MCOB 15.1 Handbook provisions which apply in respect of home finance transactions entered into via a P2P platform

MCOB 15.1.1 G

1The purpose of MCOB 15 is, where a firm is a P2P platform operator which carries on a regulated activity in relation to a home finance transaction and where the lender or provider does not require permission to enter into the transaction, to:

  1. (1)

    explain the application of MCOB provisions to the firm;

  2. (2)

    apply to the firm rules and guidance in MCOB that would not otherwise apply, to ensure the protection provided under MCOB to the recipient of home finance is not affected by the status of the provider;

  3. (3)

    make modifications to the way certain provisions of MCOB apply to the firm; and

  4. (4)

    disapply specified MCOB provisions from the firm.

MCOB 15.1.2 G

The effect of CONC 1.2.12R is that a provision of CONC that would otherwise apply in relation to a regulated mortgage contract or a home purchase plan does not apply where the transaction is facilitated by a P2P platform operator and the lender or plan provider does not require permission to enter into it.

MCOB 15.2 Guidance on the application of MCOB where agreements are facilitated by a P2P platform

MCOB 15.2.1 G
  1. (1)

    1Where a home finance transaction is entered into with the facilitation of a firm which is a P2P platform operator, the firm is likely to carry on an activity of the kind specified by article 25A, 25B, 25C or 25E of the Regulated Activities Order (arranging) and if so MCOB provisions applying to that activity will apply to the firm. In addition, a firm which is a P2P platform operator may carry on an activity of the kind specified by article 53A, 53B, 53C or 53D of the Regulated Activities Order (advising) and, if so, MCOB provisions applying to that activity will apply to the firm.

  2. (2)

    Where a lender requires permission under article 61(1) of the Regulated Activities Order to enter into a regulated mortgage contract (that is, where it carries on that activity by way of business and is not excluded or exempt) it will require that permission notwithstanding the fact that it does so with the facilitation of a P2P platform operator, and will be responsible for complying with relevant MCOB rules. Similarly, where a person requires permission under article 63B or 63F of the Regulated Activities Order to enter into a home reversion plan or a home purchase plan, it will require that permission notwithstanding the fact that it does so with the facilitation of a P2P platform operator, and will be responsible for complying with relevant MCOB rules. It would be open to such a lender or provider to outsource the performance of those obligations to the platform, having regard to the guidance on outsourcing in MCOB 1.2.1AG.

  3. (3)

    Under current legislation, any person who enters into a regulated sale and rent back agreement requires permission, unless they are a related person in relation to the agreement seller within the meaning of article 63J(4)(c) of the Regulated Activities Order, or excluded or exempt. However, it should be noted that the relevant legislative provision will cease to have effect on 1 January 2022.

  4. (4)

    To secure an appropriate degree of protection for consumers, where a home finance transaction is facilitated by a P2P platform operator and the lender or provider under that transaction does not fall within the definition of a mortgage lender, home purchase provider, reversion provider or SRB agreement provider, MCOB 1.2.22R(1) applies to the P2P platform operator those provisions of MCOB that would apply to the lender or provider if it were a mortgage lender, home purchase provider, reversion provider or SRB agreement provider.

  5. (5)

    For the same reason, where a regulated mortgage contract or home purchase plan is administered by a P2P platform operator on behalf of a lender or provider who did not enter into the transaction by way of business, MCOB 1.2.22R(2) applies to the P2P platform operator those provisions of MCOB that would apply to the administrator if the transaction had been entered into by way of business.

  6. (6)

    This chapter applies MCOB 3A (financial promotions etc) to a firm which is a P2P platform operator in relation to a home finance transaction.

  7. (7)

    As set out in MCOB 4.6.1G, a consumer may have a right to cancel a distance contract for services provided by a P2P platform operator.

  8. (8)

    MCOB 5.6.113R to 5.6.119G (payments made to a mortgage intermediary) are not relevant to a mortgage intermediary which is a P2P platform operator where the lender does not require permission for entering into a regulated mortgage contract. However, if there is a mortgage intermediary other than the P2P platform operator involved in the transaction, those provisions may apply to that intermediary, with the modifications set out in MCOB 15.4.14R. The same applies in relation to similar provisions in MCOB 9.4.119R to 9.4.125G (payments to a lifetime mortgage intermediary), with the modifications set out in MCOB 15.4.16R, and in MCOB 9.4.168R to MCOB 9.4.174G (payments to a reversion intermediary), with the modifications set out in MCOB 15.4.17R.

  9. (9)

    The specified activities of administering a home reversion plan in article 63B of the Regulated Activities Order and administering a regulated sale and rent back agreement in article 63J of that Order apply whether or not the plan or agreement is entered into by way of business and so will be relevant to a P2P platform operator carrying on those activities in relation to those products.

