MCOB 9.3 Pre-application disclosure

1. (1)

   MCOB 5.1 to MCOB 5.5 (with the modifications stated in MCOB 9.3.2 R to MCOB 9.3.12 R) apply to a firm where the home finance transaction is an equity release transaction, except that those provisions that by their nature are only relevant to regulated mortgage contracts do not apply to home reversion plans (see MCOB 9.1.2A G).3

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2. (2)

   The table in MCOB 9.3.2 R shows how the relevant rules and guidance in MCOB 5 must be modified by replacing the cross-references with the relevant cross-references to rules and guidance applicable to equity release transactions.4

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3. (3)

   The table in MCOB 9.3.3 R replaces certain rules and guidance in MCOB 5 with rules and guidance from MCOB 9.3 and MCOB 9.4.

4. (4)

   The table in MCOB 9.3.4 R disapplies certain rules in MCOB 5 for the purposes of MCOB 9.

5. (5)

   The terms that by their nature are relevant only to regulated mortgage contracts must be replaced with the appropriate equivalent terms and expressions for home reversion plans.3

An illustration on a particular equity release transaction issued by, or on behalf of an equity release provider, must be an accurate reflection of the costs of the equity release transaction.3

A mortgage intermediary must take reasonable steps to ensure that an illustration which it issues, or which is issued on its behalf, other than that provided by a mortgage lender:

1. (1)

   is accurate within the following tolerances:

   1. (a)

      no more than one percent or £1, whichever is the greater, below the actual figures charged by the mortgage lender for the following:

      1. (i)

         the total amount payable in Section 15 of the illustration;

      2. (ii)

         the amounts that the customer must pay by regular instalment (where payments are required), or the amounts of interest charged, in Section 8 of the illustration; and

      3. (iii)

         the amount by which the regular instalment, or the estimated amount owed, would increase following a one percentage point increase in interest rates in Section 9 of the illustration.

   2. (b)

      the APR in Section 15 of the illustration cannot be understated by more than 0.1%; and

2. (2)

   except in the case of conveyancing fees and insurance premiums (where estimates may be used), is accurate in respect of other figures quoted in the illustration including fees payable to the mortgage lender or mortgage intermediary in Section 11 and cash examples of early repayment charges, calculated in accordance with the rules at MCOB 9.4.83 R to MCOB 9.4.88 R, in Section 13.1

3A reversion intermediary must take reasonable steps to ensure that an illustration which it issues, or which is issued on its behalf, other than that provided by an reversion provider, is accurate, except in the case of conveyancing fees and insurance premiums (where estimates may be used).

In meeting a request an illustration in relation to a particular equity release transaction (see MCOB 5.5.1 R (2)(d))4, the firm must not delay the provision of the illustration by requesting information other than:

1. (1)

   the information necessary to personalise the illustration, if the firm does not already know it;

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2. (2)

   where the firm is uncertain whether the transaction will be an equity release transaction,3 such information as is necessary to ascertain this;3

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3. (3)

   where the interest rates, payments (if required) or any other terms and conditions to be included in the illustration are dependent on the customer's credit record, such information as is necessary to produce an illustration;

4. (4)

   where the firm includes a quotation for any tied products or compulsory insurance in the illustration, such information as is necessary to produce those quotations; and

5. (5)

   where the customer agrees to receive a quotation for insurance in the illustration (other than that provided for in (4)), such information as is necessary to produce those quotations