Related provisions for MCOB 11.6.12

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MCOB 11.6.1GRP
(1) This section sets out rules and guidance for lenders and providers under regulated mortgage contracts and home purchase plans, in relation to the assessment of affordability for the customer of these contracts. Firms have the option of applying certain of the rules and guidance on a modified basis in relation to regulated mortgage contracts and home purchase plans which are solely for a business purpose or are with high net worth mortgage customers. This section also contains
MCOB 11.6.2RRP
(1) Except as provided in MCOB 11.6.3 R, MCOB 11.6.57 R (Interest roll-up mortgages) and MCOB 11.7 (Transitional arrangements):(a) before entering into, or agreeing to vary, a regulated mortgage contract or home purchase plan, a firm must assess whether the customer (and any guarantor of the customer's obligations under the regulated mortgage contract or home purchase plan) will be able to pay the sums due; and(b) the firm must not enter into the transaction in (a) unless it can
MCOB 11.6.5RRP
When assessing for the purposes of MCOB 11.6.2 R whether a customer will be able to pay the sums due, a firm: (1) must not base its assessment of affordability on the equity in the property which is used as security under the regulated mortgage contract or is subject to the home purchase plan, or take account of an expected increase in property prices;(2) must take full account of:(a) the income of the customer, net of income tax and national insurance; and, as a minimum(b) (i)
MCOB 11.6.6RRP
For the purposes of MCOB 11.6.2 R, a firm must not rely on a general declaration of affordability by the customer or his representative.
MCOB 11.6.7GRP
A firm may wish to impose a limit, expressed as a multiple of the customer's income, on the amount it is prepared to advance under a regulated mortgage contract or home purchase plan. Such an approach is not, of itself, inconsistent with MCOB 11.6.2 R but, in accordance with the rules in this section, the firm must be able to demonstrate that the loan is affordable, having taken full account of the customer's income and expenditure, and (for a mortgage lender) the impact of future
MCOB 11.6.8RRP
In taking account of the customer's income (in accordance with MCOB 11.6.5R (2)(a)) for the purposes of its assessment of whether the customer will be able to pay the sums due:(1) a firm must obtain evidence of the income declared by the customer for the purposes of the customer's application for the regulated mortgage contract or home purchase plan (or variation). The evidence, whether document-based or derived through the use of automated systems, must be of a type and for a
MCOB 11.6.9GRP
In relation to taking account of the customer's income for the purposes of its assessment of whether the customer will be able to pay the sums due:(1) income may be derived from sources other than employment (such as pensions or investments), or from more than one job;(2) the evidence necessary to comply with MCOB 11.6.8 R will vary according to factors such as the employment status and the nature of the employment of the customer (for example, whether he is employed, self-employed,
MCOB 11.6.10RRP
For the purposes of a mortgage lender's or home purchase provider's assessment of whether the customer will be able to pay the sums due:(1) the committed expenditure of a customer in MCOB 11.6.5R (2)(b)(i) is his credit and other contractual commitments which will continue after the regulated mortgage contract or home purchase plan (or variation) is entered into;(2) the basic essential expenditure of a customer's household in MCOB 11.6.5R (2)(b)(ii) comprises expenditure for:
MCOB 11.6.13GRP
(1) Examples of evidence of income in MCOB 11.6.12R (1) are payslips and bank statements.(2) If a firm obtains details of the customer's credit commitments from the customer, it should corroborate the information, for example by making a credit reference agency search or checking credit card or bank statements.(3) Where the customer's credit or contractual commitments are due to end shortly after the regulated mortgage contract or home purchase plan (or variation) has been entered
MCOB 11.6.14RRP
If a firm is, or should reasonably be aware from information obtained during the application process, that there will, or are likely to, be future changes to the income and expenditure of the customer during the term of the regulated mortgage contract or home purchase plan, the firm must take them into account when assessing whether the customer will be able to pay the sums due for the purposes of MCOB 11.6.2 R.
MCOB 11.6.15GRP
(1) Examples of future changes to income and expenditure in MCOB 11.6.14 R are: reductions in income that may come about following the customer's retirement; where it is known that the customer is being made redundant; or where the firm is aware of another loan commitment that will become due during the term of the regulated mortgage contract or home purchase plan, such as an equity loan to assist in property purchase.(2) If the term of a regulated mortgage contract or home purchase
