Related provisions for MCOB 4.1.3

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To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004 (From field only).

MIPRU 4.2.7RRP
The capital resources requirement for a social housing firm whose Part 4A permission is limited to carrying on the regulated activities of: (1) home financing;1 or11(2) home finance administration1(or both);11is that the firm's net tangible assets must be greater than zero.
MIPRU 4.2.8GRP
If a social housing firm is carrying on home financing1or home finance administration1(and no other regulated activity), its net tangible assets must be greater than zero. However, if it carries on insurance mediation activity or home finance mediation activity1, there is no special provision and the capital resources requirement for firms carrying on designated investment business or mediation activities only applies to it as appropriate. 11111
MIPRU 4.2.10AGRP
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
MIPRU 4.2.11RRP
(1) If a firm carrying on insurance mediation activity or home finance mediation activity1(and no other regulated activity) does not hold client money or other client assets in relation to these activities, its capital resources requirement is the higher of:1(a) £5,000; and(b) 2.5% of the annual income from its insurance mediation activity or home finance mediation activity1(or both).1(2) If a firm carrying on insurance mediation activity or home finance mediation activity1(and
MIPRU 4.2.12RRP
(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
MIPRU 4.2.13GRP
When considering what is an undrawn commitment or unreleased amount1, the appropriate regulator takes into account an amount which a customer1has the right to draw down or to receive under a home finance transaction1, but which has not yet been drawn down or received1, whether the commitment or obligation1is revocable or irrevocable, conditional or unconditional. 1
MIPRU 4.2.18RRP
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
MIPRU 4.2.19RRP
The capital resources requirement for a firm carrying on home finance administration only, which has all the home finance transactions1 that it administers off its balance sheet, is the higher of:11(1) £100,000; and(2) 10% of its annual income.
MIPRU 4.2.20RRP
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
MIPRU 4.2.21RRP
(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
MIPRU 4.2.22RRP
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
MIPRU 4.2.23RRP
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
PERG 7.3.1GRP
Under article 53 of the Regulated Activities Order (Advising on investments), advising a person is a specified kind of activity if:(1) the advice is given to the person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor; and(2) it is advice on the merits of his doing any of the following (whether as principal or agent):(a) buying, selling, subscribing for or underwriting a particular investment which is a security
PERG 7.3.2GRP
Articles 53,1 53A, 53B,3 53C1 and 53D 3of the Regulated Activities Order contain a number of elements, all of which must be present before a person will require authorisation. For guidance on whether a person is carrying on these regulated activities, see PERG 8 (Financial promotion and related activities),1PERG 4 (Guidance on regulated activities connected with mortgages), , 3PERG 14.3, 3PERG 14.4 and PERG 14.4A (Guidance on home reversion,3 home purchase and regulated sale and
PERG 7.3.3AGRP
The result of the amendments made to the meaning of the business test in section 22 of the Act is that the test differs depending on the activity in question. Where the regulated activities of advising on investments and advising on a home finance transaction1 are concerned, the business test is not to be regarded as satisfied unless a person carries on the business of engaging in those activities. This is a narrower test than that of carrying on regulated activities by way of
PERG 7.3.4GRP
In the FCA's view, for a person to be carrying on the business of advising on investments or advising on a home finance transaction1 he will usually need to be doing so with a degree of regularity and for commercial purposes – that is to say, he will normally be expecting to gain some kind of a direct or indirect financial benefit. But, in the FCA's view it is not necessarily the case that advice provided free of charge will not amount to a business. Advice is often given 'free'
PERG 7.3.7GRP
But even if advice is given in the United Kingdom, the general prohibition will not be contravened if the giving of advice does not amount to the carrying on, in the United Kingdom, of the business of advising on investments or advising on a home finance transaction1. Also, the general prohibition will not be contravened if the exclusion for overseas persons in article 72 of the Regulated Activities Order (Overseas persons) applies. That exclusion applies in relation to the giving
PERG 7.3.8GRP
