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    2024-11-30

MCOB 7.7 Business loans and loans to high net worth mortgage customers: tailored provisions3

1Further advances

MCOB 7.7.1RRP
  1. (1)

    Where, in relation to a regulated mortgage contract for a business purpose or a high net worth mortgage customer3 who is not a consumer under an MCD regulated mortgage contract4, a customer either:

    1. (a)

      seeks an immediate increase in the borrowing provided under the regulated mortgage contract; or

    2. (b)

      overdraws on the borrowing under the regulated mortgage contract;

    the further advance rules in MCOB 7.6.7 R to MCOB 7.6.17 R do not apply.

  2. (2)

    Where (1) applies, the firm must within five business days (for a loan for a business purpose) or in good time before the customer is bound by the regulated mortgage contract (for a high net worth mortgage customer)3 provide the customer with either:

    1. (a)

      a business illustration or high net worth illustration (as applicable)3 for the new total borrowing; or

    2. (b)

      the following information, in a single communication:

      1. (i)

        the new amount outstanding on the regulated mortgage contract;

      2. (ii)

        details of any changes in the repayment arrangements or interest rate charged as a result of the change;

      3. (iii)

        where there is a new early repayment charge or a change to the existing early repayment charge, the maximum amount payable as an early repayment charge in respect of the regulated mortgage contract; and

      4. (iv)

        details of any charges that apply for changing the regulated mortgage contract.

MCOB 7.7.1AGRP

2Firms are reminded that in accordance with MCOB 1.2.3 R, they should comply in full with MCOB, but in doing so may opt to take account of3 all tailored provisions in MCOB that relate to business loans or loans to high net worth mortgage customers3. Therefore, a firm may only follow the tailored provisions in MCOB 7.73 in relation to one of these sectors3 if it also follows all other tailored provisions in MCOB that relate to that sector. In either case, the rest of MCOB applies in full3.

33
MCOB 7.7.2GRP

Where a customer remains in breach, for more than one month, of an agreed borrowing limit or of an obligation to repay where the regulated mortgage contract does not have a regular repayment plan, firms are reminded that MCOB 13 (Payment difficulties5 and repossessions) applies.

MCOB 7.7.3RRP

Where a customer applies for a further advance that is a regulated mortgage contract for a business purpose or a high net worth mortgage customer3 who is not a consumer under an MCD regulated mortgage contract4 and MCOB 7.7.1 R does not apply:

  1. (1)

    the business illustration or high net worth illustration 3must be based upon the total borrowing; and

  2. (2)

    MCOB 7.6.9 R to MCOB 7.6.10 G and MCOB 7.6.12 G do not apply.

1Arrangements to repay capital

MCOB 7.7.4RRP

Where MCOB 7.6.28 R(5) applies, a firm may omit the final sentence of the required text where it is aware, in the context of an interest-only mortgage, that the customer's intention is not to use a savings plan as a repayment strategy3.

3

1Disclosure

MCOB 7.7.5RRP

1MCOB 7.4 (Disclosure at the start of the contract) does not apply in relation to a regulated mortgage contract that is for a business purpose or a high net worth mortgage customer3.