MCOB 15.3 Further provisions about the application of MCOB where agreements are facilitated by a P2P platform

MCOB 15.3.1 R

1 MCOB 3A (financial promotions etc) applies to a firm which is a P2P platform operator communicating or approving a financial promotion of a P2P agreement which is a home finance transaction where the lender or provider does not require permission to enter into the transaction. It applies as though references to qualifying credit were references to agreements that would be qualifying credit but for the lender not carrying on regulated activity by entering into or administering a regulated mortgage contract.

MCOB 15.3.2 R

MCOB 13 (arrears, payment shortfalls and repossessions) applies to a firm which is a P2P platform operator in respect of regulated mortgage contracts or home purchase plans. It applies as though:

  1. (1)

    references to a mortgage administrator or a home purchase administrator include a P2P platform operator;

  2. (2)

    references to administering a regulated mortgage contract, administering a home purchase plan and administering a sale shortfall include a P2P platform operator administering such an agreement or shortfall on behalf of a lender or plan provider. References expressing the same concept but using different tenses are similarly included; and

  3. (3)

    references to a firm taking any action against a customer include where the firm takes action required by a security trustee holding rights for a lender or provider under a regulated mortgage contract or home purchase plan.

MCOB 15.4 Modifications

General modifications

MCOB 15.4.1 R

1Where a provision of MCOB applies to a firm which is a P2P platform operator and requires the firm to refer to the identity of the mortgage lender, home purchase provider, reversion provider or SRB agreement provider, the provision may be satisfied by a statement that the loan, plan or agreement is provided by investors facilitated by the P2P platform operator.

MCOB 15.4.2 R

Where a provision of MCOB applies to a firm which is a P2P platform operator and refers to the “lender’s base mortgage rate”, “the lender’s standard variable rate” or a similar phrase, the firm must refer to the firm’s base mortgage rate or standard variable rate, as the case may be.

MCOB 15.4.3 R

Where a provision of MCOB applies to a firm which is a P2P platform operator, that provision applies as if:

  1. (1)

    references to a firm entering into a home finance transaction (or any particular type or types of home finance transaction) with a customer include the firm which is the P2P platform operator facilitating a lender or provider entering into such a home finance transaction with a customer;

  2. (2)

    references to a firm varying an existing home finance transaction (or any particular type or types of home finance transaction) include the firm which is the P2P platform operator varying such an agreement or plan on behalf of a lender or provider; and

  3. (3)

    other references to a mortgage lender, home purchase provider, reversion provider or SRB agreement provider include the P2P platform operator.

MCOB 15.4.4 R
  1. (1)

    Where a P2P platform operator facilitates an arrangement under which a number of persons provide home finance to a single customer under separate P2P agreements comprising separate home finance transactions, the provisions of MCOB listed in the table in (2) apply as though a requirement for the firm to make a notification or disclosure in respect of a home finance transaction is a requirement for the firm to make a single notification or disclosure reflecting the aggregate terms and effects of all the home finance transactions taken together.

  2. (2)

    This table belongs to (1).

    MCOB provisions

    Description

    MCOB 2.6A.5AR

    Protecting customer’s interests: regulated sale and rent back agreements

    MCOB 5.5.1R

    Provision of illustrations: timing

    MCOB 5.8

    Pre-application disclosure: home purchase plans

    MCOB 5.9

    Pre-sale disclosure for regulated sale and rent back agreements

    MCOB 6.4.1R

    Mortgages: content of the offer document

    MCOB 6.5.1R

    Tariff of charges

    MCOB 6.5.6R

    Distance contracts with retail customers

    MCOB 6.8.1R

    Home purchase plans: offer document

    MCOB 6.8.5R

    Home purchase plans: distance contracts with retail customers

    MCOB 6.9.3R

    Regulated sale and rent back agreements: written pre-offer document: Stage One

    MCOB 6.9.10R

    Regulated sale and rent back agreements: written pre-offer document: Stage Two

    MCOB 7.4.1R

    Mortgages: disclosure at the start of the contract: disclosure requirements

    MCOB 7.5.1R

    Annual statement: requirement

    MCOB 7.5.10R

    Annual statement: additional content if tariff of charges has changed

    MCOB 7.6.1R

    Notification of payment changes and other material changes to terms and conditions

    MCOB 7.6.2R

    Notification where the regulated mortgage contract is sold, assigned or transferred

