Related provisions for ICOBS 6.4.6
1 - 20 of 240 items.
(1) A firm must provide the customer with an illustration for a regulated mortgage contract before the customer submits an application for that particular regulated mortgage contract to a mortgage lender, unless an illustration for that particular regulated mortgage contract has already been provided.(2) Except in the circumstances in MCOB 5.5.1A R, a1firm must provide the customer with an illustration for a regulated mortgage contract when any of the following occurs, unless
1A firm need not provide an illustration:(1) in relation to a direct deal; (2) if the customer refuses to disclose key information (for example, in a telephone conversation, his name or a communication address) or where the customer is not interested in pursuing the enquiry; or(3) if the firm does not wish to do business with the customer.
The effect of the requirements at MCOB 5.3.1 R and MCOB 5.5.1 R(1) is that if a customer's application to enter into a regulated mortgage contract with a mortgage lender, made via a mortgage intermediary, is subsequently passed by that mortgage intermediary to another mortgage lender, then the mortgage intermediary must ensure that the application is amended and the customer is provided with an illustration for the other mortgage lender'sregulated mortgage contract before the
Where a firm has already provided an illustration in accordance with MCOB 5.5.1 R and the terms for the proposed regulated mortgage contract are subsequently materially altered, the firm must ensure that the customer is provided with a revised illustration, before acting on the amendment, when the change occurs at the point at which a customer submits an application for the regulated mortgage contract.
(1) If, at the point an illustration must be provided in accordance with MCOB 5.5.1 R, a firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:(a) provide an illustration; or(b) seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.(2) Where (1)(b) applies, an illustration must be provided, unless, on the basis of the information the customer provides,
If the firm has reasonable evidence that the contract is not a regulated mortgage contract and has not provided an illustration before a customer submits an application, and it is subsequently found that the contract is a regulated mortgage contract, there is no requirement to provide a separate illustration at that stage. However, the requirement to integrate an illustration into the offer document at MCOB 6.4.1 R will apply.
Where the customer requests an illustration for1 a particular regulated mortgage contract (see MCOB 5.5.1 R (2)(d)), the purpose of MCOB 5.5.15 R, MCOB 5.5.16 R and MCOB 5.5.17 G is to ensure that the customer receives an illustration without unnecessary delay. These requirements do not restrict the information that the firm may obtain from the customer after it has provided the customer with an illustration.11
In meeting a request for an illustration in accordance with MCOB 5.5.1 R (2)(d)11, the firm must not delay the provision of the illustration by requesting information other than:1(1) the information necessary to personalise the illustration in accordance with MCOB 5.6.6 R, if the firm does not already know it;(2) where the firm acts in accordance with MCOB 5.5.11 R(2), such information as is necessary to ascertain whether or not the contract will be a regulated mortgage contract;(3)
A firm may use information that it already holds on the customer for the purpose of producing the illustration (for example, if it already holds the customer's credit record), providing the use of this information does not delay the customer receiving the illustration and the customer's consent is obtained where appropriate.
If, on the basis of the information obtained from the customer or on the basis of information that the firm already holds on the customer, the firm would do business with the customer, but not on the terms requested, the firm may provide the customer with an illustration in respect of a different regulated mortgage contract if it chooses to do so.