MCOB 11.6.16RRP
(1) This rule applies where: (a) a purpose of a regulated mortgage contract or home purchase plan (or variation) is debt consolidation; and (b) the customer is a credit-impaired customer.(2) Subject to (3), where each of the conditions in (1) is satisfied and, if the debts which are to be repaid using the sums raised by the regulated mortgage contract or home purchase plan (or variation) were not repaid, the transaction would not be affordable for the customer, the firm must take
MCOB 11.6.18RRP
(1) Under MCOB 11.6.5R (4), in taking account of likely future interest rate increases for the purposes of its assessment of whether the customer will be able to pay the sums due, a mortgage lender must consider the likely future interest rates over a minimum period of five years from the expected start of the term of the regulated mortgage contract (or variation), unless the interest rate under the regulated mortgage contract is fixed for a period of five years or more from that
MCOB 11.6.20RRP
A firm must put in place, and operate in accordance with, a written policy (which may be contained in more than one document), approved by its governing body, setting out the factors it will take into account in assessing a customer's ability to pay the sums due. The policy must address the following matters:(1) how income and expenditure is to be assessed, including (except as provided in MCOB 11.6.32R (1) and MCOB 11.6.39R (1)): (a) details of the types of income which are acceptable;
MCOB 11.6.22RRP
A firm must put in place, and be able to demonstrate that it has, robust systems and controls (including the use of management information and key performance indicators) to monitor the effectiveness of its affordability assessments, including in preventing payment difficulties.
MCOB 11.6.23GRP
Except as provided in MCOB 11.6.32R (2) and MCOB 11.6.39R (2), the monitoring in MCOB 11.6.22 R should:(1) include use of management information, key performance indicators and root cause analysis to review and (where appropriate) adjust and improve the mortgage lender's or home purchase provider's method of calculating the size of the advance for each customer, based on a consideration of the customer's income and expenditure; and (2) take place on a regular basis. However, a
MCOB 11.6.26RRP
When assessing for the purposes of MCOB 11.6.2 R whether a customer will be able to pay the sums due, a firm: (1) must not base its assessment of affordability on the equity in the property which is used as security under the regulated mortgage contract, or take account of an expected increase in property prices;(2) must:(a) where the repayments will be made from the resources of the customer:(i) take full account of the income, net of income tax and national insurance, or net
MCOB 11.6.27RRP
For the purposes of MCOB 11.6.2 R, a firm must not rely on a general declaration of affordability by the customer or his representative.
MCOB 11.6.28RRP
In taking account (in accordance with MCOB 11.6.26R (2)) of the customer's income or net assets (or both) and the resources of the business for the purposes of its assessment of whether the customer will be able to pay the sums due: (1) a firm must obtain evidence of the income or net assets (or both) of the customer and the resources of the business, as declared by the customer for the purpose of the customer's application for the regulated mortgage contract (or variation); and
MCOB 11.6.29RRP
In MCOB 11.6.26 R, for the purposes of taking full account of committed expenditure and taking account in general terms of basic essential expenditure and basic quality-of-living costs, the meaning of those phrases is as set out in MCOB 11.6.10 R.
MCOB 11.6.30GRP
The information which a firm should consider when taking account, for the purposes of MCOB 11.6.26R (2)(b), of the strength of the financial resources of the business will vary according to the characteristics of the business, but may include factors such as the cash flow, assets and liabilities of the business.
MCOB 11.6.31RRP
If a firm is, or should reasonably be aware from information obtained during the application process, that there will, or are likely to, be future changes to the income and expenditure of the customer, or the resources of the business, during the term of the regulated mortgage contract, the firm must take them into account when assessing whether the customer will be able to pay the sums due for the purposes of MCOB 11.6.2 R.
MCOB 11.6.34RRP
When assessing for the purposes of MCOB 11.6.2 R whether a customer will be able to pay the sums due, a firm: (1) must not base its assessment of affordability on the equity in the property which is used as security under the regulated mortgage contract, or take account of an expected increase in property prices;(2) must:(a) take full account of the income, net of income tax and national insurance, or net assets (or both) of the customer; and the customer's committed expenditure;
MCOB 11.6.35RRP
For the purposes of MCOB 11.6.2 R, a firm must not rely on a general declaration of affordability by the customer or his representative.