    MCOB 7.6.5R

    Notification where additional borrowing taken up

    MCOB 7.6.7RMCOB 7.6.17R

    Further advances

    MCOB 7.6.18R

    Rate switches

    MCOB 7.6.22R

    Addition or removal of a party to the contract

    MCOB 7.6.28R

    Changes to amount of each payment due

    MCOB 7.8.1R

    Home purchase plans: post-sale disclosure

    MCOB 7.8.3R

    Home purchase plans: annual statement

    MCOB 7.8.6R

    Home purchase plans: tariff of charges

    MCOB 7.9.1R

    Post-sale disclosure for regulated sale and rent back agreements

    MCOB 9.3.1R

    Equity release: pre-application disclosure

    MCOB 9.5.1R

    Disclosure at the offer stage for equity release transactions

    MCOB 9.6.1R

    Disclosure at the start of the contract and after sale for equity release transactions

    MCOB 9.7.2R

    Disclosure at the start of the contract: lifetime mortgages: disclosure requirements where interest payments are required

    MCOB 9.7.4R

    Disclosure requirements where the regulated lifetime mortgage contract is a drawdown mortgage with fixed payments to the customer

    MCOB 9.7.6R

    Disclosure requirements where the regulated lifetime mortgage contract is a drawdown mortgage with variable payments to the customer

    MCOB 9.7.8R

    Disclosure requirements where a lump sum payment is made to the customer and interest is rolled up

    MCOB 9.8.1R

    Lifetime mortgages: annual statements: content

    MCOB 9.8.3R

    Lifetime mortgages: event driven information

    MCOB 9.8.5R

    Lifetime mortgages: further advances

    MCOB 9.8.9RMCOB 9.8.10R

    Lifetime mortgages: changes to payments, amounts drawn down and amount owed

    MCOB 9.9.1R

    Provision of statements: instalment reversion plans

    MCOB 9.9.3R

    Annual statement for instalment reversion plans: content

    MCOB 9.9.4R

    Annual statement for instalment reversion plans: additional content if tariff of charges has changed

    MCOB 9.9.5R

    Event-driven information for instalment reversion plans: material changes

    MCOB 13.3.4AR(2)

    Information to understand the implications of any proposed arrangement for dealing with payment difficulties

    MCOB 13.3.4BR

    Information about government schemes to assist borrowers in payment difficulties

    MCOB 13.4.1R

    Arrears: provision of information to the customer of a regulated mortgage contract

    MCOB 13.4.5R

    Steps required before action for repossession: provision of updated information

    MCOB 13.5.1R

    Dealing with a customer in arrears or with a sale shortfall on a regulated mortgage contract: statements of charges

    MCOB 13.6.3RMCOB 13.6.4R

    Repossessions: if the proceeds of sale are less than the amount due: notification of intent to pursue shortfall

    MCOB 13.6.6R

    If the proceeds of sale are more than the amount due: informing the customer

    MCOB 13.8.1R

    Home purchase plans: arrears: provision of information to the customer

MCOB 15.4.5 R

Where a provision of MCOB applies to a firm which is a P2P platform operator and requires the firm to provide an illustration, the firm may provide a European Standardised Information Sheet (ESIS) instead. The ESIS may diverge from the requirements of MCOB 5A where it is necessary to do so to describe the aggregate terms and effects of all the home finance transactions comprising the arrangement with the customer, taken together.

Protecting customers’ interests: home finance transactions

MCOB 15.4.6 R

MCOB 2.6A.-1R (inclusion and reliance on certain interest terms in agreements) applies to a firm which is a P2P platform operator as if:

  1. (1)

    in place of the firm not relying on a term mentioned in that rule it referred to the firm not taking steps to exercise or enforce rights under such a term; and

  2. (2)

    in place of referring to a term permitting the firm to change the rate of interest, it referred to a term permitting that rate to be changed.

MCOB 15.4.7 G

A firm which is a P2P platform operator may comply with MCOB 4.4A.1R (1) and MCOB 4.4A.2R by providing a customer with an explanation in simple, clear terms that the firm only offers loans facilitated on its platform.

MCOB 15.4.8 R

The “relevant market” referred to in MCOB 4.4A.2R in relation to a firm which is a P2P platform operator is the market for regulated mortgage contracts offered by such platforms.

MCOB 15.4.9 R

In disclosing remuneration under MCOB 4.4A.8R, a firm which is a P2P platform operator is not required to disclose any fees paid by a lender.

MCOB 15.4.10 R

The following rules apply subject to the modifications to MCOB 4.4A set out elsewhere in MCOB 15.4:

  1. (1)

    MCOB 4.4A.9R (method of providing initial disclosure in all cases);

  2. (2)

    MCOB 4.4A.12R (timing of initial disclosure in all cases);

  3. (3)

    MCOB 4.4A.18R (additional disclosure under distance contracts); and

  4. (4)

    the rules in MCOB 4.10 (home purchase plans: sales standards).

