Related provisions for MCOB 5.6.22

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MCOB 5.6.1GRP
MCOB 5.6 sets out the required content of an illustration provided to a customer by a firm.
MCOB 5.6.3RRP
Section 13 in MCOB 5 Annex 1 is required only where the illustration is provided to the customer by, or on behalf of, a mortgage intermediary. If this is not the case, Section 14 must be renumbered Section 13.
MCOB 5.6.4GRP
(1) Further requirements regarding the use of the Key facts logo and the location of specimens are set out in GEN 5.1 and GEN 5 Annex 1 G.33(2) MCOB 5.6.2 R(3) does not prevent the use of different fonts and typefaces for headings and risk warnings. Its purpose is to prevent particular sections of the illustration from being made less prominent than other sections through the inconsistent use of font sizes and typefaces.(3) The illustration can contain the mortgage lender's or
MCOB 5.6.5RRP
The illustration provided to customers must:(1) contain only the material prescribed in MCOB 5.6 and no other material except where provided for elsewhere in MCOB 5.6; and(2) be in a document separate from any other material that is provided to the customer.
MCOB 5.6.13RRP
Where the illustration relates to a regulated mortgage contract that is sub-divided into different parts with different types of interest rate or different rates of interest or different conditions, or a combination of these, the requirements in MCOB 5.6 may be adapted to accommodate this. The adaptations made must be limited to those that are necessary.
MCOB 5.6.14GRP
(1) MCOB 5.6.13 R applies where, for example, the illustration covers a regulated mortgage contract that is:(a) divided so that a certain amount of the loan is payable on a fixed interest rate, and a certain amount on a discounted interest rate; or(b) a combination of a repayment mortgage and an interest-only mortgage and the loan is subdivided into different types of interest rate and/or different rates of interest.(2) MCOB 5.6.13 R does not apply where an illustration covers
MCOB 5.6.15RRP
At the head of the illustration, the following information must be included:(1) the customer's name;(2) the date of issue of the illustration;(3) details of how long the illustration is valid and whether there is any date by which the regulated mortgage contract covered by the illustration needs to commence (for example, where a fixed interest rate is only available if the regulated mortgage contract commences before a certain date); and(4) the prescribed text at the head of the
MCOB 5.6.16RRP
Under the section heading 'About this illustration', the prescribed text in MCOB 5 Annex 1 under this heading must be included.
MCOB 5.6.17RRP
(1) Unless (2) applies, under the section heading 'Which service are we providing you with?' the prescribed text in MCOB 5 Annex 1 under this heading must be included, with a 'check box' for each statement, one of which must be marked prominently to indicate the level of service provided to the customer.(2) If the level of service described in the illustration is provided by another firm, (1) may be replaced by the following:Under the section heading 'Which service are we providing
MCOB 5.6.18RRP
(1) Under the section heading 'What you have told us', the illustration must state the information that has been obtained from the customer under MCOB 5.6.6 R (apart from MCOB 5.6.6 R(1) which is provided for in Section 4 of the illustration), and can include brief details of any other information that has been obtained from the customer and used to produce the illustration.(2) If the amount on which the illustration is based includes the amount that the customer wants to borrow
MCOB 5.6.19RRP
Where the same illustration covers a regulated mortgage contract that is a combination of a repayment mortgage and an interest-only mortgage, either:(1) Section 3 of the illustration must state the amount the customer wishes to borrow as a repayment mortgage and the amount required as an interest-only mortgage; or(2) Section 3 of the illustration must summarise the repayment method as partly an interest-only mortgage and partly a repayment mortgage, and Section 4 of the illustration
MCOB 5.6.20RRP
Where the same illustration covers a regulated mortgage contract that has different parts of the loan over a different term (that is, the final repayment date of the loan parts are different), either:(1) Section 3 of the illustration must state the amount repayable over each term; or(2) Section 3 of the illustration must state the longest term that applies and Section 4 of the illustration must state the amount repayable over each term.
MCOB 5.6.21RRP
For the purpose of illustrating to the customer the repayment method in Section 3 or Section 4 of the illustration, or the cost of the regulated mortgage contract in Section 5 of the illustration, if the illustration covers a regulated mortgage contract that is a combination of more than one interest-only part on the same product terms but with different repayment dates, the illustration must either treat it as one part by assuming the longest term, or alternatively treat it as
MCOB 5.6.23GRP
An example of the type of statement that would satisfy MCOB 5.6.22 R is:'The valuation that will be carried out on the property and changes to any of the information you have given us could alter the information in this illustration. If this is the case please ask for a revised illustration.'
MCOB 5.6.27RRP
Description of interest rate types and rates of interest. This table belongs to MCOB 5.6.26R:Description of the interest rateAmount payable in each instalmentLender's base mortgage rate - must be described as the [Lender]'s standard variable rate, currently X%, [where applicable insert the date at which the interest rate ends or period for which the interest rate applies].Amount based on X%.Fixed rate - must be described as a fixed rate of X% [where applicable insert the date
MCOB 5.6.28RRP
Where the loan under the regulated mortgage contract is divided into more than one part (for example where part of the loan is a fixed interest rate and part of the loan is a discounted variable interest rate) and the firm displays this in a tabular format in the illustration:(1) the following text must be used to introduce the table 'As this mortgage is made up of more than one part, these parts are summarised below:';(2) each part must be numbered for ease of reference in the
MCOB 5.6.30GRP
An example of further information that may be included in accordance with MCOB 5.6.29 R might be that an 'approval in principle' has been granted subject to valuation and satisfactory credit reference.