MCOB 11.6.36RRP
In taking account of the customer's income or net assets (or both) (in accordance with MCOB 11.6.34R (2)(a)) for the purposes of its assessment of whether the customer will be able to pay the sums due: (1) a firm must obtain evidence of the income or net assets (or both) declared by the customer for the purpose of the customer's application for the regulated mortgage contract (or variation); and(2) a firm must not accept self-certification of income by the customer, and the source
MCOB 11.6.37RRP
In MCOB 11.6.34 R, for the purposes of taking full account of committed expenditure and taking account in general terms of basic essential expenditure and basic quality-of-living costs, the meaning of those phrases is as set out in MCOB 11.6.10 R.
MCOB 11.6.38RRP
If a firm is, or should reasonably be, aware from information obtained during the application process, that there will, or are likely to, be future changes to the income and expenditure of the customer during the term of the regulated mortgage contract, the firm must take them into account when assessing whether the customer will be able to pay the sums due for the purposes of MCOB 11.6.2 R.
MCOB 11.6.39RRP
Where a firm chooses, in accordance with MCOB 11.6.33 R, to apply the provisions of MCOB 11.6.34 R to MCOB 11.6.38 R in place of MCOB 11.6.5 R to MCOB 11.6.19 G:(1) its policy in MCOB 11.6.20R (1) need not address each of the matters prescribed in sub-paragraphs (a) to (e) of that rule;(2) MCOB 11.6.23 G does not apply; and (3) in each case the record-keeping requirements in MCOB 11.6.60R (2)(a) to MCOB 11.6.60R (2)(d) apply only to the extent relevant, but the record in MCOB
MCOB 11.6.48RRP
For the purposes of MCOB 11.6.2 R, where a mortgage lender is lending under an interest-only mortgage in accordance with MCOB 11.6.41R (1), it may assess affordability on the basis of payment of interest only over the term (plus repayment of such capital as may be due to be repaid over the term). If it does so, it must consider as part of the customer's committed expenditure under MCOB 11.6.5R (2)(b)(i) (or the equivalent alternative provision for transactions with high net worth
MCOB 11.6.60RRP
(1) A firm must make, in paper or electronic form, an adequate record of the steps it takes to comply with the rules in this chapter in relation to each customer.(2) The record in (1) must include the information taken into account in each affordability assessment, so that it is possible to understand from the record the basis of the mortgage lender's or home purchase provider's lending or financing decision, including (except as provided in MCOB 11.6.32R (3) and MCOB 11.6.39R
MCOB 8.5A.2RRP
If a firm gives advice to a particular customer to enter into an equity release transaction, or to vary an existing equity release transaction, it must take reasonable steps to ensure that the equity release transaction is, or after the variation will be, suitable for that customer.
MCOB 8.5A.5RRP
For the purposes of MCOB 8.5A.2 R: (1) an equity release transaction will not be suitable for a customer unless the equity release transaction is appropriate to the needs and circumstances of the customer; (2) a firm must base its determination of whether an equity release transaction 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
MCOB 8.5A.6RRP
When a firm assesses whether the equity release transaction is appropriate to the needs and circumstances of the customer for the purposes of MCOB 8.5A.5 R, the factors it must consider include the following:(1) whether the benefits to the customer outweigh any adverse effect on:(a) the customer's entitlement (if any) to means-tested benefits; and(b) the customer's tax position (for example the loss of an Age Allowance);(2) alternative methods of raising the required funds such
MCOB 8.5A.8RRP
In considering the factor at MCOB 8.5A.6R (1), where a firm has insufficient knowledge of means-tested benefits and tax allowances to reach a conclusion, the firm must refer a customer to an appropriate source or sources such as the Pension Service, HM Revenue and Customs or Citizens Advice Bureau (or other similar agency) to establish the required information.
MCOB 8.5A.11RRP
In relation to MCOB 8.5A.5R (1), when a firmadvises a customer in relation to entering into an equity release transaction where the main purpose for doing so is the consolidation of existing debts by the customer, it must also take account of the following in assessing whether the equity release transaction is suitable for the customer: (1) the costs associated with increasing the period over which a debt is to be repaid; (2) whether it is appropriate for the customer to secure
MCOB 8.5A.15RRP
When advising a customer on the suitability of an equity release transaction, a firm must explain to the customer that the assessment of whether the equity release transaction is appropriate to his needs and circumstances is based on the customer's current circumstances, which may change in the future.
MCOB 8.5A.17GRP