If a person is carrying on the business of advising on investments or advising on a home finance transaction1in the United Kingdom, he will not require authorisation if:(1) he is able to rely on an exclusion; in addition to the exclusions already mentioned (in articles 54 and 72 of the Regulated Activities Order), other exclusions that may be relevant are in Chapter XVII of Part II of the Regulated Activities Order; or(2) he is an exempt person (see PERG 2.11 (What to do now?1));
PERG 7.3.9GRP
Many people may be involved in the production of a periodical publication, news service or broadcast. But if the regulated activity of advising on investments or advising on a home finance transaction1 is being carried on so that authorisation is required, the FCA's view is that the person carrying on the activity (and who will require authorisation) is the person whose business it is to have the editorial control over the content. In the case of a periodical publication, this
MIPRU 4.1.1RRP
2This chapter applies to a firm with Part 4A permission to carry on any of the following activities, unless an exemption in this section applies:(1) insurance mediation activity;(2) home finance mediation activity;11(3) home financing1;14114(4) home finance administration1.14114
MIPRU 4.1.13GRP
There are special provisions for a social housing firm when it is carrying on home financing1or home finance administration1(see MIPRU 4.2.7 R). 1111
MIPRU 4.1.18GRP
Social housing firms undertake small amounts of home finance1business even though their main business consists of activities other than regulated activities. Their home financing1is only done as an adjunct to their primary purpose (usually the provision of housing) and is substantially different in character to that done by commercial lenders. Furthermore, they are subsidiaries of local authorities or registered social landlords which are already subject to separate regulation.
PERG 2.9.1GRP
The various exclusions outlined below deal with a range of different circumstances. (1) Each set of circumstances described in PERG 2.9.3 G to PERG 2.9.17 G has some application to several regulated activities relating to securities, relevant investments orhome finance transactions.4 They have no effect in relation to the separate regulated activities of accepting deposits, issuing electronic money,9effecting or carrying out contracts of insurance, bidding in emissions auctions,10advising
PERG 2.9.3GRP
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) arranging (bringing about) dealsininvestments and4making arrangements with a view to transactions in investments;44(2A) arranging a home finance transaction;4(3) managing investments;(4) assisting in the administration and performance of a contract of insurance;(5) safeguarding and administering investments;(6) sending dematerialised instructions;(7)
PERG 2.9.4GRP
A person carrying on certain regulated activities does not require authorisation in specified circumstances if he is acting in a representative capacity. The representative capacities covered by the exclusions depend on the regulated activity concerned but, in most cases, the focus is on persons who are acting as trustee or personal representative. In broad terms, the exclusions apply to specified transactions, or activities, that are part of the discharge of his general obligations
PERG 2.9.5GRP
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as agent;(2) arranging (bringing about) deals in investments, and4making arrangements with a view to transactions in investments;44(2A) arranging a home finance transaction;4(3) assisting in the administration and performance of a contract of insurance;(4) safeguarding and administering investments; and(5) advising on investments or advising on a home finance
PERG 2.9.15GRP
This group of exclusions applies, in specified circumstances, to the regulated activities of:(1) dealing in investments as principal;(2) dealing in investments as agent;(3) arranging (bringing about) deals in investments and4making arrangements with a view to transactions in investments;4(3A) arranging a home finance transaction;4(3B) 5operating a multilateral trading facility;(4) advising on investments;(5) entering into a home finance transaction;44(6) administering a home finance
PERG 2.9.17GRP
The exclusions are available, for regulated activities other than those that relate to home finance transactions4 in the two broad cases set out below. For some of these regulated activities, the exclusions apply in each case. In others, they apply in only one.4(1) The first case is where the nature of the regulated activity requires the direct involvement of another person and that person is authorised or exempt (and acting within the scope of his exemption). For example, this
PERG 2.9.17AGRP
The exclusions for overseas persons who carry on certain regulated activities related to home finance transactions4 work in a different way. They depend on the residency of the borrower or borrowers, the reversion occupier or reversion occupiers,8 the home purchaser or home purchasers or the SRB agreement seller or SRB agreement sellers8as the case may be. In addition, some of the exclusions also depend on the residency of the reversion provider4 or SRB agreement provider8. Guidance
SUP 16.12.4RRP