MCOB 5.6.31RRP
Under the section heading 'Overall cost of this mortgage' where the regulated mortgage contract has an agreed term for repayment and a regular payment plan (that is, it is not a revolving credit agreement such as a secured overdraft or mortgage credit card, or a regulated mortgage contract where all of the interest rolls up, such as an open-ended bridging loan):(1) the following text must be included in the illustration: 'The overall cost takes into account the payments in Sections
MCOB 5.6.32RRP
Under the section heading 'Overall cost of this mortgage' where the regulated mortgage contract has no agreed term for repayment, (and a 12 month term has been assumed), or no regular payment plan, or both (for example, a revolving credit agreement such as a secured overdraft or mortgage credit card or a regulated mortgage contract where all the interest rolls up such as an open-ended bridging loan):(1) the following text must be included in the illustration: 'The overall cost
MCOB 5.6.33GRP
MCOB 5.6.31 R(5) and MCOB 5.6.32 R(5) would require, for example, a reference to the fact that the overall cost takes into account mortgage payment protection insurance where this is required as a condition of the regulated mortgage contract to which the illustration relates. The requirement to take out such insurance must be stated in Sections 4 and 9 of the illustration in accordance with MCOB 5.6.25 R(6), MCOB 5.6.74 R or MCOB 5.6.77 R.
MCOB 5.6.34RRP
The following text must be included after the text required by MCOB 5.6.31 R or MCOB 5.6.32 R with the relevant cost measures shown in the right-hand column of Section 5 in accordance with the layout shown in MCOB 5 Annex 1:(1) 'The total amount you must pay back, including the amount borrowed is £[insert total amount payable]';(2) 'This means you pay back £[insert the total amount payable] divided by the amount on which the illustration is based from MCOB 5.6.6 R(2) plus all
MCOB 5.6.35RRP
(1) The APR and the total amount payable in MCOB 5.6.34 R must be calculated on the basis of information obtained from the customer under MCOB 5.6.6 R.(2) Where there is a charge to be included in the APR and total amount payable and the precise amount of that charge is not known at the time that the illustration is provided, MCOB 10.3 (Formula for calculating the APR) sets out a number of relevant assumptions to be used. If the method for including the charge is not addressed
MCOB 5.6.37RRP
At the end of Section 5 of the illustration the following text must be included:(1) unless the interest rate is fixed throughout the term of the regulated mortgage contract:'The figures in this section will vary following interest rate changes and if you do not keep the mortgage for [insert term from MCOB 5.6.6 R(4)].'; and(2) (a) where the regulated mortgage contract is a repayment mortgage:'Only use the figures in this section to compare the cost with another repayment mortgage.';
MCOB 5.6.38GRP
The purpose of the illustration is to provide the customer with details of the cost of borrowing the amount required over the term specified from MCOB 5.6.6 R(2) and MCOB 5.6.6 R(4). Section 12 has been designed specifically to allow examples of the effect of any additional features of the regulated mortgage contract such as a linked current account or a linked savings account. Examples of these features should therefore be shown in Section 12 and not in Section 5 or Section 6
MCOB 5.6.40RRP
The heading for Section 6 of the illustration and the heading of the column on the right-hand side of this section must state the frequency with which payments must be made by the customer. (For example, if payments are to be made on a monthly basis, the heading for this section must be 'What you will need to pay each month' and the column must be headed 'Monthly payments'.)
MCOB 5.6.41RRP
All the payments in Section 6 of the illustration must be calculated based on the frequency used for the purposes of the headings in MCOB 5.6.40 R and must be shown in the column on the right-hand side of this section.
MCOB 5.6.42RRP
Section 6 of the illustration must contain the following information: (1) the loan amount on which the illustration is based. This figure should include all fees, charges and insurance premiums that have been added to the loan in accordance with MCOB 5.6.18 R(2) and MCOB 5.6.18 R(3), and the following text must follow the loan amount:'and include[s] the [fees] [and] [insurance premiums] that are shown in [Section 8] [and] [Section 9] as being added to your mortgage.'(2) the assumed
MCOB 5.6.43RRP
Where the illustration covers a regulated mortgage contract that automatically converts from one repayment method to another after a specified period, then the illustration must show the effect of this change on the regular payment, in the same way as the requirements in MCOB 5.6.42 R(3).
MCOB 5.6.50RRP
Where the illustration covers a regulated mortgage contract that is a combination of a repayment mortgage and an interest-only mortgage, the payment amounts in MCOB 5.6.42 R(3)(d) must be the combination of the amount to be paid on the repayment mortgage and the amount to be paid on the interest-only mortgage, unless MCOB 5.6.13 R or MCOB 5.6.54 R apply in which case they must be stated separately.
MCOB 5.6.51RRP
Where the interest is deferred on the regulated mortgage contract, the following text must be included under the information on the deferred interest rate included in the illustration in accordance with MCOB 5.6.42 R(3):'"The interest deferred will be added to your mortgage. The table at Section [insert 6a or 6b if MCOB 5.6.55 R applies] of this illustration shows how this will affect the amount you owe.'
MCOB 5.6.56RRP
Where MCOB 5.6.55 R applies and part of the regulated mortgage contract is an interest-only mortgage:(1) if a quotation for the repayment vehicle has been included in the illustration in accordance with MCOB 5.6.52 R(3) then MCOB 5.6.52 R(5) does not apply.(2) a statement is required to indicate that these payments do not include the cost of any savings plan.
