Related provisions for MCOB 13.3.4AA
21 - 40 of 109 items.
2MIPRU 4.2.12 R to MIPRU 4.2.23 R have the effect that a firm carrying on any home financing or home finance administration which is connected to regulated mortgage contracts will be subject to different capital requirements to a firm that carries on those activities without connection to regulated mortgage contracts. To identify which of the rules in MIPRU 4.2.12 R to MIPRU 4.2.23 R is applicable, a firm should consider which regulated activities it performs as part of its home
(1) The capital resources requirement for a firm carrying on only2home financing, 1which is not connected to regulated mortgage contracts, 2or home financing1and home finance administration1 which is not connected to regulated mortgage contracts2 (and no other regulated activity) is the higher of:111111(a) £100,000; and(b) 1% of:(i) its total assets plus total undrawn commitments and unreleased amounts under the home reversion plan1; less:(ii) excluded loans or amounts 1plus intangible
The capital resources requirement for a firm carrying on home finance administration1only, which has all or part of the home finance transactions1that it administers on its balance sheet, is:211121111112(1) in the case of a firm carrying on only home finance administration which is not connected to regulated mortgage contracts, the amount which is applied to a firm under MIPRU 4.2.12 R; or2(2) in the case of a firm carrying on any home finance administration which is connected
The capital resources requirement for a firm carrying on insurance mediation activity and home financing1 or home finance administration1 is the sum of : 11112(1) the capital resources requirement2 for a firm carrying on insurance mediation activity or home finance mediation activity1 (and no other regulated activity) (see MIPRU 4.2.11 R); and21(2) (a) in the case of a firm carrying on home financing which is not connected to regulated mortgage contracts, or home finance administration
(1) If a firm carrying on home finance mediation activity1 and home financing1 or home finance administration1 does not hold client money or other client assets in relation to itshome finance mediation activity1, the capital resources2 requirement is:1111112(a) in the case of a firm carrying on home financing which is not connected to regulated mortgage contracts or home finance administration which is not connected to regulated mortgage contracts, the amount applied to a firm
The capital resources requirement for a firm carrying on any combination of regulated activities which is not set out in MIPRU 4.2.10 R to MIPRU 4.2.21 R and MIPRU 4.2.23 R is: 211112(1) 2if the combination of regulated activities includes carrying on any home financing connected to regulated mortgage contracts or home finance administration connected to regulated mortgage contracts, the sum of the amounts which are applied to a firm under:(a) MIPRU 4.2.20R (1); and(b) MIPRU 4.2.23
2The capital resources requirementfor a firm carrying on any home financing which is connected to regulated mortgage contracts, or home financing and home finance administration which is connected to regulated mortgage contracts (and no other regulated activity), is the higher of:(1) £100,000; and(2) the sum of: (a) the credit risk capital requirement calculated in accordance with MIPRU 4.2A; and(b) 1% of:(i) its total assets plus total undrawn commitments and unreleased amounts
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) covering the regulated mortgage contract and any tied product purchased through the firm; and(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
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) except in the case of mortgage credit cards, information on the type of regulated mortgage contract, including:(a) a clear statement of whether the regulated mortgage contract is an interest-only mortgage, or repayment mortgage, or a combination of both; and(b) a prominent reminder, where all of the regulated mortgage contract is an interest-only mortgage, that:(i) the customer's payments to the firm do not
(1) 4MCOB 7.5.3 R (1)(b) does not apply where as a result of the customer having payment difficulties:(a) the regulated mortgage contract has changed to an interest-only mortgage; and(b) interest is being deferred and capitalised by the firm.(2) Paragraph (1) applies only where the customer continues to have payment difficulties.
Whether a firm is likely to provide the information set out in MCOB 7.5.3 R(2) more frequently than once a year will depend on the nature of the regulated mortgage contract. In determining how frequently to provide that information, a firm should take into account the need to keep the customer informed of any changes in the amount they owe, the customer's expectations and, where appropriate, the duration of the loan. For example, for a mortgage credit card the information might
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.