Table of applicable rules containing data items4, frequency and submission periods

(1)

(2)

(3)

(4)

RAGnumber

Regulated Activities

Provisions containing:

applicabledata items

reporting frequency/ period

due date32

32

RAG 1

• accepting deposits

• meeting of repayment claims12

• managing dormant account funds (including the investment of such funds)12

27

SUP 16.12.5 R, except FSA001 and FSA002 on consolidated basis for FINREP firms37

SUP 16.12.6 R

SUP 16.12.7 R

RAG 2.1

• effecting contracts of insurance

• carrying out contracts of insurance

• entering as provider into a funeral plan contract

SUP 16.12.8 R2

SUP 16.12.8 R2

SUP 16.12.8 R2

RAG 2.2

• managing the underwriting capacity of a Lloyds syndicate as a managing agent at Lloyds

• advising on syndicate participation at Lloyds

• arranging deals in contracts of insurance written at Lloyds

SUP 16.12.9 R2

SUP 16.12.9 R2

SUP 16.12.9 R2

RAG 3

• dealing in investment as principal

• dealing in investments as agent

• advising on investments (excluding retail investment activities)

• arranging (bringing about) deals in investments (excluding retail investment activities)

SUP 16.12.10 R2

SUP 16.12.11 R or SUP 16.12.11B R for UK designated investment firms37except FSA001 and FSA002 on consolidated basis for FINREP firms37

SUP 16.12.10 R2SUP 16.12.12 R or SUP 16.12.12A R for UK designated investment firms37

SUP 16.12.10 R2SUP 16.12.13 R

RAG 4

• managing investments

• establishing, operating or winding up a collective investment scheme

• establishing, operating or winding up a stakeholder pension scheme

• establishing, operating or winding up a personal pension scheme2

• managing an AIF38

• managing a UCITS38

5

• operating an electronic system in relation to lending (FCA-authorised persons only)48

3838

SUP 16.12.14 R2

SUP 16.12.15 R or SUP 16.12.15B R for UK designated investment firms37, except FSA001 and FSA002 on consolidated basis for FINREP firms37

SUP 16.12.14 R2SUP 16.12.16 R or SUP 16.12.16A R for UK designated investment firm37

SUP 16.12.14 R2SUP 16.12.17 R

RAG 5

• home finance administration or home finance providing activity11

11

SUP 16.12.18A R2 and SUP 16.12.18BR 37

SUP 16.12.18A R2 and SUP 16.12.18BR 37

SUP 16.12.18A R2 and SUP 16.12.18BR 37

RAG 6

• safeguarding and administration of assets (without arranging)

• arranging safeguarding and administration of assets

• acting as trustee or depositary of an AIF38

• acting as trustee or depositary of a UCITS38

384038

SUP 16.12.19A R2

SUP 16.12.20 R2

SUP 16.12.21 R2

RAG 7

• retail investment activities

• advising on pensions transfers & opt-outs

• arranging (bringing about deals) in retail investments

SUP 16.12.22A R or SUP 16.12.22C R for UK designated investment firms37, except FSA001 and FSA002 on consolidated basis for FINREP firms37

SUP 16.12.23A R and37SUP 16.12.23 R for UK designated investment firms37

SUP 16.12.24 R

RAG 8

• making arrangements with a view to transactions in investments

• operating a multilateral trading facility4

SUP 16.12.25A R or SUP 16.12.25C R for UK designated investment firms37except FSA001 and FSA002 on consolidated basis for FINREP firm37

SUP 16.12.26 R

SUP 16.12.27 R

RAG 9

• home finance mediation activity14

• insurance mediation activity (non-investment insurance contracts)

14

SUP 16.12.28A R14

SUP 16.12.28A R14

SUP 16.12.28A R14

RAG 10

• the activities of an RIE97

97

SUP 16.12.29 G2

SUP 16.12.29 G2

SUP 16.12.29 G232

32RAG 11

bidding in emissions auctions

SUP 16.12.29A R

SUP 16.12.29A R

SUP 16.12.29A R

47RAG 12

[FCA]

• credit-related regulated activity

SUP 16.12.29C R

SUP 16.12.29C R

SUP 16.12.29C R
SUP 16.12.18BRRP

The applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4 R are set out in the table below. Reporting frequencies are calculated from a firm'saccounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period.

46Description of data item

Data item (note 1)

Frequency

Submission deadline

Annual report and accounts

No standard format

Annually

80 business days

Balance Sheet

Sections A.1 and A.2 MLAR

Quarterly

20 business days

Income Statement

Sections B.0 and B.1 MLAR

Quarterly

20 business days

Capital Adequacy

Section C MLAR

Quarterly

20 business days

Lending - Business flow and rates

Section D MLAR

Quarterly

20 business days

Residential Lending to individuals - New business profile

Section E MLAR

Quarterly

20 business days

Lending - arrears analysis

Section F MLAR

Quarterly

20 business days

Mortgage Administration - Business Profile

Section G MLAR

Quarterly

20 business days

Mortgage Administration - Arrears analysis

Section H MLAR

Quarterly

20 business days

Analysis of loans to customers

Section A3 MLAR

Quarterly

20 business days

Provisions analysis

Section B2 MLAR

Quarterly

20 business days

Fees and Levies

Section J MLAR

Annually

30 business days

Sale and rent back

Section K MLAR

Annually

30 business days

Credit Risk (note 2)

Section L MLAR

Quarterly

20 business days

Liquidity (note 3)

Section M MLAR

Quarterly

20 business days

Note 1

When submitting the completed data item required, a firm must use the format of the data item set out in SUP 16 Annex 19A. Guidance notes for the completion of the data items are set out in SUP 16 Annex 19B.