MCOB 5.6.59RRP
Under the section heading 'Are you comfortable with the risks?':(1) under the sub-heading 'What if interest rates go up?' the illustration must include the following:(a) if the interest rate is fixed throughout the term of the regulated mortgage contract, an explanation that the payments will not vary because the interest rate is fixed;(b) if the interest rate is fixed for part of the term of the regulated mortgage contract, an explanation of when or how increases in the interest
MCOB 5.6.60RRP
The amount by which the customer's payments would increase in accordance with MCOB 5.6.59 R(1)(g) and (h) must be calculated as follows:(1) the firm must use the total amount borrowed, or assume that all payments due on the regulated mortgage contract have actually been paid, all additional fees and payments due have been paid, and no underpayments or overpayments have been made;(2) where all or part of the regulated mortgage contract is a repayment mortgage, the calculation must
MCOB 5.6.66RRP
Under the section heading 'What fees must you pay?' the illustration must:(1) itemise all the fees that are included in the calculation of the APR in accordance with MCOB 10 (Annual Percentage Rate), excluding any charges for insurance set out in Section 9 in accordance with MCOB 5.6.73 R; and1(2) include a statement at the end of the section using the following text:'You may have to pay other taxes or costs in addition to any fees shown here.'
MCOB 5.6.67GRP
An example of a fee that would normally be included in Section 8 would be a fee to re-inspect a property after completion of works if it is known that this fee will be charged at the time the illustration is produced. 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 Section 9 of the illustration 'Insurance', as required by MCOB 5.6.77 R(2)). Fees payable upon repayment
MCOB 5.6.69RRP
The following information must be provided for each fee included in this section of the illustration in accordance with MCOB 5.6.66 R(1):(1) a description of the fee;(2) the amount payable by the customer recorded in a column headed 'Fee amount' on the right-hand side of this section;(3) for fees included under the sub-heading 'Other fees', to whom the fee is payable;(4) when the fee is payable;(5) whether or not the fee is refundable, and if so, the extent to which it is refundable;
MCOB 5.6.70RRP
(1) If a higher lending charge is payable by the customer, the following text must be used to describe such a charge for the purposes of MCOB 5.6.69 R:'A higher lending charge is payable because you are borrowing [insert the ratio of the mortgage amount (from MCOB 5.6.6 R(2)) to the property's price or value (from MCOB 5.6.6 R(3))] of the property's [estimated] [price/value].'(2) If the customer has asked for any fees to be added to the loan, this must be stated alongside each
MCOB 5.6.71GRP
'Other fees' will include any fee charged by a mortgage intermediary, or another third party, for advising on or arranging a regulated mortgage contract but not commission or procuration fees (which are dealt with in Section 13 of the illustration).
MCOB 5.6.73RRP
(1) Under the section heading 'Insurance' the illustration must include details of:(a) insurance which is a tied product; and(b) insurance which is required as a condition of the regulated mortgage contract which is not a tied product.(2) A firm may also provide details of insurance which it is optional for the customer to take out under this section heading.(3) It must be clear to the customer which products he is required to purchase under which circumstances (for example, where
MCOB 5.6.77RRP
The following information must be included under the sub-heading 'Insurance you must take out as a condition of this mortgage but that you do not have to take out through [insert the name of the mortgage lender, or where relevant the name of the mortgage intermediary, or both]':(1) if the regulated mortgage contract requires the customer to take out an insurance policy (other than that which is a tied product which the customer is obliged to purchase through the mortgage lender,
MCOB 5.6.78GRP
Under the sub-heading 'Insurance you must take out as a condition of this mortgage but that you do not have to take out through [insert name of mortgage lender or where relevant the name of the mortgage intermediary, or both]' the illustration should not include any insurance policy that may be taken out by a mortgage lender itself to protect its own interests rather than the customer's interests, for example, because of the ratio of the loan amount to the property value.1
MCOB 5.6.79GRP
If the cost of any insurance that the mortgage lender might take out to protect its own interests, because of the ratio of the loan amount to the property value, is passed on to the customer, it will be shown elsewhere in the illustration, for example, as a higher lending charge or in the interest rate charged.
MCOB 5.6.80RRP
A firm may include in the illustration, under the sub-heading 'Optional insurance', quotations (estimated where necessary) for any insurance products (other than the insurance products covered elsewhere in the illustration in accordance with MCOB 5.6.74 R and MCOB 5.6.77 R) that the firm issuing the illustration wishes to promote to the customer.
MCOB 5.6.81RRP
If no quotations are included in the illustration in accordance with MCOB 5.6.80 R, the sub-heading 'Optional insurance' must not be included in the illustration.
