MCOB 4.10 1Home purchase plans

1A firm must comply with the scope of service requirements at MCOB 4.3.1 R and MCOB 4.3.2 R (Providing services within and beyond scope), MCOB 4.3.4A R (Whole of market) and MCOB 4.3.10 R (Appointed representatives).

1. (1)

   A firm must, on first making contact with a customer when it anticipates giving personalised information or advice on entering into a new home purchase plan, ensure that the customer is, or has been, provided with an appropriate initial disclosure document or combined initial disclosure document in a durable medium.

2. (2)

   If the initial contact in (1) is by telephone, a firm must:

   1. (a)

      (if the call is with a view to concluding a distance home purchase mediation contract) give the following information before proceeding further:

      1. (i)

         the name of the firm and (if initiated by the firm) the commercial purpose of the call;

      2. (ii)

         the scope of the service provided by the firm; and

      3. (iii)

         whether or not the firm will provide the customer with advice on those home purchase plans within its scope; and

   2. (b)

      ensure that the customer is, or has been, provided with such a document in a durable medium as soon as is practicable.

3. (3)

   A firm must not use a combined initial disclosure document in relation to a combination of home purchase plans and equity release transactions.2

1A firm, before making a personal recommendation on a home purchase plan, must take reasonable steps to ensure that it is:

1. (1)

   affordable;

2. (2)

   appropriate to the customer's needs and circumstances; and

3. (3)

   the most suitable of those home purchase plans that the firm has available to it within the scope of the service provided to the customer.

1If a firm arranges a home purchase plan or a variation to an existing home purchase plan without giving a personal recommendation, it must ensure that the questions it asks about the customer's needs and circumstances are scripted in advance.

1A firm must, beforemaking a personal recommendation to a customer of, or when a customer requests or selects, a home purchase plan ensure that the customer is, or has been, provided with an appropriate risks and features statement about that plan.

1A risks and features statement need not be personalised to the customer's circumstances but must:

1. (1)

   include the Key facts logo in a prominent position at the top of the statement;

2. (2)

   state that the FSA requires a firm to provide the statement;

3. (3)

   state that mortgages are available and that the customer should think carefully about the product appropriate to his needs;

4. (4)

   describe the significant features of the plan, including:

   1. (a)

      how the home purchase plan works;

   2. (b)

      the nature of the customer's commitment;

   3. (c)

      when and how a customer's commitment is reviewed;

   4. (d)

      any significant restrictions of the plan; and

   5. (e)

      the charges that a customer may incur under the plan, including the reason for, and amount of, each charge, when they are payable, whether they will be reimbursed and, if so, when;

5. (5)

   describe the risks associated with the plan, including:

   1. (a)

      the risks to the customer if he fails to keep up repayments and the circumstances in which this might occur; and

   2. (b)

      risks to the customer of the home purchase provider failing or disposing of any of its obligations or rights (including its interest in the property) to a third party (taking into account steps that will be taken by the home purchase provider to mitigate such risks); and

6. (6)

   state the importance of obtaining independent legal advice.

1A firm may omit details of the charges that a customer may incur under a home purchase plan from the risks and features statement if they are included in a separate tariff of charges provided to the customer at the same time.