MCOB 8.5A.5R (3) means that where the advice provided is based on a selection of equity release transactions from a single or limited number of providers, the assessment of suitability should not be limited to the types of equity release transactions which the firm offers. A firm cannot recommend the 'least worst' equity release transaction where the firm does not have access to products appropriate to the customer's needs and circumstances. This means, for example, that if a
MCOB 8.5A.19RRP
(1) A firm must make and retain a record: (a) of the customer information, including that relating to the customer's needs and circumstances and the customer's apparent satisfaction of the equity release provider's known eligibility criteria, that it has obtained for the purposes of MCOB 8.5A; (b) that explains why the firm has concluded that any advice given to a customer complies with MCOB 8.5A.2 R and satisfies the suitability requirement in MCOB 8.5A.5R (1); (c) of any advice
CONC 5.3.1GRP
(1) In making the creditworthiness assessment or the assessment required by CONC 5.2.2R (1), a firm should take into account more than assessing the customer's ability to repay the credit. [Note: paragraph 4.2 of ILG](2) The creditworthiness assessment and the assessment required by CONC 5.2.2R (1) should include the firm taking reasonable steps to assess the customer's ability to meet repayments under a regulated credit agreement in a sustainable manner without the customer incurring
CONC 5.3.2RRP
A firm must establish and implement clear and effective policies and procedures to make a reasonable creditworthiness assessment or a reasonable assessment required by CONC 5.2.2R (1). [Note: paragraph 4.19 of ILG]
CONC 5.3.3GRP
Under the procedures required by CONC 5.3.2 R a firm should take adequate steps, insofar as it is reasonable and practicable to do so, to ensure that information (including information supplied by the customer) on an application for credit relevant to a creditworthiness assessment or an assessment required byCONC 5.2.2R (1) is complete and correct. [Note: paragraph 4.29 of ILG]
CONC 5.3.4RRP
A firm must not base its creditworthiness assessment, or its assessment required under CONC 5.2.2R (1), primarily or solely on the value of any security provided by the customer, but this rule does not apply in relation to a regulated credit agreement under which the firm takes an article in pawn and the customer's total financial liability (including capital, interest and all other charges) is limited under the agreement to the proceeds of sale which would represent the true
CONC 5.3.5RRP
A firm must not advise or encourage a customer to enter into a regulated credit agreement for an amount of credit higher than the customer initially requested if the creditworthiness assessment or the assessment required by CONC 5.2.2R (1) indicates that repayment of the higher amount would not be sustainable or the firm ought reasonably to suspect that that is the case.[Note: paragraph 4.28 of ILG]
CONC 5.3.7RRP
A firm must not accept an application for credit under a regulated credit agreement where the firm knows or ought reasonably to suspect that the customer has not been truthful in completing the application in relation to information supplied by the customer relevant to the creditworthiness assessment or the assessment required by CONC 5.2.2R (1).[Note: paragraph 4.31 of ILG]
CONC 5.3.8GRP
An example of where a firm ought reasonably to suspect that the customer has not been truthful may be that the information supplied by the customer concerning income or employment status is clearly inconsistent with other available information.
BIPRU 3.4.40RRP
If there is no short-term credit assessment as set out in BIPRU 3.4.112 R, the general preferential treatment for short-term exposures as specified in BIPRU 3.4.37 R applies to all exposures to institutions of up to three months residual maturity.[Note: BCD Annex VI Part 1 point 34]
BIPRU 3.4.41RRP
If there is a short-term credit assessment as set out in BIPRU 3.4.112 R and such an assessment determines the application of a more favourable or identical risk weight than the use of the general preferential treatment for short-term exposures, as specified in BIPRU 3.4.37 R, then the short-term assessment and risk weighting specified in BIPRU 3.4.112 R must be used for that specific exposure only. Other short-term exposures must follow the general preferential treatment for
BIPRU 3.4.42RRP
If there is a short-term credit assessment as set out in BIPRU 3.4.112 R and such an assessment determines a less favourable risk weight than the use of the general preferential treatment for short-term exposures, as specified in BIPRU 3.4.37 R, then the general preferential treatment for short-term exposures must not be used and all unrated short-term claims must be assigned the same risk weight as that applied by the specific short-term assessment.[Note: BCD Annex VI Part 1
BIPRU 3.4.43GRP
2BIPRU 3 Annex 4 G2 contains a flow diagram guide to determining the risk weight to be applied to short-term exposures to institutions according to whether a short-term credit assessment is available.
BIPRU 3.4.51RRP

