Related provisions for MCOB 9.3.7
Description of interest rate types and rates of interest. This table belongs to MCOB 9.4.26R:
Description of the interest rate 
Amount payable in each instalment (if applicable) 
Lender'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 fixed rate of X% [where applicable insert the date at which the interest rate ends or the period for which the interest rate applies]. 
Amount based on the fixed rate of X%. 
Discounted rate  must be described as a variable rate, currently X%, with a discount of Y% [where applicable insert the date at which the discount ends or the period for which the discount applies], giving a current rate payable of Z%. 
Amount based on Z%. 
Capped rate  must be described as a variable rate, currently X%, which will not go above a ceiling of Y% [where applicable insert the date at which the capped interest rate ends or the period for which the capped interest rate applies]. 
Amount based on the current interest rate payable (X%). 
Capped and collared  must be described as a variable rate, currently X%, which will not go below a floor of Y% or above a ceiling of Z% [where applicable insert the date at which the capped and collared interest rate ends or the period for which the capped and collared interest rate applies]. 
Amount based on the current interest rate payable (X%). 
Tracker rate  must be described as a variable rate which is [X% above/X% below/the same as] [insert interest rate tracked, currently Z%], [where applicable insert the date at which the interest rate ends or the period for which the interest rate applies], to give a current rate payable of Y%. Details should also be provided of how soon after an interest rate change the mortgage interest rate is adjusted. 
Amount based on Y%. 
Deferred rate  must be described as a variable rate, currently X%, where Y% is not paid now but is added to your mortgage [where applicable insert the date at which the deferred interest rate ends or the period for which the deferred interest rate applies], to give a current rate payable of Z%. 
Amount based on Z%. 
Stepped rate where different interest rates apply over different time periods (for example, fixed interest rate in year 1 changes in year 2). Each element should be dealt with individually as above. 
Amount for each of the 'steps'. 
Combinations of the above must be treated in the same way as the descriptions above, (for example, if a discounted interest rate has a 'floor' then it must be described as such). 
Follow the above treatment depending on the combination. 
Description of interest rate types and rates of interest. This table belongs to MCOB 5.6.26R:
Description of the interest rate 
Amount payable in each instalment 
Lender'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 at which the interest rate ends or the period for which the interest rate applies]. 
Amount based on the fixed rate of X%. 
Discounted rate  must be described as a variable rate, currently X%, with a discount of Y% [where applicable insert the date at which the discount ends or the period for which the discount applies], giving a current rate payable of Z%. 
Amount based on Z%. 
Capped rate  must be described as a variable rate, currently X%, which will not go above a ceiling of Y% [where applicable insert the date at which the capped interest rate ends or the period for which the capped interest rate applies]. 
Amount based on the current interest rate payable (X%). 
Capped and collared  must be described as a variable rate, currently X%, which will not go below a floor of Y%, or above a ceiling of Z% [where applicable insert the date at which the capped and collared interest rate ends or the period for which the capped and collared interest rate applies]. 
Amount based on the current interest rate payable (X%). 
Tracker rate  must be described as a variable rate which is [X% above/X% below/the same as] [insert interest rate tracked, currently Z%,] [where applicable insert the date at which the rate ends or the period for which the interest rate applies], to give a current rate payable of Y%. Details should also be provided of how soon after an interest rate change the mortgage interest rate is adjusted. 
Amount based on Y%. 
Deferred rate  must be described as a variable rate, currently X%, where Y% is not paid now but is added to your mortgage [where applicable insert the date at which the deferred interest rate ends or the period for which the deferred interest rate applies], to give a current rate payable of Z%. 
Amount based on Z%. 
Stepped rate where different interest rates apply over different time periods (for example, fixed interest rate in year 1 changes in year 2). Each element should be dealt with individually as above. 
Amount for each of the 'steps'. 
Combinations of the above must be treated in the same way as the descriptions above, (for example, if a discounted interest rate has a 'floor' then it must be described as such). 
Follow the above treatment depending on the combination. 
An example of how the information required by MCOB 5.6.52 R (1), MCOB 5.6.52 R (3) and MCOB 5.6.52 R (5) may be presented is as follows:
Cost of repaying the capitalYou will still owe £Z at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage, remember to add any money that you may need to pay into a separate savings plan to build up a lump sum to repay this amount. 

Savings plan that you do not have to take out through [insert name of mortgage lender or mortgage intermediary] 
Monthly payments 
XYZ savings plan (see separate product disclosure document) 
£C 
What you will need to pay each month including the cost of a savings plan to repay the capital 

36 payments at a fixed rate currently x% followed by: 
£(A+C) 
264 payments at a variable rate currently y%. 
£(B+C) 
Table: This table belongs to COLL 6.3.2 G (2) (a) and COLL 6.3.3 R (Valuation)1.
Valuation and pricing 

1 
The valuation of scheme property 

(1) 
Where possible, investments should be valued using a reputable source. The reliability of the source of prices should be kept under regular review. 

(2) 
For some or all of the investments comprising the scheme property, different prices may quoted according to whether they are being bought (offer prices) or sold (bid prices). The valuation of a singlepriced authorised fund should reflect the midmarket value of such investments. In the case of a dualpriced authorised fund, the issue basis of the valuation will be carried out by reference to the offer prices of investments and the cancellation basis by reference to the bid prices of those same investments. The prospectus should explain how investments will be valued for which a single price is quoted for both buying and selling.1 1 

3(2A) 
Schemes investing in money market instrumentsshould value such instruments on an amortised cost basis on condition that the scheme is a qualifying money market fund. 

(3) 
Any part of the scheme property of an authorised fund that is not an investment should be valued at a fair value, but for immovables this is subject to COLL 5.6.20 R (3) (f) (Standing independent valuer and valuation). 