Note 2

Only applicable to a firm that has one or more exposures that satisfy the conditions set out in MIPRU 4.2A.4 R, and:

- has permission to carry on any home financing which is connected to regulated mortgage contracts; or

- has permission to carry on home financing and home finance administration which is connected to regulated mortgage contracts (and no other activity); or

- has permission to carry on home finance administration which is connected to regulated mortgage contracts and has all or part of the home finance transactions that it administers on its balance sheet.

Note 3

Only applicable to a firm

that

has no restriction to its Part 4A permission preventing it from undertaking new home financing or home finance administration connected to regulated mortgage contracts, and:

- has permission to carry on any home financing or home finance administration connected to regulated mortgage contracts.
SUP 16.12.28RRP
(1) 2SUP 16.12.28A R does not apply to:(a) a lead regulated firm;(b) an OPS firm;(c) a local authority;11(d) a third party processor in respect of any home finance activity.11(2) A lead regulated firm and an OPS firm must submit a copy of its annual report and audited accounts within 80 business days from its accounting reference date.
SUP 16.12.28ARRP

2The applicable data items, reporting frequencies and submission deadlines referred to in SUP 16.12.4 R are set out in the table below. Reporting frequencies are calculated from a firm'saccounting reference date, unless indicated otherwise. The due dates are the last day of the periods given in the table below following the relevant reporting frequency period.

Description of data item11

Data item11 (note 1)

Frequency

Submission deadline

Annual regulated business revenue up to and including £5 million

Annual regulated business revenue over £5 million

Balance Sheet

Section A RMAR

Half yearly

Quarterly

30 business days

Income Statement

Section B RMAR

Half yearly

Quarterly

30 business days

Capital Adequacy

Section D1 RMAR

Half yearly

Quarterly

30 business days

Professional indemnity insurance

(note 2)11

Section E RMAR

Half yearly

Quarterly 11

11

30 business days

Threshold Conditions

Section F RMAR

Half yearly

Half yearly

30 business days

Training and Competence

Section G RMAR

Half yearly

Half yearly

30 business days

COBS11 data

Section H RMAR

Half yearly

Half yearly

30 business days

Supplementary product sales data

Section I RMAR

Half yearly11

11

Annually

30 business days

Client money and client assets

Section C RMAR

Half yearly

Quarterly

30 business days

Fees and levies

Section J RMAR

Annually

Annually

30 business days

Note 1

When submitting the completed data item required, a firm must use the format of the data item set out in SUP 16 Annex 18A. Guidance notes for the completion of the data items is set out in SUP 16 Annex 18B.

11Note 2

This item only applies to firms that may be subject to an FSA requirement to hold professional indemnity insurance and are not exempt CAD firms.
SUP 16.12.30RRP
(1) 2An authorised professional firm, other than one that must comply with IPRU(INV) 3, 5 or 13 in accordance with IPRU(INV) 2.1.4R,3 or one that is a CASS debt management firm or one that carries on only credit-related regulated activity as a non-mainstream regulated activity,47 must submit an annual questionnaire, contained in SUP 16 Annex 9R, unless:11(a) its only regulated activities are one or more of:(i) insurance mediation;(ii) mortgage mediation;(iii) retail investment;(iv)
SUP 16.12.31RRP

2Table of data items from an authorised professional firm

Report

Return (note 1)

Frequency (Note 4)24

Due date

Adequate information relating to the following activities:

RMAR (Note 3)

Half yearly (quarterly for sections A to E for larger firms, subject to Note 3 exemptions) (note 2)

For half yearly report: 30 business days after period end For quarterly report: 30 business days after quarter end

(1) insurance mediation activity;

(2) mortgage mediation activity;

(3) retail investment activity;

(4) advising on, or arranging deals in, packaged products, or managing investments for private customers where these activities are the authorised professional firm's "main business" as determined by IPRU(INV) 2.1.2 R (3)

Adequate information relating to mortgage lending and mortgage administration.