This table belongs to BIPRU 3.4.50 R.

Credit quality step

1

2

3

4

5

6

Risk weight

20%

50%

100%

100%

150%

150%
BIPRU 3.4.60RRP
(1) In the exercise of its judgement for the purposes of BIPRU 3.4.56 R to BIPRU 3.4.58 R, a firm may be satisfied only if the conditions in (2) to (6) are met.(2) The value of the property does not materially depend upon the credit quality of the obligor. This requirement does not preclude situations where purely macroeconomic factors affect both the value of the property and the performance of the borrower.(3) The risk of the borrower does not materially depend upon the performance
BIPRU 3.4.112RRP
Exposures to institutions where BIPRU 3.4.34 R to BIPRU 3.4.39 R apply, and exposures to corporates6 for which a short-term credit assessment by a nominated ECAI is available must be assigned a risk weight according to the table in BIPRU 3.4.113 R in accordance with the mapping by the appropriate regulator in accordance with the Capital Requirements Regulations 2006 of the credit assessments of eligible ECAIs to six steps in a credit quality assessment scale.[Note: BCD Annex VI
BIPRU 3.4.113RRP

This table belongs to BIPRU 3.4.112 R.

6

Credit quality step

1

2

3

4

5

6

Risk weight

20%

50%

100%

150%

150%

150%
BIPRU 3.4.116RRP
Exposures in the form of CIUs for which a credit assessment by a nominated ECAI is available must be assigned a risk weight according to the table in BIPRU 3.4.117 R in accordance with the assignment by the appropriate regulator in accordance with the Capital Requirements Regulations 2006 of the credit assessments of eligible ECAIs to six steps in a credit quality assessment scale.[Note: BCD Annex VI Part 1 point 75]
CONC 5.2.1RRP
(1) Before making a regulated credit agreement the firm must undertake an assessment of the creditworthiness of the customer.[Note: section 55B(1) of CCA](2) A firm carrying out the assessment required in (1) must consider: (a) the potential for the commitments under the regulated credit agreement to adversely impact the customer's financial situation, taking into account the information of which the firm is aware at the time the regulated credit agreement is to be made; and [Note:
CONC 5.2.2RRP
(1) Before entering into a regulated credit agreement which is excluded from CONC 5.2.1 R (see (4), (5) and (6)), a firm must carry out an assessment of the potential for the commitments under the agreement to adversely impact the customer's financial situation, taking into account the information of which the firm is aware at the time the agreement is to be made.[Note: paragraphs 1.14 and 4.1 of ILG] (2) Paragraph (1) does not apply to an agreement to which CONC 4.7.2R (1) applies
CONC 5.2.3GRP
The extent and scope of the creditworthiness assessment or the assessment required by CONC 5.2.2R (1), in a given case, should be dependent upon and proportionate to factors which may include one or more of the following:(1) the type of credit; (2) the amount of the credit;(3) the cost of the credit;(4) the financial position of the customer at the time of seeking the credit;(5) the customer's credit history, including any indications that the customer is experiencing or has experienced
CONC 5.2.4GRP
(1) To consider all of the factors set out in CONC 5.2.3 G in all cases is likely to be disproportionate. [Note: paragraph 4.11 of ILG](2) A firm should consider what is appropriate in any particular circumstances dependent on, for example, the type and amount of the credit being sought and the potential risks to the customer. The risk of credit not being sustainable directly relates to the amount of credit granted and the total charge for credit relative to the customer's financial
CONC 5.5.3RRP
(1) Before a P2P agreement is made, a firm must undertake an assessment of the creditworthiness of the prospective borrower.(2) A firm carrying out the assessment in (1) must consider: (a) the potential for the commitments under the P2P agreement to adversely impact the prospective borrower's financial situation, taking into account the information of which the firm is aware at the time the P2P agreement is to be made; and (b) the ability of the prospective borrower to make repayments
CONC 5.5.5RRP
A firm must consider sufficient information to enable it to make a reasonable assessment required by CONC 5.5.3 R. [Note: paragraph 4.21 of ILG]
CONC 5.5.6RRP
Before a P2P agreement is entered into under which a person takes an article in pawn, the firm must:(1) undertake the assessment referred to in CONC 5.2.2R (1) of the prospective borrower; and (2) comply with CONC 5.3.2 R, CONC 5.3.4 R, CONC 5.3.5 R, CONC 5.3.6 R and CONC 5.3.7 R to the same extent as if it were the lender under an agreement to which those rules apply, and should also take into account the guidance in CONC 5.2.3 G and CONC 5.2.4 G and CONC 5.3 to the same extent.
BIPRU 3.6.12RRP
Where a credit assessment exists for a specific issuing program or facility to which the item constituting the exposure belongs, this credit assessment must be used to determine the risk weight to be assigned to that item.[Note: BCD Annex VI Part 3 point 8]
BIPRU 3.6.13RRP
Where no directly applicable credit assessment exists for a certain item, but a credit assessment exists for a specific issuing program or facility to which the item constituting the exposure does not belong or a general credit assessment exists for the issuer, then that credit assessment must be used if it produces a higher risk weight than would otherwise be the case or if it produces a lower risk weight and the exposure in question ranks pari passu or senior in all respects
BIPRU 3.6.16RRP
Short-term credit assessments may only be used for short-term asset and off-balance sheet items constituting exposures to institutions and corporates.[Note: BCD Annex VI Part 3 point 12]
BIPRU 3.6.17RRP
Any short-term credit assessment may only apply to the item the short-term credit assessment refers to, and it must not be used to derive risk weights for any other item.[Note: BCD Annex VI Part 3 point 13]
CONC 6.2.1RRP