MCOB 15.4.11 G

The guidance in MCOB 4.10 (home purchase plans: sales standards) should be read as modified as necessary to take account of the effect of MCOB 15.4.10R on the rules in MCOB 4.10.

MCOB 15.4.12 R

MCOB 4.6A.1R (rolling up of fees etc. into loans) applies to a firm which is a P2P platform operator facilitating a regulated mortgage contract with the modification that, in addition to the firm not offering a regulated mortgage contract to a customer, the firm must also not facilitate the entry of a customer into a such a contract.

MCOB 15.4.13 R

MCOB 5.5.1R (timing of provision of mortgage illustration) and MCOB 5.8.1R (financial information statement: timing) apply to a firm which is a P2P platform operator on the basis that the application for that particular regulated mortgage contract or home purchase plan is made to the firm.

MCOB 15.4.14 R

Where MCOB 5.6 applies to a firm which is a P2P operator facilitating a regulated mortgage contract, and the illustration is issued to the customer by, or on behalf of, a separate mortgage intermediary, references in MCOB 5.6.113R to 5.6.119G to a mortgage lender must be treated as referring to the P2P platform operator.

MCOB 15.4.15 R

MCOB 6.4.5G (information about advice provided by mortgage intermediary) applies to a firm which is a P2P platform operator as if the references to the mortgage lender are references to the P2P platform operator and references to a mortgage intermediary are references to a person other than the P2P platform operator.

MCOB 15.4.16 R

Where MCOB 9.4 applies to a firm which is a P2P operator facilitating a lifetime mortgage, and the illustration is issued to the customer by, or on behalf of, a separate mortgage intermediary, references in MCOB 9.4.119R to 9.4.125G to a mortgage lender must be treated as referring to the P2P platform operator.

MCOB 15.4.17 R

Where MCOB 9.4 applies to a firm which is a P2P platform operator facilitating a home reversion plan, and the illustration is issued to the customer by, or on behalf of, a separate reversion intermediary, references in MCOB 9.4.168R to 9.4.174R to a reversion provider must be treated as referring to the P2P platform operator.

MCOB 15.4.18 R

Where MCOB 11.8 (customers unable to change contract, plan or provider) applies in relation to a regulated mortgage contract or home purchase plan facilitated by a P2P platform operator, MCOB 11.8.1E applies as if the reference to a customer being unable to enter into a new regulated mortgage contract or home purchase plan or vary the terms of the existing regulated mortgage contract or a home purchase plan, with the existing or a new mortgage lender or home purchase provider, is a reference to a customer being unable to enter into a new regulated mortgage contract or home purchase plan or vary the terms of an existing regulated mortgage contract or home purchase plan, which is facilitated by the platform.

MCOB 15.5 MCOB provisions disapplied from P2P platform operators

MCOB 15.5.1 R

1The rules in the following provisions of MCOB do not apply to an MCD mortgage credit intermediary, where that firm is a P2P platform operator facilitating a regulated mortgage contract where the lender does not require permission to enter into the contract:

  1. (1)

    MCOB 2A (Mortgage Credit Directive);

  2. (2)

    MCOB 3A.5 (MCD financial promotions);

  3. (3)

    MCOB 3B (MCD general information);

  4. (4)

    MCOB 4.4A.4R (range of products);

  5. (5)

    MCOB 4A (additional MCD advising and selling standards);

  6. (6)

    MCOB 5.6.113R to 5.6.117R (payments to mortgage intermediaries) do not apply to a mortgage intermediary which is a P2P platform operator where the lenders under regulated mortgage contracts entered into by a particular borrower do not require permission for entering into regulated mortgage contracts. In this case Section 14 of the illustration must be renumbered 13;

  7. (7)

    MCOB 5A (MCD pre-application disclosure);

  8. (8)

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

  9. (9)

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

  10. (10)

    MCOB 11A (additional MCD responsible lending requirements).

MCOB 15.5.2 G
  1. (1)

    The guidance in the provisions of MCOB listed in MCOB 15.5.1R is not relevant in relation to an MCD mortgage credit intermediary, where that firm is a P2P platform operator facilitating a regulated mortgage contract where the lender does not require permission to enter into the contract.

  2. (2)

    Similarly, the following guidance is not relevant in relation to such an MCD mortgage credit intermediary:

    1. (a)

      MCOB 4.4A.3G, 4.4A.3AG, 4.4A.5G and 4.4A.6G (range of products); and

    2. (b)

      MCOB 5.6.118G and 5.6.119G (payments to mortgage intermediaries) (see MCOB 15.5.1R(6)).

MCOB 15.5.3 G

A regulated mortgage contract (including a MCD regulated mortgage contract) where the lender does not act by way of business is not within the scope of the MCD.