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 this sourcebook's disclosure requirements,1 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,2 home reversion plan1 or regulated sale and rent back agreement2 is not typically a matter for regulation. However, in certain limited circumstances, the FCA 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,2 home reversion plan1 or regulated sale and rent back agreement2 are excessive and contrary to the customer's interests; and

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4. (d)

   the charges made to a customer in connection with a firm entering into, making a further advance on, administering, arranging or advising on a regulated mortgage contract,2 home reversion plan or regulated sale and rent back agreement2, or arranging or advising on a variation to the terms of a regulated mortgage contract, 2home reversion plan or regulated sale and rent back agreement 2are excessive.1

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