(1) Before significantly increasing:(a) the amount of credit to be provided under a regulated credit agreement; or(b) a credit limit for running-account credit under a regulated credit agreement;the lender must undertake an assessment of the customer's creditworthiness. [Note: section 55B(2) of CCA](2) A firm carrying out the assessment in (1) must consider: (a) the potential for the commitments under the regulated credit agreement to adversely impact the customer's financial
CONC 6.2.3RRP
A firm must consider sufficient information available to it at the time of the increase referred to in CONC 6.2.1 R to enable it to make a reasonable assessment required by that rule. [Note: paragraph 4.21 of ILG]
MCOB 4.7A.19RRP
When advising a customer on the suitability of a regulated mortgage contract, a firm must explain to the customer that the assessment of whether the regulated mortgage contract is appropriate to his needs and circumstances is based only on the customer's current circumstances and any reasonably foreseeable changes to those.
MCOB 4.7A.22GRP
MCOB 4.7A.5R (3) means that where the advice is not provided on an unlimited range of products from across the relevant market, the assessment of suitability should not be limited to the types of regulated mortgage contracts which the firm offers. A firm cannot recommend the 'least worst' regulated mortgage contract where the firm does not have access to products appropriate to the customer's needs and circumstances. This means, for example, that a firm dealing solely in the credit-impaired
MCOB 4.7A.25RRP
(1) A firm must make and retain a record:(a) of the customer information, including that relating to the customer's needs and circumstances, that it has obtained for the purposes of MCOB 4.7A;(b) that explains why the firm has concluded that any advice given to a customer complies with MCOB 4.7A.2 R and satisfies the suitability requirement in MCOB 4.7A.5R (1); and(c) of the customer's positive choice in MCOB 4.6A.2 R (Rolling up of fees or charges into loan) where applicable(2)
MCOB 4.11.4ERP
(1) In assessing whether a customer can afford to enter into a particular regulated sale and rent back agreement, a firm should use the following information:(a) the rental payments that will be due under the tenancy agreement which confers the right of the customer (or trust beneficiary or related party) to continue residing in the property, stress tested to take account of possible future rental increases during the fixed term of the tenancy agreement by reference to the circumstances
MCOB 4.11.6GRP
In considering the customer's entitlement to the means-tested benefits and housing benefits for the affordability and appropriateness assessment, a firm may rely on information provided to it by the customer, provided it is satisfied on reasonable grounds that the customer has received advice from the appropriate HM Government department or other appropriate source of independent advice as to his position.
MCOB 4.11.8RRP
(1) A firm must make and retain a record of the customer information that has been provided to it, including that relating to:(a) the customer's income, expenditure and other resources that it has obtained from him for the purpose of assessing affordability, together with the stress testing of the rental payments; (b) the customer's needs, objectives and individual circumstances that it has obtained from him for the purpose of assessing appropriateness; and(c) the customer's entitlement
BIPRU 12.5.16RRP
In assessing its wholesale funding risk, a firm must:(1) identify its wholesale liabilities;(2) determine how those liabilities behave under normal financial conditions;(3) assess how they will behave under the stresses required by BIPRU 12.5.6R; and(4) divide its wholesale liabilities into funding which the firm assesses as having a higher than average likelihood of withdrawal in response to actual or perceived changes in the firm's credit-worthiness (Type A wholesale funding)
BIPRU 12.5.18GRP
In the appropriate regulator's view, Type A wholesale funding is likely to include at least funding which:(1) is accepted from a credit institution, local authority, insurance undertaking, pension fund, money market fund, asset manager (including a hedge fund manager), government-sponsored agency, sovereign government, or sophisticated non-financial corporation; or(2) is accepted through the treasury function of a sophisticated non-financial corporation which may be assumed to
BIPRU 12.5.21RRP
For the purpose of assessing its retail funding risk, a firm must:(1) estimate the gross retail outflows that could occur under the liquidity stresses required by BIPRU 12.5.6R;(2) identify the stress, or combination of stresses, to which it considers its retail funding to be most vulnerable and estimate the gross retail outflows that could occur under that stress or combination of stresses; and(3) divide its retail funding into funding which the firm assesses as having a higher
BIPRU 12.5.22GRP
In general, the appropriate regulator expects a firm's retail funding to be less responsive than its wholesale funding to actual or perceived changes in the firm's credit-worthiness. However, a firm should nevertheless make its own assessment of the relative responsiveness of its wholesale and retail funding.
CONC 8.3.2RRP
A firm must ensure that: (1) all advice given and action taken by the firm or its agent or its appointed representative: (a) has regard to the best interests of the customer; (b) is appropriate to the individual circumstances of the customer; and (c) is based on a sufficiently full assessment of the financial circumstances of the customer;[Note: paragraph 2.6a of DMG](2) customers receive sufficient information about the available options identified as suitable for the customers'
CONC 8.3.7RRP
A firm must:(1) provide the customer with a source of impartial information on the range of debt solutions available to the customer in the relevant country of the UK; [Note: paragraph 3.23b of DMG](2) before giving any advice or any recommendation on a particular course of action in relation to the customer'sdebts, carry out a reasonable and reliable assessment of:(a) the customer's financial position (including the customer's income, capital and expenditure);(b) the customer's
MCOB 9.3.2RRP