MLAR

Quarterly

20 business days after quarter end

Note 1

When giving the report required, a firm must use the return indicated. The RMAR and MLAR are located at SUP 16 Annex 18A and SUP 16 Annex 19A respectively. Guidance on the completion of the data items are located at SUP 16 Annex 18B and SUP 16 Annex 19B respectively.

Note 2

For the purposes of RMAR reporting, a larger firm is a firm whose annual regulated business revenue in its previous financial year was greater than £5m. Annual regulated business revenue for these purposes is a firm's total revenue relating to insurance mediation activity, mortgage mediation activity and retail investment activity.

Note 3

A firm which submits an MLAR is not required to submit sections A and B of the RMAR.

Note 4

Reporting dates are calculated from a firm'saccounting reference date.
IFPRU 4.6.9GRP
The FCA considers that, until more promising account level arrears data is collected, enabling firms to better explain the movement in their arrears rate over time, the likelihood of firms being able to develop a compliant variable scalar approach for non-mortgage retail portfolios is low. This is because of the difficulty that firms have in distinguishing between movements in default rates that result from cyclical factors and those that result from non-cyclical reasons for these
IFPRU 4.6.19GRP
The FCA expects a firm to consider the following issues when seeking to apply a variable scalar approach for UK mortgages:(1) in respect of Principle 2 (IFPRU 4.6.5 G), the commonly used Council for Mortgage Lenders database was based on arrears data and not defaults during a period, and the use of these data without further analysis and adjustment can undermine the accuracy of any calculations; and(2) in respect of Principle 3 (IFPRU 4.6.5 G), the historical data time period
IFPRU 4.6.20GRP
The FCA expects a firm that is including mortgage arrears data as a proxy for default data to:(1) carry out sensitivity analysis identifying the circumstances in which the assumption that arrears may be used as a proxy for default would produce inaccuracy in long-run PD estimates;(2) set a standard for what might constitute a potentially significant level of inaccuracy, and demonstrate why, in practice, the use of this proxy would not result in any significant inaccuracy;(3) establish
IFPRU 4.6.21GRP
When using historical mortgage data as a key input into variable scalar models, the FCA expects a firm to:(1) carry out sensitivity analysis identifying the implications of using different cut-off dates for the start of the reference data set; and(2) justify the appropriateness of its choice of cut-off date.
IFPRU 4.6.23GRP
The FCA expects the PD of a residential mortgage would typically be lower than the PD of an unsecured loan to the same borrower (see article 178(1) of the EU CRR).
PERG 4.10.5GRP
There are exclusions that apply, in certain circumstances, in relation to each of the regulated mortgage activities if the person carrying on the activity is acting in the capacity of trustee or personal representative. Article 66 of the Regulated Activities Order (Trustees, nominees and personal representatives) sets out the circumstances in which the exclusions apply. The terms of these differ slightly depending on the regulated activity.
PERG 4.10.10GRP
1There are exclusions that apply, in relation to each of the regulated mortgage activities if the person carrying on the activity is a local authority.
PERG 7.4.2GRP
But the exclusion applies only if the principal purpose of the publication or service is not:(1) to advise on securities or relevant investments or home finance transactions1: or1(2) to lead or enable persons:(a) to buy, sell, subscribe for or underwrite securities or relevant investments; or1(b) to enter as borrower into regulated mortgage contracts, or vary the terms of regulated mortgage contracts entered into by them 1as borrower on or after 31 October 2004; or111(c) 1to
PERG 7.4.5GRP
The exclusion applies only if the principal purpose of the publication or service is not:(1) to give advice on securities, relevant investments or home finance transactions1(see PERG 7.3.1 G); or1(2) to lead or enable persons to:(a) buy, sell, subscribe for or underwrite securities or relevant investments; or(b) to enter as borrower into regulated mortgage contracts, or vary the terms of regulated mortgage contracts entered into by them 1 as borrower on or after 31 October 2004;
PERG 7.4.8GRP
Looking at the first disqualifying purpose set out in the exclusion, all the matters relevant to whether the regulated activities of advising on investments or advising on a home finance transaction1are being carried on must be taken into account (see PERG 8.24 (Advising on investments)). If the principal purpose of a publication or service is to give to persons, in their capacity as investors (or potential investors), 1 as borrowers, as reversion occupiers or reversion providers
PERG 7.4.9GRP
For the second disqualifying purpose, the focus switches to assessing whether the principal purpose of a publication or service is to lead a person to engage in a relevant transaction or enable him to do so. This disqualifying purpose is an alternative to the first. So it extends to material not covered by the first. In this respect:(1) material in a publication or service that invites or seeks to procure persons to engage in a relevant transaction can be said to "lead" to those
PERG 4.3.1GRP
There are six regulated mortgage activities requiring authorisation or exemption if they are carried on in the United Kingdom. These are set out in the Regulated Activities Order. They are:(1) arranging (bringing about) regulated mortgage contracts (article 25 A(1) (Arranging regulated mortgage contracts));(2) making arrangements with a view to regulated mortgage contracts (article 25A(2) (Arranging regulated mortgage contracts));(3) advising on regulated mortgage contracts (article
PERG 4.3.3GRP
A person will only need authorisation or exemption if he is carrying on a regulated activity 'by way of business' (see section 22 of the Act (Regulated activities)). There are, in fact, three different forms of business test applied to the regulated mortgage activities. In the FCA's view, however, the difference in the business tests should have little practical effect.
PERG 4.3.5GRP

