit agreements it covers introductions concerning exempt agreements under articles 60C to 60H of that Order (other than agreements under article 60F of that Order (exempt agreements: exemptions relating to the number of repayments to be made)). Additionally
CONC 2.5.3RRP
A firm must:(1) where it has responsibility for doing so, explain the key features of a regulated credit agreement to enable the customer to make an informed choice as required by CONC 4.2.5 R;[Note: paragraphs 4.27 to 4.30 of CBG and 2.2 of ILG](2) take reasonable steps to satisfy itself that a product it wishes to recommend to a customer is not unsuitable for the customer's needs and circumstances;[Note: paragraph 4.22 of CBG](3) advise a customer to read, and allow the customer
CONC 2.5.6RRP
Where a credit broker ("B") is not a negotiator (within the meaning of section 56(1) of the CCA), B must, within seven working days after receiving a request in writing for any such information, which is made by a customer within 28 days after the termination of any negotiations relating to a regulated credit agreement or a regulated consumer hire agreement whether on the making of the agreement or otherwise, give to the customer notice of: (1) the name and address of any credit
CONC 2.5.8RRP
A firm must not:(1) make or cause to be made unsolicited calls to numbers entered on the register kept under regulation 25 or 26 of the Privacy and Electronic Communications (EC Directive) Regulations 2003 or to a customer who has notified the firm not to call the number being used to call; [Note: paragraph 3.9a of CBG](2) other than where:(a) [deleted]4(b) [deleted]4(c) [deleted]4(ca) (i) the firm has obtained the contact details of a customer (C) in the course of the sale or
CONC 2.5.9GRP
(1) It is likely to be an inappropriate offer of an inducement or incentive to enter into an regulated credit agreement or a regulated consumer hire agreement to state that the offer in relation to the agreement will be withdrawn or the terms and conditions of the offer will worsen if the agreement is not signed immediately or within a stated period after the communication, unless the firm's offer on those terms and conditions will in fact be withdrawn or worsen in the period
CONC 2.5.10RRP
In CONC 2.5.8R (14):(1) payment protection product means a product or feature of a product designed to offer customers short-term protection against potential loss of income, by providing the means for them to meet (or temporarily suspend) their financial obligations including repayments under a credit agreement. Payment protection products include, in particular, short term income protection, debt freeze or debt waiver;(2) short-term income protection means a contract of insurance
MCOB 8.1.2RRP
This table belongs to MCOB 8.1.1 R(1) Category of firm(2) Applicable sectionequity release provider44whole chapter except MCOB 8.5A5 and MCOB 8.74, MCOB 8.6A in accordance with MCOB 8.1.2A R5equity release adviser44whole chapter MCOB 8.7 does not apply in relation to a lifetime mortgage45equity release arranger44whole chapter except MCOB 8.5A.5MCOB 8.7 does not apply in relation to a lifetime mortgage45
MCOB 8.1.2ARRP
5MCOB 8.6A only applies to an equity release provider in relation to entering into an equity release transaction where there is no firm which is arranging (bringing about) the equity release transaction to which MCOB 8.6A applies.
MCOB 8.1.4RRP
(1) Initial disclosure requirements apply4 only in relation to varying the terms of an equity release transaction4 entered into by the customer in any of the following ways:44(a) adding or removing a party;(b) taking out a further advance; or(c) switching all or part of the lifetime mortgage3 from one interest rate to another.13(2) Otherwise, this chapter applies in relation to any form of variation of an equity release transaction.444
MCOB 8.1.6GRP
6Firms are reminded that MCD lifetime mortgages are also subject to the advising and selling standards in MCOB 4.4A and MCOB 4A that apply to MCD regulated mortgage contracts.
MCOB 1.6.1GRP
MCOB applies to regulated mortgage contracts. For certain categories of regulated mortgage contract, MCOB applies from the dates mentioned in MCOB 1.2.21G. A credit agreement secured on land5 that is not a regulated mortgage contract, for example because the borrower is not an individual or a trustee,5 may be a regulated credit agreement to which the CCA and CONC apply (see CONC 1.2.7G).542421
MCOB 1.6.2GRP
Principle 2 requires a firm to conduct its business with due skill, care and diligence. The purpose of MCOB 1.6.3 R is to reinforce this. The FCA would expect firms to take appropriate steps to determine whether any mortgage it proposes to enter into is subject to FCA regulation and, if so, whether it is a regulated mortgage contract or a regulated credit agreement4.
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 or as a regulated credit agreement4 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
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,