(1) A firm must deal fairly with any customer who:(a) has a payment shortfall4 on a regulated mortgage contract or home purchase plan;141(b) has a sale shortfall; or11(c) is otherwise in breach of a home purchase plan.(2) A firm must put in place, and operate in accordance with, a written policy (agreed by its respective governing body) and procedures for complying with (1). Such policy and procedures must reflect the requirements of MCOB 13.3.2A R and MCOB 13.3.4A R.3
(1) 4Where a customer has a payment shortfall in relation to a regulated mortgage contract or home purchase plan, a firm must not attempt to process more than two direct debit requests in any one calendar month.(2) Where a firm’s direct debit request, in respect of a customer who has a payment shortfall on a regulated mortgage contract or home purchase plan, has been refused, on at least one occasion in each of two consecutive months, due to insufficient funds, the firm must:(a)
3In complying with MCOB 13.3.2AR(6):(1) a firm must consider whether, given the individual circumstances of the customer, it is appropriate to do one or more of the following in relation to the regulated mortgage contract or home purchase plan with the agreement of the customer:(a) extend its term; or(b) change its type; or(c) defer payment of interest due on the regulated mortgage contract or of sums due under the home purchase plan (including, in either case, on any sale shortfall);
(1) Where, in relation to a regulated mortgage contract for a business purpose or a high net worth mortgage customer3, a customer either:(a) seeks an immediate increase in the borrowing provided under the regulated mortgage contract; or(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) Where (1) applies, the firm must within five business days (for a loan for a business purpose) or in
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 and MCOB 7.7.1 R does not apply:(1) the business illustration or high net worth illustration3must be based upon the total borrowing; and(2) MCOB 7.6.9 R to MCOB 7.6.10 G and MCOB 7.6.12 G do not apply.
When considering entering into or varying a regulated mortgage contract or home purchase plan, a firm need not apply the rules in MCOB 11.6.2 R to MCOB 11.6.18 R inclusive (as modified by MCOB 11.6.25 R to MCOB 11.6.31 R and MCOB 11.6.33 R to MCOB 11.6.38 R, where applicable) if it has established, acting reasonably, that the following conditions are satisfied:(1) the customer has: (a) an existing regulated mortgage contract (whether or not entered into on or after 31 October
The condition in MCOB 11.7.1R (2) does not apply if each of the following conditions is satisfied: (1) the firm is the mortgage lender or home purchase provider under the existing regulated mortgage contract or home purchase plan in MCOB 11.7.1R (1);(2) the value of the property which is the subject of the regulated mortgage contract or home purchase plan is at risk if repairs or maintenance work to the property are not carried out; (3) the funds generated by the additional borrowing
(1) When considering entering into or varying an interest-only mortgage, a mortgage lender need not apply the rules in MCOB 11.6.41R (1), MCOB 11.6.49 R, MCOB 11.6.50 R and MCOB 11.6.60R (3) if the conditions in MCOB 11.7.1 R) are satisfied, and if it has established, acting reasonably, that the existing regulated mortgage contract in MCOB 11.7.1R (1) is an interest-only mortgage.(2) Where only part of the sum advanced under the existing regulated mortgage contract is on an interest-only
1The guidance on initial disclosure requirements in MCOB 4.4A3 may be relevant; in this context, that guidance should be read using home purchase plan terminology instead of the equivalent regulated mortgage contract terminology, where appropriate3.Additional requirements for distance home purchase mediation contracts with retail customersNote: The rules regarding additional disclosure requirements for, and cancellation of, distance home purchase mediation contracts are set out
3For the purposes of MCOB 4.10.5A R:(1) a home purchase plan will not be suitable for a customer unless the home purchase plan is appropriate to the needs and circumstances of the customer;(2) a firm must base its determination of whether a home purchase plan is appropriate to a customer's needs and circumstances on the facts disclosed by the customer and other relevant facts about the customer of which the firm is or should reasonably be aware;(3) no advice must be given to a
3Firms may wish to consider the following provisions:3(1) the rule at MCOB 4.7A.6 R on the customer's needs and circumstances, as if it were guidance and to the extent applicable to home purchase plans; and(2) the guidance at MCOB 4.7A.1G (2), MCOB 4.7A.21 G and MCOB 4.7A.23 G (Other considerations when advising);in each case using home purchase plan terminology instead of the equivalent regulated mortgage contract terminology, where appropriate.