Summary of which variant of the business test applies to the different regulated mortgage activities. This table belongs to PERG 4.3.4 G.

By way of business

Carrying on the business

Entering into a regulated mortgage contract (article 61(1))

Arranging (bringing about) regulated mortgage contracts (article 25A(1))

Administering a regulated mortgage contract (article 61(2)) (and the contract administered must have been entered into by way of business)

Making arrangements with a view to regulated mortgage contracts (article 25A(2))

 

Advising on regulated mortgage contracts (article 53A)
PERG 4.3.8GRP
It follows that whether or not any particular person may be carrying on a regulated mortgage activity 'by way of business' will depend on his individual circumstances. However, some typical examples where the applicable business test would be likely to be satisfied are where a person:(1) enters into one or more regulated mortgage contracts as lender in the expectation of receiving interest or another form of payment that would enable him to profit from his actions;(2) administers
PERG 4.11.5GRP
For the purposes of regulated mortgage activities, sections 418(2), (4), (5), (5A) and (6) are relevant, as follows:(1) Section 418(2) refers to a case where a UK-based person carries on a regulated activity in another EEA State in the exercise of rights under a Single Market Directive. The only Single Market Directive which is relevant to mortgages is theCRD3.3(2) Section 418(4) refers to the case where a UK-based person carries on a regulated activity and the day-to-day management
PERG 4.11.8GRP
The FCA's view of the effect of the Act and Regulated Activities Order in various territorial scenarios is set out in the remainder of this section. In those scenarios:(1) the term "service provider" is used to describe a person carrying on any of the regulated mortgage activities;(2) the term "borrower" refers to a borrower who is an individual and not a trustee; the position of a borrower acting as a trustee is not considered; and(3) it is assumed that the activity is not an
PERG 4.11.9GRP

Simplified summary of the territorial scope of the regulated mortgage activities, to be read in conjunction with the rest of this section.

This table belongs to PERG 4.11.8 G

Individual borrower resident and located:

in the UK

outside the UK

Service provider carrying on regulated activity from establishment:

