MCOB TP 1 Transitional Provisions

1

Every rule in MCOB unless the context otherwise requires and subject to any more specific transitional provision relating to the matter.

R

If the application of any provision in MCOB is dependent on the occurrence of a series of events, some of which occur before, and some of which occur on or after, 31 October 2004, the provision applies with respect to the events that occur on or after 31 October 2004.1

From 31 October 2004 for six months.

31 October 2004

2

G

(1) For example, if a customer submits an application for a regulated mortgage contract before 31 October 2004, a firm responding to that application on or after 31 October 2004 will not be required to provide the customer with an illustration in accordance with MCOB 5. However, the firm will have to comply with the requirements in MCOB when taking any further action (such as issuing an offer) regarding the application on or after 31 October 2004.1

(2) An offer document may have to be issued under transitional provision 1R even though no illustration has been given out (because that part of the transaction occurred before 31 October 2004). In such cases the suitably adapted illustration required by MCOB 6.4.4 R would need to omit:

(a) the required text in MCOB 6.4.4 R (4)(b); and1

(b) Section 2 of the illustration entirely.

3

G

MCOB applies to regulated mortgage contracts entered into on or after 31 October 2004. Variations made on or after that date to mortgage contracts entered into before that date are not subject to FSA regulation but may be subject to the Consumer Credit Act 1974. AUTH App 4.4.13 G contains guidance on the variation of contracts entered into before 31 October 2004.1

4

MCOB 2.2.6 R

R

(1A) firm must disclose to a customer:

(a) the extent to which transactions will be subject to FSA regulation, stating in particular the position with regard to advice (where given), disclosure and offer;

(b) a statement that the Consumer Credit Act 1974 will not apply to the regulated mortgage contract and that, where applicable, any Consumer Credit Act rights or requirements set out in previous communications will not apply; and

(c) details concerning complaints and redress for services provided before 31 October 2004 and those provided on or after 31 October 2004.1

(2) Unless already given to the customerbefore 31 October 2004, the information required in (1) must be communicated in a durable medium at the time of the first contact between the firm and thecustomer on or after 31 October 2004.1

From 31 October 2004 for six months

31 October 2004

5

MCOB 2.2.6 R

G

At 31 October 2004, there will be cases where a firm has issued documentation which satisfies the requirements of the Consumer Credit Act 1974 (HMSO legislation webpage), but where no CCA agreement has been concluded. A customer may even have signed a CCA agreement, which has not been executed before the onset of mortgage regulation. In such cases, a firm must take care to avoid giving the impression that any agreement reached on or after 31 October 2004 will be subject to the Consumer Credit Act 1974 (HMSO legislation webpage), as to imply otherwise might leave the firm in breach of MCOB 2.2.6 R. This is a particular risk given that any initial documentation that the customer will have received may have been in compliance with that Act. Equally, it is possible that once mortgage regulation begins, the customer would, in the absence of any information from the firm, form the view that the entire transaction is regulated by the FSA. Accordingly, in such a case, a firm must provide the customer with the information required by transitional provision 4R(1) and at the time and in the manner required by transitional provision 4R(2), in order to clarify the position.1

6

MCOB 3.6

R

(1) Providing it does not state or imply that protections under the Consumer Credit Act 1974 HMSO Consumer Credit Act 1974 (HMSO legislation webpage) apply, a non-real time qualifying credit promotion communicated:

(a) in a directory (or similar publication) that is updated annually;

(b) otherwise than in (a);

on or after 31 October 2004 where the deadline for submission for communication was before that date will be in compliance with the rules in MCOB 3.6 if it satisfies the advertising requirements under the Consumer Credit Act 1974 (HMSO legislation webpage) .12

(2) Paragraph (1) does not have effect if, and to the extent that, it would be inconsistent with any community obligation of the United Kingdom.

(1)(a) From the later of 31 October 2004 or the date of first communication, for one year;2

(1)(b) From 31 October 2004 for three months

31 October 2004

7

MCOB 3.6

G

(1) Mortgage lenders and mortgage administrators should take care to ensure that where they rely on transitional provision 6R for compliance with MCOB 3.6, they do not indicate in the non-real time qualifying credit promotion that protections under the Consumer Credit Act 1974 (HMSO legislation webpage) apply. (2) Where transitional provision 6R applies, a firm that confirms compliance with the rules in MCOB 3 under MCOB 3.9, or approves the non-real time qualifying credit promotion under MCOBMCOB 3.11 should confirm that the promotion meets the requirements of the Consumer Credit Act 1974 (HMSO legislation webpage).

82

R2

A reference to:2

(a) an initial disclosure document in MCOB 4 Annex 1 R or MCOB 8 Annex 1; or2(b) an illustration in MCOB 5 Annex 1 or MCOB 9 Annex 1;2

includes an initial disclosure document or illustration which complies with the rules in the Mortgages: Conduct of Business Sourcebook Instrument 2003, as amended by the Mortgages: Conduct of Business Sourcebook (Amendment) Instrument 2004.2

From 31 October 2004 until 31 May 20052