MCOB 5.6.82RRP
(1) If any quotations for insurance are included in the illustration in accordance with MCOB 5.6.74 R(3), MCOB 5.6.77 R(1) or MCOB 5.6.80 R, the illustration:(a) must include a brief description only of the type of insurance (full details of the insurance cover may however be provided separately); and(b) (i) must include the total price to be paid by the customer in a column on the right hand side of the illustration under the heading '[insert frequency of payments quoted] payments';
MCOB 5.6.84RRP
Under the heading 'What happens if you do not want this mortgage any more?', the illustration must include the following information on the regulated mortgage contract:(1) under the sub-heading 'Early repayment charges':(a) an explanation that the customer cannot repay the regulated mortgage contract early, if this is the case;(b) an explanation of whether early repayment charges are payable;(c) an explanation of when early repayment charges are payable;(d) an explanation of any
MCOB 5.6.86RRP
Where MCOB 5.6.84 R(1)(f) would result in more than three cash amounts being shown in the illustration, the cash amounts shown in the illustration may be restricted to three examples. These examples must be representative of the full range of charges that apply and not be limited to the lowest charges that apply. These three examples are in addition to:(1) any statement of the amount of any fees described in MCOB 5.6.84 R(1)(d); and(2) the maximum early repayment charge required
MCOB 5.6.88RRP
(1) In calculating example cash amounts in accordance with MCOB 5.6.84 R(1)(f), it must be assumed that:(a) the regulated mortgage contract is repaid in full;(b) unless the original amount borrowed is used, that all payments due on the regulated mortgage contract are actually paid;(c) additional fees and charges such as insurance premiums have been paid; and(d) no underpayments or overpayments have been made.(2) If:(a) cashbacks or other incentives need to be repaid; or(b) fees
MCOB 5.6.89RRP
Where the cash examples from MCOB 5.6.88 R included in the illustration would vary either if the interest rate charged on the regulated mortgage contract changed or with changes in interest rates generally, an appropriate warning that the early repayment charges may vary from the cash examples must be included in the illustration.
MCOB 5.6.90RRP
(1) Under the section heading 'What happens if you want to make overpayments?', the illustration must include details of any restrictions on lump sum and regular overpayments on the regulated mortgage contract, together with a statement as to whether or not the amount on which the interest charged is recalculated is reduced immediately on receipt of any lump sum or regular overpayment.(2) Where such recalculation does not take place immediately (for example, if an annual rest
MCOB 5.6.92RRP
Under the section heading 'Additional features' the illustration must include, where relevant, details of any additional features or facilities under the various sub-headings in MCOB 5.6.94 R.
MCOB 5.6.95RRP
Under the sub-heading 'Underpayments', the illustration must include details of circumstances in which the customer can make underpayments and a brief statement of any conditions that apply.
MCOB 5.6.96RRP
Under the sub-heading 'Payment holidays', the illustration must include details of circumstances in which the customer can take payment holidays and a brief statement of any conditions that apply.
MCOB 5.6.97RRP
Under the sub-heading 'Borrow back', the illustration must include details of circumstances in which the customer can borrow back any monies overpaid and a brief statement of any conditions that apply.
MCOB 5.6.98RRP
Under the sub-heading 'Incentives', the illustration must include:(1) any incentives including cashbacks; and(2) if a cashback is provided, the amount of the cashback and details of when it is paid to the customer.
MCOB 5.6.99RRP
Under the sub-heading 'Additional borrowing available without further approval', the illustration must provide details of circumstances in which there are any linked borrowing facilities that would allow the customer to increase the amount of the loan on which the illustration is based without any further approval from the mortgage lender (for example, if there are additional drawdown facilities).
MCOB 5.6.102RRP
Under the sub-heading 'Credit card', the illustration must:(1) state if a credit card is offered with the regulated mortgage contract; and(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 mortgage offer will tell you more about the differences.'; or(b) where the mortgage lender provides the customer with
MCOB 5.6.103RRP
Where any of the additional features under MCOB 5.6.99 R to MCOB 5.6.102 R inclusive apply, then the following must also be stated if the amount of additional borrowing that would be available to the customer is stated in the illustration:(1) the maximum additional amount available;(2) if the interest rate payable on any additional borrowing is different to the interest rate in Section 4 and Section 6 of the illustration, the interest rate and the APR charged on the additional
MCOB 5.6.106RRP
(1) Where additional features are included in accordance with MCOB 5.6.92 R and these are credit facilities that do not meet the definition of a regulated mortgage contract, the relevant parts of Section 12 of the illustration must include the following text:'This additional feature is not regulated by the FSA'.1(2) Where additional features are included in accordance with MCOB 5.6.92 R and these are credit facilities regulated by the Consumer Credit Act 1974, the relevant parts
MCOB 5.6.110RRP
(1) Under the sub-heading 'Linked savings account', the illustration must include the following information:(a) whether a linked savings account is a compulsory or optional product (if the savings account is a compulsory product this must also be stated in Section 4 of the illustration in accordance with MCOB 5.6.25 R(6));(b) the interest rate paid on the linked savings account if it differs from the interest rate charged on the regulated mortgage contract; and(c) the firm providing
MCOB 5.6.111GRP
If an example is included in the illustration in accordance with MCOB 5.6.109 R(2) or MCOB 5.6.110 R(2), it must be based on information obtained from the customer and the amounts that are intended to be paid into the current or savings account on a regular basis; the amounts that it is intended are saved; and the actual or likely expenditure profile. The amounts involved and the expenditure profile should not be standard assumptions made by the firm, but should be those of the
MCOB 5.6.113RRP
Where the illustration is issued to a customer by, or on behalf of, a mortgage intermediary, Section 13 'Using a mortgage intermediary' must be included in the illustration and must include the following:(1) unless MCOB 5.6.114 R applies, a clear statement of the amount payable (either directly or indirectly) by the mortgage lender to the mortgage intermediary, or to any third parties; and(2) the name of the mortgage lender who will make the payment, the name of the mortgage intermediary
MCOB 5.6.118GRP
MCOB 2.3.7 R requires any material inducements provided by a mortgage lender, whether directly or indirectly, to a mortgage intermediary or third party (unless the payment only reflects the cost of outsourcing work relating to the processing of mortgage applications by a firm unconnected to the mortgage intermediary) to be quantified in cash terms, which will enable the cash values to be included in the illustration in accordance with MCOB 5.6.117 R.1
MCOB 5.6.120RRP
This section must be renumbered Section 13 if the illustration is not provided by, or on behalf of, a mortgage intermediary.
