MCOB 4.4A Initial disclosure requirements

1Using the methods and at the times specified in this section, a firm must provide the customer with the following information:

1. (1)

   whether there are any limitations in the range of products that it will offer to the customer, and if so what those are;

   2
2. (1A)

   if there are any limitations in the range of the firm’s products about which it will provide information during a spoken or other interactive dialogue with the customer, what those limitations are;7

3. (2)

   the basis on which the firm will be remunerated; and2

4. (3)

   the availability of alternative finance options.2

1. (1)

   The limitations in MCOB 4.4A.1 R include any limitations on the regulated mortgage contracts the firm will consider from within the relevant market. A firm which is offering services to a customer in respect of more than one type of relevant market must describe its services in relation to each such relevant market.

2. (2)

   For these purposes, there are two relevant markets for regulated mortgage contracts (apart from lifetime mortgages): one for regulated mortgage contracts that are not for a business purpose; and one for regulated mortgage contracts that are. A firm offering services in relation to loans for a business purpose must make that clear in its disclosure under MCOB 4.4A.1R (1).

3. (3)

   If a firm will not, as part of its services, consider direct deals, it need not treat that as a limitation in its product range, but the firm must tell the customer as part of the disclosure under MCOB 4.4A.1R (1) that it will not consider direct deals.

1. (1)

   If a firm is not offering to the customer products from an unlimited range from across the relevant market, in2 its disclosure on product range in MCOB 4.4A.1 R, the firm must:2

   2
   1. (a)

      where it is an MCD mortgage credit intermediary,2 list the names of all the mortgage lenders whose products it is offering; or

   2. (b)

      where it is not an MCD mortgage credit intermediary, either2

      2
      1. (i)

         comply with (a); or2

      2. (ii)

         inform the customer of the number of mortgage lenders whose products it is offering and that he has the right to request a list of those mortgage lenders.2

2. (2)

   If a customer requests the list in (1)(b)(ii)2, the firm must provide it in a durable medium as soon as possible following the request and in any event within five business days. The list must also indicate whether the firm offers all of the products generally available from each mortgage lender on the list.

3. (3)

   An MCD mortgage credit intermediary must only disclose that it is independent if its consideration of MCD regulated mortgage contracts across the market is unlimited.2

   [Note: articles 15(1)(c) and 22(4) of the MCD]

1. (1)

   The information about the basis of remuneration required by MCOB 4.4A.1R (2) must include all relevant information, including the following details:

   1. (a)

      any fees which the firm will charge to the customer;

   2. (b)

      when any such fees will be payable and, if applicable, reimbursable; and

   3. (c)

      whether the firm will receive commission from the mortgage lender or another third party and, if applicable, whether any commission will be offset against any fees charged and the arrangements for doing so; and2

      [Note: article 15(3) of the MCD]2

      2
   4. (d)

      for an MCD regulated mortgage contract, the amount of commissions or other inducements, or where the amount is not known at the time of disclosure, notification that the actual amount will be disclosed at a later stage in the ESIS.2

      [Note: article 15(1)(g) of the MCD]2

2. (2)

   The details in (1)(a) must be expressed, where possible, as a specific cash sum, but the following rules apply where this is not possible:

   1. (a)

      If the firm will charge a fee that is a percentage of another sum which is not yet known (such as, but not limited to, the amount to be borrowed), the firm must provide details of the percentage and a representative illustrative example which gives an amount as a cash sum.

   2. (b)

      If the firm will charge one of a range of possible cash fees, the firm must provide a description of the fee in terms which include the maximum and minimum possible fees as cash sums, and what factors will determine where in the range the fee will be.

   3. (c)

      If the firm will charge one of a range of fees that are a percentage of another sum which is not yet known (such as, but not limited to, the amount to be borrowed), the firm must provide details of the minimum and maximum percentages and a representative illustrative example which gives an amount as a cash sum, and set out what factors will determine where in the range the fee will be.

   4. (d)

      If the firm will charge an amount based on an hourly rate, but the number of hours to be spent on the customer's transaction is unknown, the firm must state the hourly rate in cash terms and set out what factors will determine how many hours it takes to provide the firm's services.

   5. (e)

      for an MCD regulated mortgage contract, if the firm will charge a fee calculated other than in line with 2(a) to (d), the firm must provide details of the method for calculating the fee.

      [Note: article 15(1)(e) of the MCD]2

2Where a customer is looking to increase the borrowing secured on a property which is the subject of an existing regulated mortgage contract, the firm must first inform the customer, either orally or in writing, that the following alternative finance options may be available and more appropriate for the customer:

1. (1)

   a further advance from the existing lender, unless the firm knows that the existing lender will not make a further advance to the customer;

2. (2)
   1. (a)

      a second charge regulated mortgage contract, where the firm would offer services in relation to a new first charge regulated mortgage contract;

   2. (b)

      a new first charge regulated mortgage contract, where the firm would offer services in relation to a second charge regulated mortgage contract; or

3. (3)

   unsecured lending.