Table of modified cross-references to other rules.

This table belongs to MCOB 9.3.1 R.

Subject

Rule or guidance

Reference in rule or guidance

To be read as a reference to:

Variations

MCOB 5.1.3R(2)

MCOB 7

MCOB 7 as modified by MCOB 9

Part of loan not an equity release transaction2

2

MCOB 5.1.9G

MCOB 5.6.6R(2)

MCOB 9.4.6R(2)

Waiver of provisions

MCOB 5.1.10G

MCOB 5.6

MCOB 9.4.

Purpose

MCOB 5.2.1G

MCOB 5

MCOB 5 as modified by MCOB 9

Applying for a lifetime mortgage2

2

MCOB 5.3.2G

MCOB 5.6.26R and MCOB 5.6.27R

MCOB 9.4.26R and MCOB 9.4.27R

4Messages to be given when providing information on equity release transactions

MCOB 5.4.18AR (1)

MCOB 5.4.18AR (1)(a)

MCOB 4.7A.2 R

MCOB 4.4A.1R (1), MCOB 4.4A.2 R and MCOB 4.4A.4R (1)

MCOB 8.5A.2 R

MCOB 4.4A.1R (1), MCOB 4.4A.2 R and MCOB 4.4A.4R (1), each as applied by MCOB 8.3.1 R in modified form

4Messages to be given when customer requests an execution-only sale

MCOB 5.4.18BR (1)

MCOB 4.8A.14R (1) to MCOB 4.8A.14R (3)

MCOB 8.6A.4R (2)

4Guidance relevant to messages given to customer

MCOB 5.4.18C G

MCOB 5 Annex 1

MCOB 9 Annex 1 R for a lifetime mortgage; MCOB 9 Annex 2 R for a home reversion plan.

Tied products

MCOB 5.4.24G

MCOB 5.6.74R

MCOB 9.4.73R or MCOB 9.4.160R3

4Provision of illustrations: timing

MCOB 5.5.1 R (2)(e)

MCOB 4.8A.14R (1), (2) or (3)

MCOB 8.6A.4R (2)

Issue of offer document in place of illustration

MCOB 5.5.3G

MCOB 6.4 and MCOB 6.6

MCOB 6.4 and MCOB 6.6 as modified by MCOB 9

Customer's credit record

MCOB 5.5.16R

MCOB 5.5.15R(4)

MCOB 9.3.12R(3)
MCOB 9.3.12RRP
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:34(1) the information necessary to personalise the illustration, if the firm does not already know it;3(2) where the firm is uncertain whether the transaction will be an equity release transaction,3 such information as is necessary to ascertain this;33(3) where the
CONC 3.8.2RRP
A firm must not in a financial promotion or a communication with a customer:(1) provide an application for credit with a pre-completed amount of credit which is not based on having carried out a creditworthiness assessment or an assessment required by CONC 5.2.2R (1); or[Note: paragraph 5.3 of ILG](2) suggest or state, expressly or by implication, that providing credit is dependent solely upon the value of the equity in property on which the agreement is to be secured; or[Note:
CONC 4.8.5GRP
Merely offering a customer more credit than the customer requested would not amount to the behaviour in CONC 4.8.4 R where:(1) the offer of the higher amount was based on a proper creditworthiness assessment or assessment required by CONC 5.2.2R (1); or(2) the firm offers more advantageous terms, conditions or prices to customers for larger loans, provided that such offers are sufficiently transparent and a proper creditworthiness assessment or assessment required by CONC 5.2.2R
MCOB 11.5.1GRP
(1) This chapter requires a firm to treat customers fairly by assessing, before deciding to:(a) enter into a regulated mortgage contract or home purchase plan; or(b) vary a regulated mortgage contract or home purchase plan;whether the customer will be able to repay the sums borrowed and interest (in the case of a regulated mortgage contract) or pay the sums due (in the case of a home purchase plan).(2) This chapter aims to ensure that customers are not exploited by firms that
BIPRU 5.4.35RRP

This table belongs to BIPRU 5.4.34 R.

Credit quality step with which the credit assessment of the debt security is associated

Residual Maturity

Volatility adjustments for debt securities issued by entities described in BIPRU 5.4.2 R (2)

Volatility adjustments for debt securities issued by entities described in BIPRU 5.4.2 R (3) and (4)

20 day liquidation period (%)

10 day liquidation period (%)

5 day liquidation period (%)

20 day liquidation period (%)

10 day liquidation period (%)

5 day liquidation period (%)

1

≤ 1 year

0.707

0.5

0.354

1.414

1

0.707

> 1 ≤ 5 years2

2.828

2

1.414

5.657

4

2.828

> 5 years

5.657

4

2.828

11.314

8

5.657

2–3

≤ 1 year

1.414

1

0.707

2.828

2

1.414

> 1 ≤ 5 years

4.243

3

2.121

8.485

6

4.243

> 5 years

8.485

6

4.243

16.971

12

8.485

4

≤ 1 year

21.213

15

10.607

N/A

N/A

N/A

> 1 ≤ 5 years

21.213

15

10.607

N/A

N/A

N/A

> 5 years

21.213

15

10.607

N/A

N/A

N/A
BIPRU 5.4.36RRP

This table belongs to BIPRU 5.4.34 R.