MCOB 5.6.122RRP
This section must follow the section 'Where can you get further information about mortgages?' and must include the name, address and contact point of the firm providing the illustration.
MCOB 5.6.123GRP
An example of wording which would comply with MCOB 5.6.122 R would be:'If you wish to discuss this mortgage illustration please contact [name of firm] at [address] or on [telephone number]'.
MCOB 5.6.124RRP
4(1) 4The following words must be prominently displayed in the illustration, after the contact details: 'Your home may be repossessed if you do not keep up repayments on your mortgage'.(2) If the loan may be secured on property which is not the customer's home the statement in (1) may be amended but only to the extent necessary in order to reflect that fact.4
MCOB 5.6.126GRP
(1) An amortisation table may be added to the end of the illustration after the information required by MCOB 5.6.124 R if the mortgage lender or mortgage intermediary wishes. A firm may find that this is particularly appropriate to illustrate certain types of regulated mortgage contract, for example, a regulated mortgage contract with more than one part.(2) The purpose of (1) is to permit a firm to add an amortisation table in accordance with the European Commission's 'Recommendation
MCOB 5.6.127RRP
If the customer's liability under a regulated mortgage contract is in a currency other than sterling, MCOB 5.6 applies to the illustration for that regulated mortgage contract with the following amendments:(1) all cash amounts must be given in the relevant currency except where otherwise required in (2)(a) and (3);(2) the following information must be stated under Section 4 'Description of this mortgage':(a) the amount in sterling on which the illustration is based from MCOB 5.6.6
MCOB 5.6.132RRP
If the interest rate charged on the regulated mortgage contract is deferred, MCOB 5.6 applies with the following additions:(1) A section headed: 'Effect of deferring interest on the amount you owe' must be included in the illustration after Section 6.(2) This section must be numbered 6a so that the numbering follows on consecutively from the preceding section unless MCOB 5.6.55 R applies in which case it should be numbered 6b.(3) Under the section heading the following text must
MCOB 5.6.134RRP
The heading for Section 6 of the illustration and the heading of the column on the right-hand side of this section must state the frequency with which payments must be made by the customer. (For example, if payments were to be made on a monthly basis, the heading for this section would be 'What you will need to pay each month' and the column would be headed 'Monthly payments'). Where no regular payments are required on the regulated mortgage contract, for example where all interest
MCOB 5.6.135RRP
All the payments in Section 6 of the illustration must be calculated based on the frequency used for the purposes of the headings in MCOB 5.6.40 R and must be shown in the column on the right-hand side of this section. If no payments are required, for example on a secured bridging loan or secured overdraft, then this column should be marked on the illustration as nil.
MCOB 5.6.136RRP
Section 6 of the illustration must contain the following information:(1) the loan amount on which the illustration is based. Where fees are being added to the loan then this figure should include all fees, charges and insurance premiums that have been added to the loan in accordance with MCOB 5.6.18 R(2) and MCOB 5.6.18 R(3), and the following text must follow the loan amount:'and include[s] the fees [and insurance premiums] that are shown in Section 8 [and Section 9] as being
MCOB 5.6.141RRP
The amount by which the total amount payable would increase in accordance with MCOB 5.6.140 R(1)(e) must be calculated as follows:(1) unless the total amount borrowed is used, it must be assumed that all payments due on the regulated mortgage contract have actually been paid, all additional fees and payments due have been paid, and no under or overpayments have been made;(2) unless the total amount borrowed is used, the calculation must be based on the amount of the loan outstanding
MCOB 9.4.48RRP
Unless all of the interest rates described in MCOB 9.4.47 R(4) apply for the life of the loan part to which they apply, then an additional sub section titled "What you will owe in future" must be included to indicate the future stepped payments. This section must:(1) state when a change in payment will occur;(2) state the reason for the change in payment; and(3) confirm that the payment illustrated assumes that interest rates will not change.
MCOB 9.4.50RRP
An explanation of the table required in accordance with MCOB 9.4.51 R must be shown in a box immediately under the heading using the following text:"This shows how the amount(s) paid to you and the interest and any fees that we charge mount up over [insert number of years estimated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R] years. It has been calculated using the current interest rate(s) of [insert interest rate(s)]. Interest is added to the amount you owe [insert frequency
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 9.4.85GRP
Where a firm does not impose an early repayment charge, it may delete the sub heading 'Circumstances in which early repayment charges do not apply'.