MCOB applies to regulated mortgage contracts entered into on or after 31 October 2004. A contract that was entered into before 31 October 2004, and that is subsequently varied on or after that date, will not be a regulated mortgage contract but may be a regulated credit agreement to which the CCA and CONC apply. If, however, a new contract is entered into on or after 31 October 2004, replacing the previous contract, this may be a regulated mortgage contract.4PERG 4.4.13G2 contains
Principle 2 requires a firm to conduct its business with due skill, care and diligence. The purpose of MCOB 1.6.3 R is to reinforce this. The FCA would expect firms to take appropriate steps to determine whether any mortgage it proposes to enter into is subject to FCA regulation and, if so, whether it is a regulated mortgage contract or a regulated credit agreement4.
If, notwithstanding the steps taken by a firm to comply with MCOB 1.6.3 R, it transpires that a mortgage which the firm has treated as unregulated or as a regulated credit agreement4 is in fact a regulated mortgage contract, the firm must as soon as practicable after the correct status of the mortgage has been established:(1) contact the customer and provide him with the following information in a durable medium:(a) a statement that the mortgage contract is a regulated mortgage
(1) MCOB 1.6.4 R(2) means, for example, that if a firm discovered immediately after completion that a loan was a regulated mortgage contract, the firm would be required to comply with MCOB 7.4 (Disclosure at the start of the contract).(2) Although MCOB 1.6.4 R recognises that firms may become aware that a mortgage is a regulated mortgage contract at a late stage, the FCA expects this to be an extremely rare occurrence. It could arise, for example, if a firm has acted on the understanding,
The cumulative effect of article 20(3) of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (the 2013 Order) and Chapter 14A of Part 2 of the Regulated Activities Order is to essentially carve out regulated mortgage contracts from regulation under the CCA and from regulation as a credit-related regulated activity.11
Section 126(2) of the CCA (as inserted by the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014) provides, however, that for the purposes of section 126(1) of the CCA (a land mortgage securing a regulated credit agreement is enforceable (so far as provided in relation to the agreement) on an order of the court only) and Part 9 of the CCA (judicial control) a regulated mortgage contract which would, but for the exemption in PERG 2.7.19CG(1),
The definition does not include administration of a regulated mortgage contract which was not entered into by way of business. See PERG 4.3.3 G for a discussion of the 'by way of business' test. The definition also does not include administration of a mortgage which was entered into before 31 October 2004. See, however, PERG 4.4.4 G and PERG 4.4.13 G for a discussion of how a variation of a mortgage contract entered into before 31 October 2004 could amount to the entry into a
Under article 61(3)(b) of the Regulated Activities Order, administering a regulated mortgage contract is defined as either or both of:(1) notifying the borrower of changes in interest rates or payments due under the contract, or of other matters of which the contract requires him to be notified; and(2) taking any necessary steps for the purposes of collecting or recovering payments due under the contract from the borrower;but does not include merely having or exercising a right
Article 62 of the Regulated Activities Order provides that a person who is not an authorised person does not administer a regulated mortgage contract if he:(1) arranges for a firm with permission to administer a regulated mortgage contract (a 'mortgage administrator') to administer the contract; or(2) administers the regulated mortgage contract itself, provided that the period of administration is no more than one month after the arrangement in (1) has come to an end.
The illustration provided as part of the offer document in accordance with MCOB 6.4.1 R (1) must meet the requirements of MCOB 5.6 (Content of illustrations) with the following modifications:(1) the illustration must be suitably adapted and revised to reflect the fact that the firm is making an offer to a customer and updated to reflect changes to, for example, the interest rate, charges, the exchange rate or the APR required by MCOB 10 (Annual Percentage Rate), at the date the
A firm must ensure that the offer document contains a prominent statement:(1) of the period for which the offer is valid;(2) explaining, where the regulated mortgage contract contains features, such as additional unsecured borrowing facilities, which could result in the customer borrowing more money, that where such features are used, the amount of the customer's debt will increase;(3) explaining when any interest rate change on the regulated mortgage contract takes effect. This
A firm must ensure that the contact details section of the offer document (as required by MCOB 5.6.122 R) also includes information on how to complain to the firm about the services provided by the firm in relation to the regulated mortgage contract and whether or not complaints may subsequently be referred to the Financial Ombudsman Service.