An illustration provided to a customer must:(1) contain the material set out in MCOB 5 Annex 1 in the order and using the numbered section headings, sub-headings and prescribed text in MCOB 5 Annex 1, except where provided for in MCOB 5.6;(2) follow the layout of the template in MCOB 5 Annex 1 with:(a) prominent use of the Key facts3 logo followed by the text 'about this mortgage';33(b) each section clearly separated;(c) all the amounts to be paid in Sections 5, 6, 8 and 9 in
As a minimum the illustration must be personalised to reflect the following requirements of the customer:(1) the specific regulated mortgage contract in which the customer is interested;(2) the amount of the loan required;(3) the price or value of the property on which the regulated mortgage contract would be secured (estimated where necessary);(4) the term of the regulated mortgage contract (where the customer is unable to suggest a date at which he expects to repay the loan,
In relation to MCOB 5.6.6 R(3), for the firm to comply with the principle of 'fair, clear11 and not misleading' in MCOB 2.2.6, an estimated valuation, where the estimated valuation is not that provided by the customer, must be a reasonable assessment based on all the facts available at the time. For example, an overstated valuation could enable a more attractive regulated mortgage contract to be illustrated on the basis of a lower ratio of the loan amount to the property value
The amount referred to in MCOB 5.6.6 R(2) is:(1) in cases where on the basis of the information obtained from the customer before providing the illustration it is clear that the customer would not be eligible to borrow the amount he requested, an estimate of the amount that the customer could borrow based on the information obtained from the customer; or(2) where the regulated mortgage contract is a revolving credit agreement such as a secured overdraft or mortgage credit card:4(a)
MCOB 5.6.6 R sets out minimum requirements. The illustration may be personalised to a greater degree if the mortgage lender or mortgage intermediary wishes, subject to the restrictions on the information that can be obtained from the customer in MCOB 5.5.15 R when the illustration is provided in accordance with MCOB 5.5.1 R(2)(c).
MCOB 5.6.9 R(1) does not require information to be obtained from the customer before providing an illustration in order to ascertain the amount the customer is eligible to borrow. Instead, its purpose is to avoid a firm being in a position where it would otherwise have to provide a customer with an illustration for an amount it knew the customer would not be eligible for, based on whatever information it had obtained from the customer before providing the illustration.
The purpose of the illustration is to provide the customer with details of the cost of borrowing the amount required over the term specified in MCOB 5.6.6 R(2) and MCOB 5.6.6 R(4). Section 12 has been designed specifically to illustrate any additional features of the regulated mortgage contract such as a linked current account, a linked savings account or the availability of unsecured lending. These features should therefore be shown in section 12 and not in section 3 of the
Under the section heading 'Description of this mortgage' the illustration must:(1) state the name of the mortgage lender providing the regulated mortgage contract to which the illustration relates (a trading name used by the mortgage lender may also be stated in accordance with MCOB 5.6.2 R(6)), and the name, if any, used to market the regulated mortgage contract;(2) (a) provide a description of the interest rate type and rate of interest that applies in accordance with the format
MCOB 5.6.27 R sets out some examples of descriptions of interest rate types and rates of interest which must be used in the illustration to comply with MCOB 5.6.25 R(2). If an interest rate is not described in MCOB 5.6.27 R, it must be presented in the illustration in a way that is consistent with the descriptions in MCOB 5.6.27 R.
Where the loan under the regulated mortgage contract is divided into more than one part (for example where part of the loan is a fixed interest rate and part of the loan is a discounted variable interest rate) and the firm displays this in a tabular format in the illustration:(1) the following text must be used to introduce the table 'As this mortgage is made up of more than one part, these parts are summarised below:';(2) each part must be numbered for ease of reference in the
The following information must be included in the description of the interest rate required by MCOB 5.6.42 R(3)(c) except where MCOB 5.6.54 R applies:(1) where the interest rate can change, the word 'currently' must be used to illustrate the current interest rate payable; and(2) where the interest rate changes after a given period the words 'followed by' must be used to indicate this.
