MCOB 12.2 Purpose

(1)

Firms are reminded of their obligations under Principle 6 and the Consumer Duty (as applicable). A firm is also under an obligation, as a consequence of this sourcebook's disclosure requirements, to make charges transparent to customers. This chapter reinforces these requirements by preventing a firm from imposing unfair and excessive charges.

(2)

 The level of charges under a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement is not typically a matter for regulation. However, in certain limited circumstances, the FCA believes that customers should be protected from unfair and excessive charging practices. This chapter considers four specific circumstances, where:

1. (a)

    the charges imposed upon a customer seeking to terminate a regulated mortgage contract before the end of the term of the contract do not reflect the cost of termination to the firm;

2. (b)

    the charges imposed on a customer in payment difficulties are not based upon the costs incurred by the firm;

3. (c)

    the charges (including rates of interest) imposed on a customer under a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement are excessive and contrary to the customer's interests; and

4. (d)

    the charges made to a customer in connection with a firm entering into, making a further advance on, administering, arranging or advising on a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement, or arranging or advising on a variation to the terms of a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement are excessive.