Credit quality step with which the credit assessment of a short term debt security is associated

Volatility adjustments for debt securities issued by entities described in BIPRU 5.4.2 R (2) with short-term credit assessments

Volatility adjustments for debt securities issued by entities described in BIPRU 5.4.2 R (3) and (4) with short-term credit assessments

20 day liquidation period (%)

10 day liquidation period (%)

5 day liquidation period (%)

20 day liquidation period (%)

10 day liquidation period (%)

5 day liquidation period (%)

1

0.707

0.5

0.354

1.414

1

0.707

2–3

1.414

1

0.707

2.828

2

1.414
APER 4.1.4ERP
Behaviour of the type referred to in APER 4.1.3 E includes, but is not limited to, deliberately:(1) falsifying documents;(2) misleading a client about the risks of an investment;(3) misleading a client about the charges or surrender penalties of investment products;(4) misleading a client about the likely performance of investment products by providing inappropriate projections of future investment returns;(5) misleading a client by informing him that products require only a single
BIPRU 3.7.2RRP

This table belongs to BIPRU 3.7.1 R

[Note: BCD Annex II]

Category

Item

Percentage

Full risk

Guarantees having the character of credit substitutes

Credit derivatives

Acceptances

Endorsements on bills not bearing the name of another credit institution

Transactions with recourse

Irrevocable standby letters of credit having the character of credit substitutes

Assets purchased under outright forward purchase agreements

Forward deposits

The unpaid portion of partly-paid shares and securities

Asset sale and repurchase agreements as defined in Article 12(3) and (5) of the Bank Accounts Directive

Other items also carrying full risk

100%

Medium risk

Documentary credits issued and confirmed (see also medium/low risk).

Warranties and indemnities (including tender, performance, customs and tax bonds) and guarantees not having the character of credit substitutes.

Irrevocable standby letters of credit not having the character of credit substitutes.

Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) with an original maturity of more than one year.

Note issuance facilities (NIFs) and revolving underwriting facilities (RUFs).

50%

Medium/low risk

Documentary credits in which underlying shipment acts as collateral and other self-liquidating transactions.

Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) with an original maturity of up to and including one year which may not be cancelled unconditionally at any time without notice or that do not effectively provide for automatic cancellation due to deterioration in a borrower's creditworthiness.

20%

Low risk

Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) which may be cancelled unconditionally at any time without notice, or that do effectively provide for automatic cancellation due to deterioration in a borrower's creditworthiness. Retail credit lines may be considered as unconditionally cancellable if the terms permit the firm to cancel them to the full extent allowable under consumer protection and related legislation.

0%
CONC 10.3.2RRP

Table: Items which are eligible to contribute to the prudential resources of a firm

Item

Additional explanation

1

Share capital

This must be fully paid and may include:

(1)

ordinary share capital; or

(2)

preference share capital (excluding preference shares redeemable by shareholders within two years).

2

Capital other than share capital (for example, the capital of a sole trader, partnership or limited liability partnership)

The capital of a sole trader is the net balance on the firm's capital account and current account. The capital of a partnership is the capital made up of the partners':

(1)

capital account, that is the account:

(a)

into which capital contributed by the partners is paid; and

(b)

from which, under the terms of the partnership agreement, an amount representing capital may be withdrawn by a partner only if:

(i) he ceases to be a partner and an equal amount is transferred to another such account by his former partners or any person replacing him as their partner; or

(ii) he ceases to be a partner and an equal amount is transferred to another such account by his former partners or any person replacing him as their partner; or

(iii) the partnership is otherwise dissolved or wound up; and

(2)

current accounts according to the most recent financial statement.

For the purpose of the calculation of capital resources in respect of a defined benefit occupational pension scheme:

(1)

a firm must derecognise any defined benefit asset;

(2)

a firm may substitute for a defined benefit liability the firm'sdeficit reduction amount, provided that the election is applied consistently in respect of any one financial year.

3

Reserves (Note 1)

These are, subject to Note 1, the audited accumulated profits retained by the firm (after deduction of tax, dividends and proprietors' or partners' drawings) and other reserves created by appropriations of share premiums and similar realised appropriations. Reserves also include gifts of capital, for example, from a parent undertaking.

For the purposes of calculating capital resources, a firm must make the following adjustments to its reserves, where appropriate:

(1)

a firm must deduct any unrealised gains or, where applicable, add back in any unrealised losses on debt instruments held, or formerly held, in the available-for-sale financial assets category;

(2)

a firm must deduct any unrealised gains or, where applicable, add back in any unrealised losses on cash flow hedges of financial instruments measured at cost or amortised cost;

(3)

in respect of a defined benefit occupational pension scheme:

(a)

a firm must derecognise any defined benefit asset;

(b)

a firm may substitute for a defined benefit liability the firm'sdeficit reduction amount, provided that the election is applied consistently in respect of any one financial year.

4

Interim net profits (Note 1)

If a firm seeks to include interim net profits in the calculation of its capital resources, the profits have, subject to Note 1, to be verified by the firm's external auditor, net of tax, anticipated dividends or proprietors' drawings and other appropriations.

5

Revaluation reserves

6

Subordinated loans/debt

Subordinated loans/debts must be included in capital on the basis of the provisions in this chapter that apply to subordinated loans/debts.

Note:

1

Reserves must be audited and interim net profits, general and collective provisions must be verified by the firm's external auditor unless the firm is exempt from the provisions of Part VII of the Companies Act 1985 (section 249A (Exemptions from audit)) or, where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.