Where all or part of the regulated mortgage contract to which the illustration relates is an interest-only mortgage:(1) the illustration must include the sub-heading 'Cost of repaying the capital' with the following text under it:'You will still owe [insert amount of loan on an interest-only basis] at the end of the mortgage term. You will need to make separate arrangements to repay this. When comparing the payments on this mortgage with a repayment mortgage, remember to add any
Where the loan under the regulated mortgage contract is divided into more than one part (for example, where part of the loan is on a fixed interest rate and part on a discounted variable interest rate) and the firm displays the initial cost of all parts, and the total cost, in a tabular format in the illustration, MCOB 5.6.42 R(3) and MCOB 5.6.46 R do not apply; instead:(1) each part must be numbered for ease of reference in the illustration;(2) the loan amounts must be totalled;(3)
(1) Under the section heading 'Insurance' the illustration must include details of:(a) insurance which is a tied product; and(b) insurance which is required as a condition of the regulated mortgage contract which is not a tied product.(2) A firm may also provide details of insurance which it is optional for the customer to take out under this section heading.(3) It must be clear to the customer which products he is required to purchase under which circumstances (for example, where
(1) If none of the features at MCOB 5.6.94 R are applicable to the regulated mortgage contract to which the illustration relates, the section headed 'Additional features' must be retained, but the sub-headings must not be included and a statement must be added to explain that there are no additional features.(2) Only those features available on the regulated mortgage contract need be included in the illustration.(3) If a firm provides a customer with supplementary information
Under the sub-heading 'Additional secured borrowing', the illustration must provide details of circumstances in which additional secured lending is offered with the regulated mortgage contract that would allow the customer, subject to certain conditions, to increase the amount of the loan on which the illustration is based.
A mortgage intermediary must take reasonable steps to ensure that an illustration which it issues, or which is issued on its behalf, other than that provided by a mortgage lender:(1) is accurate within the following tolerances:(a) no more than one percent or £1, whichever is the greater, below the actual figures charged by the mortgage lender for the following:(i) the total amount payable in Section 5 of the illustration;(ii) the amount payable for every £1 borrowed in Section
It is the responsibility of a mortgage intermediary to ensure compliance with MCOB 5.4.3 R. However, where a firm can show that it was reasonable for it to rely on information provided to it by another person, other than the mortgage lender, that an illustration was within the tolerances described in MCOB 5.4.3 R, he may be able to rely on MCOB 2.5.2 R, if this turns out not to be the case.
The purpose of MCOB 5.4.8 R is not to require a firm to ascertain whether a customer is eligible for a particular regulated mortgage contract before providing an illustration. Instead, the purpose is to ensure that the firm takes into account the information it has obtained from the customer before providing an illustration to the customer.
A firm may satisfy MCOB 5.4.10 R by drawing the customer's attention orally to the importance of reading and understanding the illustration, for example in a face-to-face meeting, or by referring to its importance in a covering letter or electronic communication or other written information that accompanies the illustration.
3MCOB 53 places no restrictions on the provision of information that is not specific to the amount the customer wants to borrow, for example, marketing literature including generic mortgage repayment tables or graphs illustrating the benefits of making a regular overpayment on a flexible mortgage. Such literature may, however, constitute a financial promotion2 and be subject to the provisions of MCOB 3 (Financial promotion).2
(1) 3Whenever a firm provides a customer with information specific to the amount that the customer wants to borrow on a particular regulated mortgage contract following an assessment of the customer's needs and circumstances in order to comply with MCOB 4.7A.2 R, it must give, clearly and prominently, the following information:(a) the same information on the firm’s product range as is required by MCOB 4.4A.1R (1), MCOB 4.4A.2 R and MCOB 4.4A.4R (1); and(b) that the customer has
(1) 3Whenever, as part of an execution-only sale (or potential execution-only sale), a customer provides a firm with the information in MCOB 4.8A.14R (1), (2) or (3) the firm must inform the customer, clearly and prominently, that the customer has the right to request an illustration for any regulated mortgage contract which the firm is able to offer the customer.(2) Whenever, as part of an execution-only sale (or potential execution-only sale), a high net worth mortgage customer
(1) 3In order to demonstrate compliance with MCOB 5.4.18AR (1), a firm may wish to consider, for example, doing one or more of the following: give the messages to the customer in a durable medium; build the requirements into the firm's training of staff, as evidenced by its training and compliance manuals; insert appropriate prompts into paper-based or automated sales systems; have procedures in place to monitor compliance by its staff with that rule. What is required in each
Where the illustration provided to the customer does not contain an accurate quotation or a reasonable estimate of the payments the customer will need to make in connection with any tied product that the customer must take out with the regulated mortgage contract, and the customer applies for that regulated mortgage contract:(1) the firm must provide the customer with an accurate quotation as soon as possible after he has applied, and in good time before the offer document is
The rules on the content of an illustration at MCOB 5.6 (Content of illustrations) mean that if the regulated mortgage contract requires the customer to take out a tied product, the illustration must include an accurate quotation or a reasonable estimate of the payments the customer would need to make for the tied product (see MCOB 5.6.52 R (2) where the tied product is a repayment strategy and MCOB 5.6.74 R where the tied product is insurance).3 If it is not possible to include
1Using the methods and at the times specified in this section, a firm must provide the customer with the following information:(1) whether there are any limitations in the range of products that it will offer to the customer, and if so what those are; and(2) the basis on which the firm will be remunerated.
