MCOB 7.5 Mortgages: statements3

Subject to MCOB 7.5.2 R, a firm must provide the customer with a statement at least once a year (or, in relation to the first statement, within the first 13 months)2:

1. (1)

   covering the regulated mortgage contract and any tied product purchased through the firm; and

2. (2)

   giving information about the existence of any linked borrowing or linked deposits, or any other products purchased through the firm where the payments for those products are combined with the payments on the regulated mortgage contract.

Where a tied product is operated separately from the regulated mortgage contract, for example where the premiums on a tied insurance product are not combined with payments on the regulated mortgage contract, the statement required by MCOB 7.5.1 R in relation to the tied product may be provided in a separate communication.

The statement required by MCOB 7.5.1 R must contain the following:

1. (1)

   except in the case of mortgage credit cards, information on the type of regulated mortgage contract, including:

   1. (a)

      a clear statement of whether the regulated mortgage contract is an interest-only mortgage, or repayment mortgage, or a combination of both; and

   2. (b)

      a prominent reminder, where all of the regulated mortgage contract is an interest-only mortgage, that:

      1. (i)

         the customer's payments to the firm do not include any costs of the repayment strategy5 (if that is the case); and

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      2. (ii)

         the customer should have in place arrangements to pay off the capital, and should check the performance of any investments they might have in place for this purpose;

      using the following text:'This is an interest-only mortgage. Your mortgage payments [include the costs of a savings plan/an investment that you] [do not include the costs of any savings plan or other investment you may] have arranged to build up a lump sum to repay the amount you borrowed. It is important to check regularly that your savings plan or other investment is on track to repay this mortgage at the end of the term.'

   3. (c)

      a prominent reminder, where only part of the regulated mortgage contract is an interest-only mortgage, that:

      1. (i)

         the customer's payments to the firm do not include any costs of the repayment strategy5 (if that is the case); and

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      2. (ii)

         the customer should have in place arrangements to pay off the amount of the loan that is on an interest-only basis, and should check the performance of any investments they might have in place for this purpose;

      using the following text:'This mortgage includes [insert amount] borrowed on interest-only terms. Your mortgage payments [include the costs of a savings plan/an investment that you] [do not include the costs of any savings plan or other investment you may] have arranged to build up a lump sum to repay this amount. It is important to check regularly that your savings plan or other investment is on track to repay the interest-only part of your mortgage at the end of the term.'

2. (2)

   details of the following transactions and information on the regulated mortgage contract during the period since the last statement (or, where the statement is the first statement, since the customer entered into the regulated mortgage contract):

   1. (a)

      the date and amount of each payment made;

   2. (b)

      the amount of each payment that was due during the statement period;

   3. (c)

      the rate(s) of interest applicable to the regulated mortgage contract during the statement period and, if applicable, the date(s) on which the rate(s) of interest changed;

   4. (d)

      the amount of interest charged under the regulated mortgage contract during the statement period; and

   5. (e)

      any other amounts charged under the regulated mortgage contract during the statement period, including fees and any amounts due in relation to tied products;

3. (3)

   a reminder that the customer should contact the firm if they are unable to make their regular payments under the regulated mortgage contract; and

4. (4)

   information at the date the statement is issued on:

   1. (a)

      the amount owed by the customer under the regulated mortgage contract;

   2. (b)

      the actual remaining term of the regulated mortgage contract (but if the term of the regulated mortgage contract is open-ended this should be clearly stated);

   3. (c)

      the date at which any early repayment charges on the regulated mortgage contract cease to apply;

   4. (d)

      where applicable, the early repayment charge that applies, expressed as a monetary amount (see MCOB 5.6.84 R);

   5. (e)

      the cost of redeeming the regulated mortgage contract (this must be shown as the sum of MCOB 7.5.3 R(4)(a) and MCOB 7.5.3 R(4)(d) plus any linked borrowing that cannot be retained (including the outstanding balances) plus any other charges that can be quantified at the date the statement is issued); if additional charges are payable that cannot be quantified at the point that the statement is issued (for example if the customer is in arrears5) a warning must be included to that effect; and1

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   6. (f)

      where applicable, the date on which the requirement for the customer to purchase any tied products from the firm comes an end.

1. (1)

   4MCOB 7.5.3 R (1)(b) does not apply where as a result of the customer having payment difficulties:

   1. (a)

      the regulated mortgage contract has changed to an interest-only mortgage; and

   2. (b)

      interest is being deferred and capitalised by the firm.

2. (2)

   Paragraph (1) applies only where the customer continues to have payment difficulties.

Where payments are not being made for5 a repayment strategy5 (for example, for a bridging loan5) the text in MCOB 7.5.3 R(1)(b)(ii) or MCOB 7.5.3 R(1)(c)(ii) is replaced with the following: "As all or part of your mortgage is an interest-only mortgage, it assumes that you pay back the total amount borrowed on an interest-only basis as a lump sum at the end of the mortgage term."

Where a firm provides a customer with a statement containing the information set out in MCOB 7.5.3 R(2) more frequently than once a year, the information set out in MCOB 7.5.3 R(1), MCOB 7.5.3 R(3) and MCOB 7.5.3 R(4) may be provided in a separate communication, but must be provided at least once a year.

If the tariff of charges has changed since the last annual statement was sent to the customer (or, where the annual statement is the first statement, since the customer entered into the regulated mortgage contract) and a firm has not already sent a revised tariff of charges to the customer, it must include one with the annual statement.