MCOB 1 Annex 5 Guidance on the application of MCOB for incoming EEA MCD credit intermediaries and for UK firms carrying out MCD credit intermediation activities in another EEA State
1Under article 34(1) of the MCD, the Home State is responsible for supervising the activities of MCD credit intermediaries providing cross border services. If a UK firm provides services into another EEA State, the rules applying to MCD credit intermediation activities therefore apply to it. For an incoming EEA firm providing cross border services, rules do not apply to the firm where the rule covers a matter dealt with by the MCD. Instead the Home State’s rules will apply.
Under article 34(2) of the MCD, ensuring compliance with the obligations in articles 7(1), 8, 9, 10, 11, 13, 14, 15, 16, 17, 20, 22 and 39 of the MCD by incoming EEA firms doing business through branches is the responsibility of the Host State. These articles contain most of the conduct requirements imposed on credit intermediaries under the MCD, for example advisory standards and the obligation to provide an ESIS. Responsibility for ensuring compliance with all other obligations in the MCD is the responsibility of the Home State. This means that, in so far as a rule imposes obligations on MCD credit intermediaries that are contained in the articles listed above, that rule applies to incoming EEA firms doing business through branches. A rule that imposes obligations contained in any other article of the MCD does not apply in relation to such an incoming EEA firm, and its equivalent Home State rule applies instead. Conversely, such a rule would apply in relation to an EEA branch of a UK firm.
For all incoming EEA firms, where MCOB imposes obligations that go beyond what is required by the MCD (as permitted under article 2 of the MCD), the firm is required to comply with those additional obligations.
The tables in MCOB 1 Annex 5.1.6G provide non-exhaustive guidance as to how the obligations imposed under the MCD relate to MCOB provisions. In general, MCOB applies as follows:
- (1)
In relation to an incoming EEA firm acting as an MCD credit intermediary on a branch basis, all provisions of MCOB that apply to MCD credit intermediaries may apply, except for the provisions in Table 2.
- (2)
In relation to an incoming EEA firm acting as an MCD credit intermediary on a cross-border services basis, all provisions of MCOB that apply to MCD credit intermediaries may apply, except for the provisions in Tables 1 and 2.
- (3)
In relation to an EEA branch of a UK firm acting as an MCD credit intermediary, the provisions in Table 2 (and only those provisions) may apply in relation to the firm’s MCD credit intermediation activity in that EEA State.
Incoming EEA firms should also refer to the general application provisions in MCOB 1.3 and the application provisions in each chapter of MCOB, which set out how MCOB applies to MCD credit intermediaries in general.
Tables 1 and 2 belong to MCOB 1 Annex 5.1.4G.
Table 1: MCOB provisions relating to MCD obligations that apply to MCD credit intermediaries, for which Host State rules apply in relation to an incoming EEA firm doing business through branches
|
MCD article |
Description |
MCOB provisions |
|
7(1) |
Obligation to act honestly, fairly, transparently and professionally in the interests of consumers. |
|
|
8 |
Obligation to provide information free of charge to consumers. |
|
|
10 |
General provisions applicable to advertising and marketing (obligation to require communications are fair, clear and not misleading). |
|
|
11 |
Standard information to be included in advertising. |
|
|
13 |
General information (to be made available about credit agreements). |
|
|
14 |
Pre-contractual information. |
|
|
15 |
Information requirements concerning credit intermediaries and appointed representatives. |
MCOB 4.4A.4R , 4.4A.8R, 4.4A.9R, 4.4A.12R and 4A.1 |
|
16 |
Adequate explanations. |
|
|
17 |
Calculation of the APRC. |
|
|
20 |
Disclosure and verification of consumer information. |
MCOB 11A.1 and 11A.3 |
|
22 |
Standards for advisory services. |
MCOB 4A.3 , 4.4A.4R(1)(a) and (3), MCOB 4.4A.9R, 4.4A.12R and MCOB 4.7A |
Table 2: MCOB provisions relating to MCD obligations that apply to MCD credit intermediaries, for which Home State rules apply in relation to all incoming EEA firms
|
MCD article |
Description |
MCOB provisions |
|
7(2) – (4) |
Remuneration not impeding obligation to act honestly, fairly, transparently and professionally in the interests of consumers, or in the consumer’s best interests when giving advice. |
|
|
12 |
Tying and bundling practices. |
MCOB 2A.2.1R and 2A.2.2G |
|
27 |
Information on changes in the borrowing rate. |