(1) The information about the basis of remuneration required by MCOB 4.4A.1R (2) must include all relevant information, including the following details:(a) any fees which the firm will charge to the customer;(b) when any such fees will be payable and, if applicable, reimbursable; and(c) whether the firm will receive commission from a third party and, if applicable, any arrangements for offsetting this against any fees charged.(2) The details in (1)(a) must be expressed, where
The information required by MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4R (1)and MCOB 4.4A.8 R must be communicated clearly and prominently, and in doing so:(1) if the initial contact includes spoken interaction, the information must be communicated orally; and(2) if the initial contact does not include spoken interaction, the messages must appear separately from other messages in the communication.If the initial contact is made by electronic means, the firm must ensure that the
(1) In order to comply with MCOB 4.4A.9 R for an internet sale, a firm should display the required information on a screen which the customer must access as part of the sales process. It would not be sufficient for the information to be accessible only by giving the customer the option to click on a link or download a document. The messages could be displayed clearly on one of the initial pages which the customer accesses.(2) In a postal sale, a firm may comply by setting out
A firm may demonstrate compliance with MCOB 4.4A.9R(1) by, for example, undertaking one or more of the following: building a requirement for oral communication of the relevant information into its training of staff as evidenced by its training and compliance manuals; inserting appropriate prompts into paper-based or automated sales systems; and having procedures in place to monitor compliance by staff with that rule. What is required in each case will depend on all the circum
(1) In many cases, MCOB 4.4A.12 R means that information will be given at the time of the first contact between the firm and the customer. However, there may be circumstances, for example in relation to a loan for a business purpose, where the possibility of the customer entering into, or varying the terms of, a regulated mortgage contract is only identified after preliminary discussions. The relevant disclosure is only required once this possibility is identified.(2) MCOB 4.4A.12
The information requirements in MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4R (1) and MCOB 4.4A.8 R do not apply where:(1) the information has already been provided by the firm and the firm has good reason to believe that it is still accurate and appropriate for the customer; or(2) the information has already been provided by the firm which first made contact with the customer in respect of the particular regulated mortgage contract, and the firm subsequently making contact with
A mortgage lender should provide the information in the provisions referred to in MCOB 4.4A.15 R in a direct sale but need not do so where the sale is through a mortgage intermediary. If a number of different firms are involved in relation to the transaction, having regard to MCOB 2.5.4 R (2), those firms should take reasonable steps to establish that the customer has been provided with the information as required by this section.
Where a firm provides services to a consumer by way of a distance contract, the firm must provide the consumer with the following information in a durable medium in good time before the distance contract has been agreed:(1) the information which is required by MCOB 4.4A.1 R to MCOB 4.4A.8 R;(2) whether or not the firm will be providing the consumer with advice;(3) the name and the main business of the firm, the geographical address at which it is established and any other geographical
(1) If at the point that initial disclosure must be made in accordance with MCOB 4.4A.1 R, MCOB 4.4A.2 R, MCOB 4.4A.4 R and MCOB 4.4A.8 Ra firm is uncertain whether the contract will be a regulated mortgage contract, the firm must:(a) make the initial disclosure; or(b) seek to obtain from the customer information that will enable the firm to ascertain whether the contract will be a regulated mortgage contract.(2) Where (1)(b) applies, the initial disclosure must be made unless,
1An insurer is responsible for producing, and an insurance intermediary for providing to a customer, the information required by this chapter and by the distance communication rules (see ICOBS 3.1). However, an insurer is responsible for providing information required on mid-term changes, and an insurance intermediary is responsible for producing price information if it agrees this with an insurer.