(4) 
For the purposes of (2) and (3), any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable on acquiring or disposing of the investment or other part of the scheme property should, in the case of a singlepriced authorised fund,2 be excluded from the value of an investment or other part of the scheme property. In the case of a dualpriced authorised fund, any such payments should be added to the issue basis of the valuation, or subtracted from the cancellation basis of the valuation, as appropriate. Alternatively, the prospectus of a dualpriced authorised fund may prescribe any other method of calculating unitprices that ensures an equivalent treatment of the effect of these payments.2 

(5) 
Where the authorised fund manager has reasonable grounds to believe that:


(6) 
The circumstances which may give rise to a fair value price being used include:


(7) 
In determining whether to use such a fair value price , the authorised fund manager should include in his consideration:


(8) 
The authorised fund manager should document the basis of valuation (including any fair value pricing policy) and, where appropriate, the basis of any methodology and ensure that the procedures are applied consistently and fairly. 

(9) 
Where a unit price is determined using properly applied fair value prices in accordance with policies in (8), subsequent information that indicates the price should have been different from that calculated will not normally give rise to an instance of incorrect pricing. 

2 
The pricing controls of the authorised fund manager 

(1) 
An authorised fund manager needs to be able to demonstrate that it has effective controls over its calculations of unit prices. 

(2) 
The controls referred to in (1) should ensure that:


(3) 
In exercising its pricing controls, the authorised fund manager may exercise reasonable discretion in determining the appropriate frequency of the operation of the controls and may choose a longer interval, if appropriate, given the level of activity on the authorised fund1or the materiality of any effect on the price. 

(4) 
Evidence of the exercise of the pricing controls should be retained. 

(5) 
Evidence of persistent or repetitive errors in relation to these matters, and in particular any evidence of a pattern of errors working in an authorised fund manager's favour, will make demonstrating effective controls more difficult. 

(6) 
Where the pricing1function is delegated to a third party, COLL 6.6.15 R (1) (Committees and delegation) will apply. 

3 
The depositary's review of the authorised fund manager's systems and controls 

(1) 
This section provides details of the types of checks a depositary should carry out to be satisfied that the authorised fund manager adopts systems and controls which are appropriate to ensure that prices of units are calculated in accordance with this section and to ensure that the likelihood of incorrect prices will be minimised. These checks also apply where an authorised fund manager has delegated all or some of its pricing1 functions to a third party. 

(2) 
A depositary should thoroughly review an authorised fund manager's systems and controls to confirm that they are satisfactory. The depositary's review should include an analysis of the controls in place to determine the extent to which reliance can be placed on them. 

(3) 
A review should be performed when the depositary is appointed and thereafter as it feels appropriate given its knowledge of the robustness and the stability of the systems and controls and their operation. 

(4) 
A review should be carried out more frequently where a depositary knows or suspects that an authorised fund manager's systems and controls are weak or are otherwise unsatisfactory. 

(5) 
Additionally, a depositary should from time to time review other aspects of the valuation of the scheme property of each authorised fund for which it is responsible, verifying, on a sample basis, if necessary, the assets, liabilities, accruals, units in issue1, securities prices (and in particular the prices of unapproved securities and the basis for the valuation of unquoted securities) and any other relevant matters, for example an accumulation factor or a currency conversion factor. 

(6) 
A depositary should ensure that any issues, which are identified in any such review, are properly followed up and resolved. 

4 
The recording and reporting of instances of incorrect pricing 

(1) 
An authorised fund manager should record each instance where the price of a unit is incorrect as soon as the error is discovered, and report the fact to the depositary together with details of the action taken, or to be taken, to avoid repetition as soon as practicable. 

(2) 
In accordance with COLL 6.6.11 G (Duty to inform the FSA), the depositary should report any breach of the rules in COLL 6.3 immediately to the FSA. However, notification should relate to instances which the depositary considers material only. 

(3) 
A depositary should also report to the FSA immediately any instance of incorrect pricing1where the error is 0.5% or more of the price of a unit, where a depositary believes that reimbursement or payment is inappropriate and should not be paid by an authorised fund manager. 

(4) 
In accordance with SUP 16.6.8 R, a depositary should also make a return to the FSA on a quarterly basis which summarises the number of instances of incorrect pricing1 during a particular period. 

5 
The rectification of pricing breaches 

(1) 
COLL 6.6.3 R (1) (Functions of the authorised fund manager) places a duty on the authorised fund manager to take action to reimburse affected unitholders, former unitholders, and the scheme itself, for instances of incorrect pricing1, except if it appears to the depositary that the breach is of minimal significance. 

(2) 
A depositary may consider that the instance of incorrect pricing1is of minimal significance if:


(3) 
In determining (2), if the instance of incorrect pricing1 is due to one or more factors or exists over a period of time, each price should be considered separately. 

(4) 
If a depositary deems it appropriate, it may, in spite of the circumstances outlined in (2), require a payment from the authorised fund manager or from the authorised fund to the unitholders, former unitholders, the authorised fund or the authorised fund manager (where appropriate). 

(5) 
The depositary should satisfy itself that any payments required following an instance of incorrect pricing1 are accurately and promptly calculated and paid. 

(6) 
If a depositary considers that reimbursement or payment is inappropriate, it should report the matter to the FSA, together with its recommendation and justification. The depositary should take into account the need to avoid prejudice to the rights of unitholders, or the rights of unitholders in a class of units. 

(7) 
It may not be practicable, or in some cases legally permissible, for the authorised fund manager to obtain reimbursement from unitholders, where the unitholders have benefited from the incorrect price. 

(8) 
In all cases where reimbursement or payment is required, amounts due to be reimbursed to unitholders for individual sums which are reasonably considered by the authorised fund manager and depositary to be immaterial, need not normally be paid. 