MCOB 14.1 1Handbook provisions which apply in respect of MCD article 3(1)(b) credit agreements

A firm must treat a proposed credit agreement as an MCD article 3(1)(b) credit agreement if the firm knows, or has reasonable cause to suspect, that the purpose of the credit agreement is to acquire or retain property rights in land or in an existing or projected building.

Subject to MCOB 14.1.5R and MCOB 14.1.7R:

1. (1)

   MCD article 3(1)(b) creditors and MCD article 3(1)(b) credit intermediaries must comply with the following provisions in MCOB. These provisions apply with such changes as are necessary to apply them to MCD article 3(1)(b) credit agreements and activity undertaken in relation to those agreements (see MCOB 14.1.4G):

   1. (a)

      MCOB 1.2.19G (identifying MCD credit agreements);

   2. (b)

      MCOB 2.3 (inducements);

   3. (c)

      MCOB 2.5A (the customer’s best interests);

   4. (d)

      MCOB 2A (Mortgage Credit Directive) except for MCOB 2A.1.4R;

   5. (e)

      MCOB 3A.1 to MCOB 3A.5 (financial promotions and communications with customers);

   6. (f)

      MCOB 3B (MCD general information);

   7. (g)

      MCOB 4A.2 (adequate explanations);

   8. (h)

      MCOB 5A (MCD pre-application disclosure);

   9. (i)

      MCOB 6A (MCD disclosure at the offer stage);

   10. (j)

       MCOB 7.5 (mortgages: statements);

   11. (k)

       MCOB 7A (additional MCD disclosure: start of contract and after sale);

   12. (l)

       MCOB 7B (MCD: further advances);

   13. (m)

       MCOB 10A (MCD Annual Percentage Rate of Charge);

   14. (n)

       MCOB 11.6 (responsible lending and financing);

   15. (o)

       MCOB 11A (additional MCD responsible lending requirements);

   16. (p)

       MCOB 12.3 (early repayment charges);

   17. (q)

       MCOB 12.5 (excessive charges); and

   18. (r)

       MCOB 13 (arrears, payment shortfalls and repossessions) except for MCOB 13.3.9R;

2. (2)

   MCD article 3(1)(b) credit intermediaries must additionally comply with the following provisions in MCOB. These provisions apply with such changes as are necessary to apply them to MCD article 3(1)(b) credit agreements and activity undertaken in relation to those agreements:

   1. (a)

      MCOB 4.4A.1R(1) and (2) (initial disclosure requirements);

   2. (b)

      MCOB 4.4A.4R(1)(a) and (3) (initial disclosure requirements);

   3. (c)

      MCOB 4.4A.8R (1)(a), (c), (d) and (2)(e) (initial disclosure requirements); and

   4. (d)

      MCOB 4A.1 (additional disclosure by MCD mortgage credit intermediaries); and

3. (3)

   MCD article 3(1)(b) credit advisers must additionally comply with the following provisions in MCOB. These provisions apply with such changes as are necessary to apply them to MCD article 3(1)(b) credit agreements and activity undertaken in relation to those agreements:

   1. (a)

      MCOB 2A.1.4R (Mortgage Credit Directive);

   2. (b)

      MCOB 4.7A (advised sales) except for:

      1. (i)

         MCOB 4.7A.1G(2) to (4);

      2. (ii)

         MCOB 4.7A.11R to MCOB 4.7A.14E; and

      3. (iii)

         MCOB 4.7A.24R to MCOB 4.7A.25R; and

   3. (c)

      MCOB 4A.3 (record of recommendation2).

An MCD article 3(1)(b) creditor or MCD article 3(1)(b) credit intermediary must elect to comply with either:

1. (1)

   MCOB 3A.1 to MCOB 3A.5 (financial promotions and communications with customers); or

2. (2)

   MCOB 3A.2, MCOB 3A.5 and CONC 3 (financial promotions and communications with customers) (except for CONC 3.4, CONC 3.5.3R to CONC 3.5.10R, CONC 3.6.6R, and CONC 3.9);

and having made an election, the firm must comply with the provisions with which it has elected to comply.

The following provisions do not apply to an MCD article 3(1)(b) creditor or MCD article 3(1)(b) credit intermediary where the conditions in CONC 1.2.10R(1) and (2) are fulfilled: MCOB 7.5 (mortgages: statements) and MCOB 13 (arrears, payment shortfalls and repossessions) (except for MCOB 13.3.1AR to MCOB 13.3.1BG, MCOB 13.3.2AR to MCOB 13.3.8G, and MCOB 13.6.1R to MCOB 13.6.2G, which apply even where those conditions are fulfilled).

[Note: article 60H(2) of the Regulated Activities Order]