In addition to the information required by MCOB 6.4.13 R, a firm may include information about how to complain to any other firm about the services that firm provided to the customer in relation to the regulated mortgage contract. For example, where the customer received advice from another firm, a mortgage lender may include contact details for the firm that provided the advice.
If the firm knows at the point that the offer is made to the customer that its interest in the regulated mortgage contract will be assigned (by sale or transfer) and the firm will no longer be responsible for setting interest rates and charges, the offer document must:(1) state this; and(2) state, where known, who will be responsible for setting interest rates and charges after the sale or transfer.
A firm must ensure that any regulated mortgage contract that it enters into does not impose, and cannot be used to impose, an early repayment charge other than one that is:(1) able to be expressed as a cash value; and(2) a reasonable pre-estimate of the costs as a result of the customer repaying the amount due under the regulated mortgage contract before the contract has terminated.
A firm may calculate the same level of early repayment charge for all regulated mortgage contracts of a similar type (for example a tranche of regulated mortgage contracts offering a particular fixed rate of interest), rather than on the basis of the individual regulated mortgage contract with the particular customer.
Before: (1) entering into a regulated mortgage contract with a customer; or(2) making a further advance on an existing regulated mortgage contract; or (3) changing all or part of a regulated mortgage contract from one interest rate to another;1a firm must disclose to the customer:(a) in the illustration provided in accordance with MCOB 5, MCOB 7.6.7 R, MCOB 7.6.18 R, MCOB 7.6.22 R, MCOB 7.6.31 R, or MCOB 9; and(b) in the illustration provided as part of the offer document in accordance
This section2 applies to a firm9 which is a home finance provider3 or a firm with permission to enter into a regulated credit agreement as lender in respect of high-cost short-term credit or home credit loan agreements,8 or which is,9 in respect of sales to a retail client5 or a consumer5:9355(1) an insurer; or(1A) the manager of an authorised AIF or a UCITS scheme; or9(2) the operator of an investment trust savings scheme , or a personal pension scheme4; or 94(3) a person who
(1) The purpose of this section2 is to set out the requirements for firms in the retail mortgage, investment, consumer credit lending8 and pure protection contract markets specified in SUP 16.11.1 R to report individual product sales data to the FCA17. In the case of firms in the sale and rent back market, there is a requirement to record, but not to submit, thedata.6 These requirements apply6 whether the regulated activity has been carried out by the firm, or through an intermediary
(1) A firm must submit a report (the 'data report') containing the information required by SUP 16.11.5 R quarterly, within 20 business days of the end of the quarter, unless (3) or (4)6 applies.(2) The reporting periods are the four calendar quarters of each year beginning on 1 January.(3) A firm need not submit a data report if no relevant sales have occurred in the quarter.(4) 6A SRB agreement provider must compile, and keep for at least five years from the end of the relevant
The data report must contain sales data in respect of the following products:(1) retail investments;(2) pure protection contracts; 3(3) regulated mortgage contracts (but not further advances);3(4) home purchase plans;36(5) home reversion plans; 638(6) 6regulated sale and rent back agreements;88(7) High-cost short-term credit; and8(8) home credit loan agreements.8
(1) 1MCOB 8.6A provides that a firm may only enter into an equity release transaction with a customer, or arrange such a transaction for a customer, as an execution-only sale if the customer has rejected advice, identified the product he wishes to purchase and positively elected to proceed with an execution-only sale.(2) The aim of MCOB 8.6A is to ensure that, in all sales of equity release transactions, there is one firm which advises the customer on the equity release transaction
A firm must not enter into or arrange an execution-only sale for a equity release transaction unless:(1) the customer has rejected the advice given by the firm and instead requested an execution-only sale of an equity release transaction;(2) the customer has identified which particular equity release transaction he wishes to purchase, and specified to the firm at least the required additional information (where applicable);(3) after providing the required information in (2), the
(1) The condition in MCOB 8.6A.4R (1) does not apply in the case of a variation of a lifetime mortgage, provided that:(a) the variation would not involve the customer taking on additional borrowing beyond the amount currently outstanding under the existing lifetime mortgage, other than to finance any product fee or arrangement fee for the proposed new or varied contract; and(b) where the variation will (in whole or part) change from one interest rate to another, the firm has presented