MCOB 9.4.86RRP
Where MCOB 9.4.83 R(1)(e) would result in more than three cash amounts being shown in the illustration, the cash amounts shown in the illustration may be restricted to three examples. These three examples are in addition to the maximum early repayment charge required by MCOB 9.4.83 R(1)(f). These examples must be representative of the full range of charges that apply and not be limited to the lowest charges that apply. These three examples are in addition to:(1) any statement
MCOB 9.4.88RRP
(1) In calculating example cash amounts in accordance with MCOB 9.4.83 R(1)(e), it must be assumed that:(a) the lifetime mortgage7 is repaid in full;7(b) all payments due (if applicable) on the lifetime mortgage7 are actually paid;7(c) additional fees and charges such as insurance premiums have been paid; and(d) no underpayments or overpayments (if applicable) have been made.(2) If:(a) cashbacks or other incentives need to be repaid; or(b) fees need to be paid;the amounts that
MCOB 9.4.89RRP
Where the cash examples from MCOB 9.4.88 R included in the illustration would vary either if the interest rate charged on the lifetime mortgage7 changed or with changes in interest rates generally, an appropriate warning that the early repayment charges may vary from the cash examples must be included in the illustration.7
MCOB 9.4.90RRP
Where the early repayment charge could be higher than those stated in the illustration if the lifetime mortgage7 continued after the end of the term estimated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R, Section 13 of the illustration must include a clear statement to that effect.7
MCOB 9.4.94RRP
(1) Under the sub-heading 'Overpayments', the illustration must include details of any restrictions on lump sum and regular overpayments (if payments are required) on thelifetime mortgage,7 together with a statement as to whether or not the amount on which the interest is recalculated is reduced immediately on receipt of any lump sum or regular overpayment.7(2) Where such recalculation does not take place immediately (for example, if an annual rest method is used), this statement
MCOB 9.4.96RRP
Under the sub-heading "Underpayments", the illustration must include details of whether the customer can make underpayments and a brief statement of any conditions that apply.
MCOB 9.4.97RRP
Under the sub-heading "Payment holidays", the illustration must include details of circumstances in which the customer can take payment holidays and a brief statement of any conditions that apply.
MCOB 9.4.98RRP
Under the sub-heading "Borrow back", the illustration must include details of circumstances in which the customer can borrow back any monies overpaid and a brief statement of any conditions that apply.
MCOB 9.4.99RRP
Under the sub-heading "Additional borrowing available without further approval", the illustration must provide details of circumstances in which additional secured lending is offered with the lifetime mortgage7 that would allow the customer, subject to certain conditions, to increase the amount of the loan on which the illustration is based.7
MCOB 9.4.101RRP
Under the sub-heading "Unsecured borrowing", the illustration must provide details of circumstances in which unsecured lending is offered with the lifetime mortgage7 that would allow the customer to increase the amount of the loan on which the illustration is based.7
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 9.4.103RRP
Where any of the additional features under MCOB 9.4.99 R to MCOB 9.4.102 R inclusive apply, then the following must also be stated if the amount of additional borrowing that would be available to the customer is stated in the illustration:(1) the maximum additional amount available;(2) if the interest rate payable on any additional borrowing is different to the interest rate in Section 5 and Section 8 of the illustration, the interest rate and the APR charged on the additional
MCOB 9.4.109RRP
Under the sub-heading "Linked current account" the illustration must include the following information:(1) whether a linked current account is a compulsory or optional product (if the current account is a compulsory product this must also be stated in Section 5 of the illustration in accordance with MCOB 9.4.24 R(7));(2) an explanation of the interest rates that apply under different circumstances to the linked current account, if different from the interest rate charged on the
MCOB 9.4.110RRP
Under the sub-heading "Linked savings account" the illustration must include the following information:(1) whether a linked savings account is a compulsory or optional product (if the savings account is a compulsory product this must also be stated in Section 5 of the illustration in accordance with MCOB 9.4.24 R(7));(2) the interest rate paid on the linked savings account if it differs from the interest rate charged on thelifetime mortgage;7 and7(3) the firm providing the linked
MCOB 9.4.111RRP
Under the section heading "Overall cost of this mortgage":(1) the following text must be included in the illustration:"The APR helps you to compare lifetime mortgages by giving you one rate that shows the overall cost of the mortgage. It takes into account some fees and charges as well as the interest due, and this means that the APR may be higher than the interest rate shown in Sections 5 and 8. Only use the APR to compare lifetime mortgages of the same type, and where the same
MCOB 9.4.112GRP
MCOB 9.4.111 R(3) would require, for example, a reference to the fact that the overall cost takes into account mortgage payment protection insurance where this is required as a condition of the lifetime mortgage7 to which the illustration relates. The requirement to take out such insurance must be stated in Sections 5 and 12 of the illustration in accordance with MCOB 9.4.24 R(7), MCOB 9.4.72 R or MCOB 9.4.76 R.7
MCOB 9.4.113RRP
The following text must be included after the text required by MCOB 9.4.111 R with the relevant cost measures shown in the right-hand column of Section 15 in accordance with the layout shown in MCOB 9 Annex 1:(1) "The total amount you would pay back over the example term of [insert number of years in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R] including the amount borrowed is £ [insert total amount payable]", and(2) "The overall cost for comparison is [insert the APR]% AP
MCOB 9.4.116RRP
At the end of Section 15 the following text must be included, if relevant:"The figures in this section will vary following interest rate changes."