in the UK

Yes

Yes

outside the UK

Yes

No

Yes = authorisation or exemption required

No = authorisation or exemption not required
PERG 4.11.10GRP
Where a person is carrying on any of the regulated mortgage activities from an establishment maintained by him in the United Kingdom, that person will be 'carrying on a regulated activity in the United Kingdom'. The location and residence of the borrower is irrelevant. That is the practical effect of sections 418(4), (5) and (6) of the Act.
FEES 4.4.9DRP
3To the extent that a firm4 has provided the information required by FEES 4.4.7 D to the FCA as part of its compliance with another provision of the Handbook, it is deemed to have complied with the provisions of that direction.444
MCOB 2.3.2RRP
A firm must take reasonable steps to ensure that it, and any person acting on its behalf, does not: (1) offer, give, solicit or accept an inducement; or (2) direct or refer any actual or potential business in relation to a regulated mortgage contract,3home reversion plan2 or regulated sale and rent back agreement3 to another person on its own initiative or on the instructions of an associate; 3if it is likely to conflict to a material extent with any duty that the firm owes to
MCOB 2.3.5GRP
MCOB 2.3.2 R does not prevent a firm: (1) assisting a home finance intermediary2 so that the quality of the home finance intermediary's2 service to customers is enhanced; or 22(2) giving or receiving indirect benefits (such as gifts, hospitality and promotional competition prizes); providing in either case this is not likely to give rise to a conflict with the duties that the recipient owes to the customer. In particular, such benefits should not be of a kind or value that is
MCOB 2.3.7RRP
(1) A mortgage lender,3reversion provider2 or SRB agreement provider3 must quantify, in cash terms, any material inducement it offers to a mortgage intermediary, reversion intermediary,2SRB intermediary3 or a third party. 3(2) In quantifying the value of the material inducement, the firm must include any subsequent payments (such as a trail fee) made where the customer continues with the samehome finance transaction.22
MCOB 2.3.8GRP
(1) Quantification of any material inducement offered by the mortgage lender or reversion provider2 supports the disclosure requirements elsewhere in MCOB. Further guidance on the disclosure of any inducement in cash terms is provided in MCOB 5.6.118 G for regulated mortgage contracts other than lifetime mortgages, MCOB 9.4.124 G for lifetime mortgages and MCOB 9.4.173 G for home reversion plans.2(1A) Quantification of any material inducement offered by a SRB agreement provider
MCOB 1.2.1RRP
1(1) This sourcebook3 applies to every firm that:113(a) carries on a home finance activity3 (subject to 31the business loan and loans to high net worth mortgage customers7 application provisions3); or3(b) communicates or approves a financial promotion of qualifying credit, of a home purchase plan,6of a home reversion plan3or of a regulated sale and rent back agreement.636(2) Where a firm has outsourced activities to a third party processor, any rule in MCOB which requires the
MCOB 1.2.2GRP
3(1) This sourcebook applies to activities carried out in respect of regulated mortgage contracts, equity release transactions, home purchase plans, and regulated sale and rent back agreements. Together, these products are referred to as home finance transactions.5555377(2) Lifetime mortgages and home reversion plans are together referred to as equity release transactions.3(3) The application of most of this sourcebook is expressed by reference to four types of firm: lenders/providers,
MCOB 1.2.12RRP
In MCOB the activities of a home finance provider which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts or plans 3to which the arranger is a party), are to be treated as arranging and therefore also as home finance activities.33
MCOB 1.2.13GRP
The effect of article 28A of the Regulated Activities Order would normally mean that arrangements made by a party to a home finance transaction3 would not fall within the home finance activity3 of arranging. So in a direct sale, a home finance provider3 would not be carrying on the regulated activity of arranging but, where the transaction proceeds to completion, would instead be involved in a regulated activity comprising entering into a home finance transaction3. However, the
MIPRU 5.2.1RRP
A firm must not use, or propose to use, the services of another person consisting of: (1) insurance mediation; or(2) insurance mediation activity; or(3) home finance mediation activity;11unless MIPRU 5.2.2 R is 3satisfied. 3[Note: Article 3(6) of the Insurance Mediation Directive2]2
MIPRU 5.2.1AGRP
3The appropriate regulator regards a firm as 'using' the services of, in particular, its immediate counterparty (typically the intermediary that passed the business to the firm) and of all other persons who have been granted the right or authority directly by the firm to effect a contract of insurance or enter into a home finance transaction.
MIPRU 5.2.2RRP
For the purposes of MIPRU 5.2.1 R, the person, in relation to the activity must:33(1) have3permission; or3(2) be3 an exempt person; or3(3) be3 an exempt professional firm; or3(4) be3 registered in another EEA State for the purposes of the Insurance Mediation Directive2; or32(5) in relation to insurance mediation activity, not be 3carrying this activity on in the EEA; or3(6) in relation to home finance mediation activity1, not be 3carrying this activity on in the United Kingdom.13[Note:
MIPRU 5.1.1RRP
2This chapter applies to a firm with a Part 4A permission to carry on:(1) insurance business; or(2) home financing;111(3) and which uses, or proposes to use, the services of another person consisting of:(a) insurance mediation; or(b) insurance mediation activity; or(c) home finance mediation activity.11
MIPRU 5.1.2GRP
The purpose of this chapter is to implement article 3.6 of the Insurance Mediation Directive in relation to insurance undertakings. The provisions of this chapter have been extended to home finance providers1 in relation to insurance mediation activity, and to insurance undertakings and home finance providers in relation to home finance mediation activity1, to ensure that firms using these services are treated in the same way and to ensure that clients have the same protection.
