MCOB 12.2 Purpose

Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm is also under an obligation, as a consequence of MCOB 5 (Pre-application disclosure), MCOB 6 (Disclosure at the offer stage), MCOB 7 (Disclosure at start of contract and after sale) and MCOB 9 (Lifetime mortgages: product disclosure), to make charges transparent to customers. This chapter reinforces these requirements by preventing a firm from imposing unfair and excessive charges.

The level of charges under a regulated mortgage contract is not typically a matter for regulation. However, in certain limited circumstances, the FSA believes that customers should be protected from unfair and excessive charging practices. This chapter considers four specific circumstances, where:

1. (a)

   the charges imposed upon a customer seeking to terminate a regulated mortgage contract before the end of the term of the contract do not reflect the cost of termination to the firm;

2. (b)

   the charges imposed on a customer in payment difficulties are not based upon the costs incurred by the firm;

3. (c)

   the charges (including rates of interest) imposed on a customer under a regulated mortgage contract are excessive and contrary to the customer's interests; and

4. (d)

   the charges made to a customer in connection with a firm entering into or making a further advance on a regulated mortgage contract or administering a regulated mortgage contract, or arranging or advising on a regulated mortgage contract or a variation to the terms of a regulated mortgage contract are excessive.