6Where a customer is looking to take out a retirement interest-only mortgage, the firm must inform the customer, either orally or in writing, that a lifetime mortgage may be available and more appropriate for the customer.

The information required by MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4R (1),2MCOB 4.4A.8 R and MCOB 4.4A.8A R2 must be communicated clearly and prominently, and in doing so:

1. (1)

   an MCD mortgage adviser, or any other firm that is8 an MCD mortgage lender or an MCD mortgage arranger that provides advisory services within the meaning of article 4(21) of the MCD,8 must provide the information in MCOB 4.4A.1R(1) and (2) and MCOB 4.4A.8R(1)(a) and (2)(e)8 in a durable medium;

   22
   1. (a)

      [deleted]8

      2
   2. (b)

      [deleted]8

      2
2. (1A)

   an MCD mortgage arranger (unless it is also acting as5 an MCD mortgage lender and5 carrying out a5 direct sale of the proposed regulated mortgage contract)5 must provide the information in MCOB 4.4A.1R(1) and (2), MCOB 4.4A.4R(1)(a) and (3), and MCOB 4.4A.8R(1)(a), (c), (d) and (2) in a durable medium; and8

3. (2)

   in all other cases:2

   2
   1. (a)

      if the initial contact includes spoken interaction, the information must be communicated orally; and2

   2. (b)

      if the initial contact does not include spoken interaction, the messages must appear separately from other messages in the communication.2

If the initial contact is made by electronic means, the firm must ensure that the customer cannot progress to the next stage of the sale unless the information has been communicated to the customer.

[Note: article 15(1) and article 22(2) of the MCD]8

The information required by MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4R(1) and (3)8, MCOB 4.4A.8 R and MCOB 4.4A.8A R2 must be provided:2

1. (1)

   in the case of information required by MCOB 4.4A.1R (1) and MCOB 4.4A.1R (2), MCOB 4.4A.4R (1)(a) and (3), and MCOB 4.4A.8R (1)(a), (c) ,(d) and (2), where the firm is an MCD credit intermediary, in good time before carrying out any MCD credit intermediation activity; 2

2. (1A)

   in the case of information required by MCOB 4.4A.1R(1) and (2) and MCOB 4.4A.8R(1)(a) and (2)(e), where the firm is an MCD mortgage adviser, or any other firm that is an MCD mortgage lender or an MCD mortgage arranger that provides advisory services within the meaning of article 4(21) of the MCD, before the provision of such advisory services or, where applicable, the conclusion of a contract for the provision of such advisory services; and8

3. (2)

   in all other cases, during the course of the initial contact.2

[Note: article 15(1) and article 22(2)8 of the MCD]2

The information requirements in MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4R (1) and MCOB 4.4A.8 R do not apply where:

1. (1)

   the information has already been provided by the firm and the firm has good reason to believe that it is still accurate and appropriate for the customer; or

2. (2)

   the information has already been provided by the firm which first made contact with the customer in respect of the particular regulated mortgage contract, and the firm subsequently making contact with the customer does not expect to alter or replace the product range or basis of remuneration described in that information.

If the initial contact is by telephone, then the firm must also, before proceeding further, give the name of the firm and (if the call is initiated by or on behalf of the firm) the commercial purpose of the call.

Where a firm provides services to a consumer by way of a distance contract, the firm must provide the consumer with the following information in a durable medium in good time before the distance contract has been agreed:

1. (1)

   the information which is required by MCOB 4.4A.1 R to MCOB 4.4A.8A R;2

   2
2. (2)

   whether or not the firm will be providing the consumer with advice;

3. (3)

   the name and the main business of the firm, the geographical address at which it is established and any other geographical address relevant for the consumer's relations with the firm;

4. (4)

   an appropriate statutory status disclosure statement (see GEN 4), a statement that the firm is on the Financial Services Register and its FCA registration number;

5. (5)

   the total price to be paid by the consumer to the firm for the financial service, including all related fees, charges and expenses, and all taxes paid through the firm or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it;

6. (6)

   the arrangements for payment and for performance;

7. (7)

   how to complain to the firm, whether complaints may subsequently be referred to the Financial Ombudsman Service and, if so, the methods for having access to it, together with equivalent information about any other applicable named complaints scheme;

8. (8)

   whether compensation may be available from the compensation scheme, or any other named compensation scheme, if the firm is unable to meet its liabilities, and information about any other applicable named compensation scheme; and

9. (9)

   any other contractual terms and conditions of the distance contract .

1. (1)

   If at the point that initial disclosure must be made in accordance with MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4 R,2MCOB 4.4A.8 R and MCOB 4.4A.8A R2 a firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:

   1. (a)

      make the initial disclosure; or

   2. (b)

      seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.

2. (2)

   Where (1)(b) applies, the initial disclosure must be made unless, on the basis of the information provided by the customer, the firm has reasonable evidence that the contract is not a regulated mortgage contract.

A firm may restrict the home finance transactions it authorises a particular appointed representative to sell. If it does so, the firm must ensure the appointed representative reflects this limited range in any disclosure given to the customer under MCOB 4.4A.