The level of information required will vary according to matters such as:(1) the knowledge, experience and ability of a typical customer for the policy;(2) the policy terms, including its main benefits, exclusions, limitations, conditions and its duration;(3) the policy's overall complexity;(4) whether the policy is bought in connection with other goods and services;(5) distance communication information requirements (for example, under the distance communication rules less information
The firm must:(1) remind the retail client about the open market options statement;33(2) tell the client what sum of money will be available to exercise open market options;33(3) remind the client about the availability of the pensions guidance; and3(4) make a recommendation that the client seeks appropriate guidance or advice to understand their options at retirement;3at least six weeks before the client’s intended retirement date.
If a retail client with an open market options3 tells a firm that he is considering, or has decided:3(1) to discontinue an income withdrawal arrangement; or(2) to take a further sum of money from his pension to exercise open market options;33 the firm must give the client an open market options3 statement, unless the firm has given the client such a statement in the last 12 months.3
(1) 3Where a firm communicates with a retail client about the retail
client'spersonal pension scheme, stakeholder pension scheme,
FSAVC, retirement annuity contract or pension buy-out contract
which is provided by the firm, unless the circumstances in (2) apply,
the firm must3:(a) refer to the availability of the pensions guidance;3(b) offer to provide the client with
information about how to access the pensions guidance; and3(c) [deleted]3(d) include3 a recommendation that the
3An example of behaviour that is likely to contravene the client's best interests rule or Principle 6 and may contravene other Principles is for a firm to actively discourage a retail client from using the pensions guidance, for example by:(1) leading the client to believe that using the pensions guidance is unnecessary or would not be beneficial; or(2) obscuring the statement about the availability of the pensions guidance or any other information relevant to the exercise of
3If a firm receives an application from a retail client to access some or all of the proceeds of a personal pension scheme, stakeholder pension scheme, FSAVC, retirement annuity contract or pension buy-out contract, the firm must provide the client with a description of the tax implications before the client accesses those proceeds.
MCOB 9.4.13 R(3) does not require information to be obtained from the customer before providing an illustration in order to ascertain the amount the customer is eligible to borrow or to release from the property8. Instead, its purpose is to avoid a firm being in a position where it would otherwise have to provide a customer with an illustration for an amount it knew the customer would not be eligible for, based on whatever information it had obtained from the customer before providing
Under the sub-heading 'Insurance you must take out through [insert name of mortgage lender or where relevant the name of the mortgage intermediary, or both]' the following information must be included if the lifetime mortgage7 requires the customer to take out insurance that is a tied product either through the mortgage lender or where relevant the mortgage intermediary:7(1) details of which insurance is a tied product;(2) for how long the customer is obliged to purchase the insurance;(3)
If the lifetime mortgage7 does not require the customer to take out insurance as a tied product, the sub-heading "Insurance you must take out through [insert name of mortgage lender and where relevant the name of the mortgage intermediary] "must be retained and a statement must be provided under this heading that the customer is not obliged to take out any insurance through the mortgage lender or, where relevant, the mortgage intermediary.7
Under the heading "What happens if you do not want this mortgage any more?", the illustration must include the following information on the lifetime mortgage:77(1) under the sub-heading "Early repayment charges":(a) an explanation of whether early repayment charges are payable;(b) an explanation of when early repayment charges are payable;(c) an explanation of any other fees that are payable if the lifetime mortgage7 is repaid early, and the current level of these fees;7(d) a
Under the sub-heading "Additional secured borrowing", the illustration must provide details of circumstances in which additional secured lending is offered with the lifetime mortgage7 that would allow the customer, subject to certain conditions, to increase the amount of the loan on which the illustration is based.7
8Under the heading "Risks - important things you must consider" the illustration must also include the following if they apply:(1) for an instalment reversion plan, a statement that if the customer dies in the early years of the plan, income payments will cease and therefore the full expected benefits of the plan will not be obtained;(2) (a) for an instalment reversion plan where there is a regular cash sum payable; and(b) where:(i) the home reversion plan is linked to an investment;
8Under the section heading "What fees must you pay?" the illustration must: (1) itemise all the fees that the customer must pay, excluding any charges for insurance set out in Section 10 of the illustration; and(2) include a statement regarding taxes and costs using the following text: "You may have to pay other taxes or costs in addition to any fees shown here.".