MCOB 9.4.117GRP
The prescribed text at MCOB 9.4.116 R would not be relevant if the illustration is for a lifetime mortgage7 that has a fixed interest rate throughout the life of the mortgage.7
MCOB 9.4.119RRP
Where the illustration is issued to a customer by, or on behalf of, a mortgage intermediary, Section 16 "Using a mortgage intermediary" must be included in the illustration and must include the following:(1) unless MCOB 9.4.120 R applies, a clear statement of the amount payable (either directly or indirectly) by the mortgage lender to the mortgage intermediary, or to any third parties; and(2) the name of the mortgage lender who will make the payment, the name of the mortgage intermediary
MCOB 9.4.124GRP
MCOB 2.3.7 R requires any material inducements provided by a mortgage lender, whether directly or indirectly, to a mortgage intermediary or third party (unless the payment only reflects the cost of outsourcing work relating to the processing of mortgage applications by a firm unconnected to the mortgage intermediary) to be quantified in cash terms, which will enable the cash values to be included in the illustration in accordance with MCOB 9.4.123 R.1
MCOB 9.4.126RRP
This section must:(1) follow Section 15 "Overall cost of this mortgage", unless the illustration is issued by a mortgage intermediary, in which case it must follow Section 16 "Using a mortgage intermediary"; and(2) include the name, address and contact point of the firm providing the illustration.
MCOB 9.4.130RRP
If the lifetime mortgage7 is a shared appreciation mortgage, MCOB 9.4 applies to the illustration with the following modifications:7(1) Section 5 "Description of this mortgage" must contain the following additional information and text in this order after the details required by MCOB 9.4.24 R to MCOB 9.4.29 R:(a) "This lifetime mortgage involves [name of mortgage lender] taking a percentage share in any increase in the value of your property [insert details of all occasions when
MCOB 9.4.133RRP
8Under the section heading "About this information", the prescribed text under this heading in the home reversion planillustration must be included.
MCOB 9.4.134RRP
(1) 8Unless (2) applies, under the section heading "Which service are we providing you with?" the prescribed text in the home reversion planillustration under this heading must be included with a "check box" for each statement, one of which must be marked prominently to indicate the level of service provided to the customer;(2) If the level of service described in the illustration is provided by another firm, (1) may be replaced by the following: under the section heading "Which
MCOB 9.4.135RRP
8Under the section heading "What is a home reversion plan?", the prescribed text in the home reversion planillustration under this heading must be included.
MCOB 9.4.136RRP
(1) 8Under the section heading "What you have told us", the illustration must state the minimum information a firm must obtain from the customer (apart from details of the plan that the customer is interested in, which is in Section 5 of the illustration), and can include brief details of any other information that has been obtained from the customer and used to produce the illustration.(2) For an instalment reversion plan, where the customer requests an additional illustration
MCOB 9.4.137RRP
8At the end of Section 4 of the illustration a statement must be included making clear that changes to any of the information obtained from the customer, and where appropriate to the valuation of the property, could alter the details elsewhere in the illustration and encouraging the customer to ask for a revised illustration in this event.
MCOB 9.4.139RRP
8Under the section heading "Description of this home reversion plan" the illustration must:(1) state the name of the reversion provider providing the home reversion plan to which the illustration relates (a trading name used by the reversion provider may also be stated), and the name, if any, used to market the home reversion plan;(2) include a statement describing the home reversion plan;(3) if the home reversion plan is linked to an investment, and payments required from the
MCOB 9.4.140RRP
8Further information about the home reversion plan may be included as long as it does not significantly:(1) duplicate information contained elsewhere in the illustration; and(2) extend the length of this section.
MCOB 9.4.142RRP
8Under the section heading "Benefits", the illustration must include:(1) a description of the monetary amount(s), and in a box aligned to the right of the document, the monetary amount(s), that the customer will receive as a lump sum and/or as a regular payment;(2) if the home reversion plan is linked to an investment and the payments required from the customer on the home reversion plan will be deducted from the income from the investment, the monetary amount of the net income
MCOB 9.4.145RRP
8The illustration must include under the heading "Risks - important things you must consider" brief statements and warnings on all material risks involving a home reversion plan, including:(1) prominently at the beginning of the section: "A home reversion is a complex property transaction. You should seek legal advice to ensure that you fully understand all of the implications for you and your home and for anyone who might otherwise inherit the property.";(2) the effect of the
MCOB 9.4.147RRP
8Under the heading "Risks - important things you must consider" the illustration must also include the following if they apply:(1) for an instalment reversion plan, a statement that if the customer dies in the early years of the plan, income payments will cease and therefore the full expected benefits of the plan will not be obtained;(2) (a) for an instalment reversion plan where there is a regular cash sum payable; and(b) where:(i) the home reversion plan is linked to an investment;
MCOB 9.4.172RRP
8The amount disclosed as payable to the reversion intermediary or third parties must include, but is not limited to:(1) any procuration fee; and(2) a cash value for any material non-cash inducements that the reversion provider provides, whether payable directly or indirectly.
MCOB 5.4.3RRP
A mortgage intermediary must take reasonable steps to ensure that an illustration which it issues, or which is issued on its behalf, other than that provided by a mortgage lender:(1) is accurate within the following tolerances:(a) no more than one percent or £1, whichever is the greater, below the actual figures charged by the mortgage lender for the following:(i) the total amount payable in Section 5 of the illustration;(ii) the amount payable for every £1 borrowed in Section
MCOB 5.4.6GRP
It is the responsibility of a mortgage intermediary to ensure compliance with MCOB 5.4.3 R. However, where a firm can show that it was reasonable for it to rely on information provided to it by another person, other than the mortgage lender, that an illustration was within the tolerances described in MCOB 5.4.3 R, he may be able to rely on MCOB 2.5.2 R, if this turns out not to be the case.
MCOB 5.4.8RRP
A firm must not issue an illustration to a customer for a regulated mortgage contract for which the customer is clearly ineligible on the basis of the information that the firm has obtained from the customer or the mortgage lender's lending criteria.