The required additional information in MCOB 8.6A.4R (2) is:(1) for a lifetime mortgage other than one falling within MCOB 8.6A.5 R:(a) the name of the mortgage lender;(b) the rate of interest;(c) the interest rate type;(d) the price or value of the property on which the lifetime mortgage would be secured (estimated where necessary); and(e) the sum the customer wishes to borrow under it, either immediately or in the future (including the amount of any lump sum, any regular drawdown
(1) Whenever a firmenters into or arranges an execution-only sale for an equity release transaction, it must make and maintain a record of:, (a) the required information provided by the customer which satisfies MCOB 8.6A.4R (2);(b) the information in durable medium in MCOB 8.6A.4R (3);(c) the confirmation by the customer in MCOB 8.6A.4R (4) (where applicable); and(d) any advice from the firm which the customer rejected, including the reasons why it was rejected, before deciding
The purpose of this section1 is to remind firms of the relevance of the high level standards in PRIN, especially with regard to the use of sales methods that may lead a customer to feel pressurised to enter into, or vary, a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement.11
12(1) Principle 6 (Customers' interests) requires that a firm must pay due regard to the interests of its customers and treat them fairly. This means, for example, that a firm should avoid selling practices that commit customers (or lead customers to believe that they are committed) to any regulated mortgage contract or home reversion plan before they have been able to consider the illustration and offer document. One such practice might be to present a new customer with an illustration,
Principle 7 (Communications with clients) requires that a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. This means, for example, that a firm should avoid giving any customer a false impression about the availability of a regulated mortgage contract, home reversion plan1 or regulated sale and rent back agreement2, such as describing it as a 'special offer' not available after
If a firm makes an offer to a consumer2 with a view to entering into a regulated mortgage contract which is a distance contract, it must provide the consumer2 with the following information with the offer document:232(1) the EEA State or States whose laws are taken by the firm as a basis for the establishment of relations with the customer prior to the conclusion of the regulated mortgage contract;(2) any contractual clause on law applicable to the regulated mortgage contract
(1) Initial disclosure requirements apply4 only in relation to varying the terms of an equity release transaction4 entered into by the customer in any of the following ways:44(a) adding or removing a party;(b) taking out a further advance; or(c) switching all or part of the lifetime mortgage3 from one interest rate to another.13(2) Otherwise, this chapter applies in relation to any form of variation of an equity release transaction.444
(Subject to MCOB 7.7.5 R) a firm that enters into a regulated mortgage contract with a customer must provide the customer with the following information before the customer makes the first payment under that regulated mortgage contract:1(1) the amount of the first payment required;(2) the amount of the subsequent payment(s) if different from the first payment;(3) the method by which the payment will be collected (for example, by direct debit) and the date of collection of the
In the case of a regulated mortgage contract under which the loan is advanced to the customer in separate tranches, the amount required under MCOB 7.4.1 R(1) will be the repayment relating to the first tranche. The amount(s) required under MCOB 7.4.1 R(2) will need to reflect the fact that when each subsequent tranche is advanced, the payment that the customer will need to make will change.
(1) A firm must make and retain an adequate record of the information that it provides to each customer at the start of the regulated mortgage contract in accordance with this section.(2) The record required by (1) must be maintained for a year from the date that the information is provided to the customer.
A firm must ensure that, as soon as possible after the sale of a repossessed property, if the proceeds of sale are less than the amount due under the regulated mortgage contract or home purchase plan1, the customer is informed in a durable medium of:1(1) the sale shortfall; and(2) where relevant, the fact that the sale shortfall1may be pursued by another company (for example, a mortgage indemnity insurer).1
(1) If the decision is made to recover the sale shortfall,1 the firm must ensure that the customer is notified of this intention.1(2) The notification referred to in (1) must take place within five years of the date of the sale (if the regulated mortgage contract or home purchase plan1is subject to Scottish law) or within six years (in all other cases).
A firm must ensure that, on the sale of a repossessed property, if the proceeds of sale are more than the amount due under the regulated mortgage contract or home purchase plan1, reasonable steps are taken, as soon as possible after the sale, to inform the customer in a durable medium of the surplus and, subject to the rights of any subsequent mortgage or charge holders, to pay it to him.1