MCOB 5.3.1RRP
A home finance provider1 must not enter into a home finance transaction1, or agree to do so, with a customer unless the customer has submitted an application for that particular home finance transaction.11
MCOB 5.3.2GRP
(1) The purpose of MCOB 5.3.1 R, taken in conjunction with other rules in this chapter, is to ensure that the customer has received details of the particular home finance transaction for which he has applied, and has had the opportunity to satisfy himself that it is appropriate for him.1(2) In relation to a regulated mortgage contract, the application should identify the type of interest rate, rate of interest, and the mortgage lender at the point it is submitted by the customer
PERG 4.2.2GRP
Certain professional firms are allowed to carry on some regulated activities without authorisation so long as they comply with specified conditions (see PERG 4.14 (Mortgage activities carried on by professional firms)).
PERG 4.2.3GRP
A person who is concerned to know whether his proposed activities may require authorisation will need to consider the following questions (these questions are a summary of the issues to be considered and have been reproduced, in slightly fuller form, in the flowchart in PERG 4.18):(1) will I be carrying on my activities by way of business (see PERG 4.3.3 G (The business test))?(2) if so, will my activities relate to regulated mortgage contracts (see PERG 4.4 (What is a regulated
PERG 4.2.5GRP
An unauthorised person who intends to carry on activities connected with mortgages will also need to comply with section 21 of the Act (Restrictions on financial promotion). This guidance does not cover financial promotions that relate to mortgages. Persons should refer to the general guidance on financial promotion in Appendix 1 to the Authorisation manual, PERG 8 (Financial promotion and related activities)) and, in particular, to PERG 8.17 (Financial promotions concerning agreements
MCOB 5.1.3RRP
(1) This chapter applies if a firm:(a) advises a particular5customer to enter into, or arranges an execution-only sale in,5 a home finance transaction2; or52(b) provides information to a customer that is specific to the amount to be provided on a particular home finance transaction2, including information provided in response to a request from a customer; or2(c) provides the means for a customer to make an application to it;in connection with entering into, or agreeing to enter
MCOB 5.1.6RRP
In this chapter, references to a home finance transaction2 include, where the context requires, references to arrangements which are capable of becoming a home finance transaction2.22
MCOB 5.1.7GRP
(1) MCOB 5.1.3 R means that this chapter applies where the customer can apply to enter into a home finance transaction2. This includes circumstances where, for example, the means to apply is provided in person, by telephone, through a website or through an application pack sent through the post.2(2) The effect of this chapter is to require a customer to be provided with key information about a home finance transaction before he submits an application to a home finance provide
PERG 2.8.6AGRP
3The exclusions in the Regulated Activities Order that relate to the various arranging activities are as follows.(-1) 8Under Article 24A(2), an activity that would otherwise be both arranging and bidding in emissions auctions is specifically excluded from arranging because the activity of bidding in emissions auctions does not form part of any other regulated activity (see PERG 2.7.6D G).(1) Under article 26, arrangements that do not or would not bring about the transaction to
PERG 2.8.12AGRP
3Advice given by an unauthorised person in relation to a home finance transaction in the circumstances referred to in PERG 2.8.6AG (5)(a) or (b) (Arranging deals in investments and arranging a home finance transaction) is also excluded. In addition:(1) the following exclusions apply in specified circumstances where a person is advising on investments or advising on a home finance transaction:(a) while acting as trustee or personal representative (see PERG 2.9.3 G);(b) in connection
PERG 2.8.14AGRP
Exclusions from the regulated activities that involve administering a home finance transaction3 are provided where an unauthorised person:333(1) arranges for administration by an authorised person who has permission for carrying on that regulated activity;3(2) carries out the administration for up to one month after an arrangement of the kind mentioned in (1) comes to an end; or3(3) carries out the administration under an agreement with an authorised person who has permission
PERG 2.8.14BGRP
3The following exclusions apply in specified circumstances where a person is administering a home finance transaction:55(1) while acting as trustee or personal representative (see PERG 2.9.3 G);(2) in connection with the carrying on of a profession or of a business not otherwise consisting of regulated activities (see PERG 2.9.5 G);10(3) as an incoming ECA provider (see PERG 2.9.18 G)109(4) in connection with, or for the purposes of, managing a UCITS or managing an AIF and the
PERG 7.1.1GRP
This chapter applies to anyone involved in publishing periodicals, or in providing news services or broadcasts, who gives (or proposes to give) advice about securities, relevant investments or home finance transactions1and who wishes to determine whether he will be carrying on the regulated activities of advising on investments or advising on a home finance transaction1.11
PERG 7.1.2GRP
The purpose of this chapter is to provide guidance as to:(1) when a person involved in publishing periodicals, or in providing news services or broadcasts, requires authorisation to carry on the regulated activities of advising on investments or advising on a home finance transaction1(see PERG 7.3 (Does the activity require authorisation));1(2) if he does, whether he qualifies for the exclusion from those activities that applies to a periodical publication, a regularly updated