MCOB 5.4.19RRP
A firm must make an adequate record of each illustration that it issues to a customer in accordance with MCOB 5.5.1 R where the customer applies for that particular regulated mortgage contract.
MCOB 5.4.21GRP
MCOB 5.4.19 R does not require a firm to keep records of illustrations that are issued to a customer where the customer does not apply to enter into that particular regulated mortgage contract.
MCOB 5.4.22GRP
The record maintained in accordance with MCOB 5.4.19 R should contain or refer to matters such as:(1) the date on which the illustration was provided to the customer;(2) the date of the application made by the customer; and(3) details of the medium through which the illustration was provided.
MCOB 9.8.1RRP
The statement required by MCOB 7.5.1 R must contain the following information:(1) except in the case of mortgage credit cards, information on the type oflifetime mortgage,3 (for example, fixed rate or variable rate) including a clear statement of how the firm expects the capital, or capital and interest (whichever is applicable) to be repaid (for example, from the proceeds of the sale of the property);3(2) details of the following transactions and information on the lifetime
MCOB 9.8.9RRP
If a customer requests, or agrees to, a change to a lifetime mortgage3 (other than a change as described in MCOB 7.6.7 R to MCOB 7.6.27 R (as modified by MCOB 9)) that changes the amount of each payment due (where payments are required), a firm must provide the customer with the following information, in a single communication, before the change takes effect:3(1) the amount outstanding on the lifetime mortgage3 at the date the change is requested;3(2) the payment due and the frequency
MCOB 9.8.10RRP
If a customer requests, or agrees to, a change to a lifetime mortgage.3(other than a change as described in MCOB 7.6.7 R to MCOB 7.6.27 R (as modified by MCOB 9)) that changes the amount paid to the customer under a drawdown mortgage, or the amount that the customer will owe under a roll-up of interest mortgage, or both, a firm must provide the customer with the following information, in a single communication, before the change takes effect:3(1) the amount outstanding on the
MCOB 9.7.2RRP
A firm that enters into a lifetime mortgage1 with a customer where interest payments are required (whether or not they will be collected by deduction from the income from an annuity or other linked investment product) must provide the customer with the following information before the customer makes the first payment under the contract:1(1) the amount of the first payment required;(2) the amount of the subsequent payments;(3) the method by which the payments will be collected
MCOB 9.7.8RRP
Where thelifetime mortgage1 provides for a lump sum payment to be made to the customer, and all or part of the interest will be rolled up during the life of the mortgage, the firm must provide the customer with the following information before the customer makes the first payment under the contract, or if no payments are required from the customer, within seven days of completion of the mortgage:1(1) if no payments are required from the customer, confirmation that no payments
MCOB 5.7.1RRP
Where the regulated mortgage contract is for a business purpose, a firm may choose to provide a business illustration (in compliance with MCOB 5.7.2 R) instead of complying with MCOB 5.6.
MCOB 5.7.5RRP
MCOB 5.6.31 R(2), MCOB 5.6.52 R(1) and MCOB 5.6.52 R(4) prescribe text that should be used to remind a customer with an interest-only mortgage that there is a need to separately arrange for the repayment of capital. The options for repayment of capital may be different where the regulated mortgage contract is for a business purpose, and a firm must vary the prescribed wording in the business illustration to reflect this. One approach may be for the firm to revise the wording to
MCOB 5.7.7GRP
(1) In accordance with MCOB 5.7.6 R(1), where the regulated mortgage contract includes a loan, the facilities described in section 12 of the business illustration should include the existence of, and a simple explanation of, any all monies charge, any contingent liabilities such as guarantees and so on.(2) Where the regulated mortgage contract includes more than one loan facility (such as a secured loan and a separate secured overdraft facility) the business illustration should
MCOB 10.3.8RRP
(1) In relation to a lifetime mortgage2, where the APR is calculated for the purpose of a financial promotion3 it must be assumed that the credit is being provided for a period of 15 years beginning with the relevant date.23(2) In relation to a lifetime mortgage2, where the APR is calculated for the purpose of an illustration, the period for which the credit is to be provided must be calculated in accordance with MCOB 9.4.10 R or MCOB 9.4.12 R.2(3) Where, in any other case, the
ICOBS 6.4.12GRP
(1) When explaining the implications of a change, a firm should explain any changes to the benefits and significant or unusual exclusions arising from the change.(2) Firms will need to consider whether mid-term changes are compatible with the original policy, in particular whether it reserves the right to vary premiums, charges or other terms. Firms also need to ensure that any terms which reserve the right to make variations are not themselves unfair under the Unfair Terms R
ICOBS 6.3.1RRP
(1) Before a pure protection contract is concluded, a firm must inform a customer of the information in the table below.(2) The information must be communicated in a clear and accurate manner, in writing, and in an official language of the State of the commitment or in another language agreed by the parties.Information to be communicated before conclusion(1)The name of the insurance undertaking and its legal form.(2)The name of the EEA State in which the head office and, where
COBS 6.3.20GRP
(1) In accordance with the rule on information disclosure before providing services (COBS 2.2.1 R), if a firm's initial contact with a retail client with a view to providing a personal recommendation on packaged products is by telephone then the following information should be provided before proceeding further:(a) the name of the firm and, if the call is initiated by or on behalf of a firm, the commercial purpose of the call;(b) whether the firm offers packaged products3 from