MCOB 4.8 Non-advised sales
- (1)
If a firm arranges a regulated mortgage contract or a variation to an existing regulated mortgage contract without giving a personal recommendation, it must ensure that all the questions it asks the customer about the customer's needs and circumstances are scripted in advance.1
- (2)
In the remainder of MCOB 4.8, a reference to a firm providing information to a customer in relation to a regulated mortgage contract is to be read as including a reference to providing information in relation to varying the terms of an existing regulated mortgage contract if the context so requires.1
- (1)
MCOB 2.2.6 (Clear, fair and not misleading communications) applies to information provided to a customer in a non-advised sale, that is a sale of a regulated mortgage contract by a firm where the firm has not made a personal recommendation to the customer to enter into that particular regulated mortgage contract. In providing information on only a selection of the regulated mortgage contracts that it deals with, a firm will need to ensure that the selection is fair and unbiased. Where the non-advised sales process leads to the identification of only one regulated mortgage contract, a firm should have regard to the guidance on scripted questions in AUTH App 4.6.21 G to 4.6.24 G.
- (2)
In the course of a non-advised sale a firm may decide that a customer is considering a regulated mortgage contract that is inappropriate for that particular customer. Firms should note that, in such circumstances, although they are not providing advice to the customer, they are still conducting a regulated activity and are subject to the high-level standards, including PRIN. Principle 6 (Customers' interests) requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm selling what it considered to be an inappropriate product, would be in breach of Principle 6 as it would be conducting a regulated activity without regard to the customer's interests. In the FSA's opinion, the appropriate course in such cases would be for the firm to tell the customer to seek advice.
Where MCOB 4.8.1 R applies, the firm must ensure that staff using the scripted questions are:
- (1)
trained in the use of the script;
- (2)
trained in the difference between what constitutes a personal recommendation and what does not; and
- (3)
instructed not to give a personal recommendation unless they meet the TC requirements for advising on regulated mortgage contracts.
A firm must take reasonable steps to supervise staff who do not meet the TC requirements for advising on regulated mortgage contracts so that:
- (1)
they do not give personal recommendations; and
- (2)
when using scripted questions to comply with MCOB 4.8.1 R, they adhere to the script in all material respects.
- (1)
Scripted questions should be clear, fair and not misleading.
- (2)
A firm should ensure that the number of supervisory staff should be adequate for the size of the sales team, and supervisors should have the technical knowledge, assessment skills and coaching skills to act as a supervisor.
A firm which, after using scripted questions to help a customer select a regulated mortgage contract, makes a personal recommendation about a regulated mortgage contract to that customer will need to follow the rules governing the provision of advice in MCOB 4 (including, but not limited to, the suitability requirements in MCOB 4.7).
Record keeping
- (1)
A firm must make, and keep up to date, a record of the scripted questions required by MCOB 4.8.1 R. The record must be made on the date on which the scripted questions are first used.
- (2)
The record in (1) must be retained for one year from the date on which it was superseded by a more up-to-date record.