MCOB 12.4 Payment shortfall charges: regulated mortgage contracts4

For each type of payment shortfall charge (for example, a monthly arrears management charge), a 4firm may calculate the same level of additional administration costs and payment shortfall charges4 for all regulated mortgage contracts where the customer is in payment shortfall4, rather than performing a calculation 4on the basis of the individual regulated mortgage contract with the particular customer.

Firms are also subject to requirements on information provision and standards relating to arrears and repossessions (see MCOB 13 (Arrears and repossessions)).

1. (1)

   4For some firms, their executive staff will be the executive board members.

2. (2)

   Executive staff costs relating to company strategy, including payment shortfall strategy, should not be included as costs relating to the day-to-day management of customers in payment shortfall.

3. (3)

   General financial reporting costs, including all legal and regulatory reporting costs, should not be included as costs relating solely to the analysis and management of accounts in payment shortfall.

4In calculating the cost of the additional administration required as a result of a customer having a payment shortfall, the firm:

1. (1)

   may, where appropriate, take into account the following types of costs:

   1. (a)

      providing information or documents;

   2. (b)

      non-executive staff costs;

   3. (c)

      premises costs;

   4. (d)

      human resources costs; and

   5. (e)

      information technology costs;

2. (2)

   should consider the extent to which the cost of the additional administration is shared with the rest of its business; and

3. (3)

   should, where a type of cost is absent from the lists in (1) and at MCOB 12.4.4R (1), before taking it into account, consider whether it is appropriate to do so.