MCOB 1.3 General application: where?

Parts of MCOB relate to distance contracts (or distance mortgage mediation contracts and distance home purchase mediation contracts2) with consumers3. These expressions are derived from the Distance Marketing Directive, and the following paragraphs provide some guidance to firms on their meaning:

1. (1)

   consumer3

   The rules which implemented the Distance Marketing Directive apply8 for distance contracts with 'any natural person who is acting for purposes which are outside his trade, business or profession', for which the term 'consumer' has been adopted. Examples of individuals who would be regarded as consumers 3include:

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   1. (a)

      personal representatives, including executors, unless they are acting in a professional capacity, for example a solicitor acting as executor; or

   2. (b)

      private individuals acting in personal or other family circumstances, for example, a trustee of a family trust.

2. (2)

   Distance contract

   To be a distance contract, a contract must be concluded under an 'organised distance sales or service-provision scheme' run by the contractual provider of the service who, for the purpose of the contract, makes exclusive use (directly or through an intermediary) of one or more means of distance communication 3up to and including the time at which the contract is concluded. So:

   3
   1. (a)

      the firm must have put in place facilities designed to enable a customer to deal with it exclusively at a distance, such as facilities for a customer to deal with it purely by post, telephone, fax or the Internet. If a firm normally operates face-to-face and has no facilities in place enabling a customer to deal with it customarily by distance means, the rules which implemented the8 Distance Marketing Directive3 will not apply. A one-off transaction effected exclusively by distance means to meet a particular contingency or emergency will not be a distance contract; and

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   2. (b)

      there must have been no simultaneous physical presence of the firm and the other party to the contract throughout the offer, negotiation and conclusion of the contract. So, for example, contracts offered, negotiated and concluded over the Internet, through a telemarketing operation, or by post will normally be distance contracts.

The mere fact that an intermediary (acting for the supplier or for the consumer3) is involved, does not make the sale of a financial product or service a distance contract. There will not be a distance contract if there has been simultaneous physical presence of the intermediary and the consumer3 at some stage in the offer, negotiation and conclusion of the contract.1