(1) 8If any fees are to be deducted from the amount to be released, this must be stated alongside each fee.(2) If the customer has the option of deducting from the amount to be released any of the fees included in this section, the following text must be included: "If you wish you can deduct [this/these/the {type of fee}] fee(s) from the amount to be released under this home reversion plan. This will reduce the amount you get to £ [insert amount of the amount to be released minus
(1) 8Under the section heading "Insurance" the illustration must include details of:(a) insurance which is a tied product; and(b) insurance which is required as a condition of the home reversion plan which is not a tied product.(2) Under this section heading a firm may also provide details of insurance which is optional for the customer to take out.(3) It must be clear to the customer which products he is required to purchase under which circumstances (for example, where both
8The following information must be included if the home reversion plan requires the customer to take out insurance that is a tied product either through the reversion provider or the reversion intermediary:(1) details of which insurance is a tied product;(2) the name of the firm imposing the requirement for the insurance;(3) for how long the customer is obliged to purchase the insurance;(4) an accurate quotation or a reasonable estimate of any payments the customer needs to make
8This section must: (1) follow Section 11 "What happens if you do not want this home reversion plan any more?", unless the illustration is issued by a reversion intermediary, in which case it must follow Section 12 "Using a home reversion intermediary"; and(2) include the name, address and contact point of the firm providing the illustration.
(1) A firm must make available:(a) the information on the employers’ liability register either:(i) on the firm's website at the address notified to the FCA in ICOBS 8.4.6R (1); or(ii) by arranging for a tracing office which meets the conditions in ICOBS 8.4.9 R to make the information available on the tracing office’s website; and(b) the latest director's certificate and the latest report prepared by an auditor for the purposes of ICOBS 8.4.4R (1)(c), to a tracing office which
For the purposes of ICOBS 8.4.4R (2)(d) and ICOBS 8.4.7R (1)(a)(ii) the existence of published and up-to-date versions of both a certificate from the directors of the tracing office, stating that the tracing office has complied in all material respects with the requirements in ICOBS 8.4.9R (1) to (6), and a report under a reasonable assurance engagement,2 addressing the accuracy and completeness of the tracing office’s database, may be relied upon as tending to establish that
The conditions referred to in ICOBS 8.4.4R (2)(d) and ICOBS 8.4.7R (1)(a)(ii) are that the tracing office is one which:(1) maintains a database which:(a) accurately and reliably stores information submitted to it by firms for the purposes of complying with these rules;(b) has systems which can adequately keep it up to date in the light of new information provided by firms;(c) has an effective search function which allows a person inputting data included on the database relating
(1) A firm must notify the FCA:(a) of any information provided to the FCA under ICOBS 8.4.6 R or ICOBS 8.4.6A R2 which ceases to be true or accurate; and(b) of the new position, in accordance with the notification requirements in ICOBS 8.4.6 R;within one month of the change.(2) A firm producing an employers’ liability register must:(a) update the register with any new or more accurate information falling within ICOBS 8 Annex 1:(i) by virtue of the entry into or renewal of, or
For the purposes of ICOBS 8.4.11R (2)(c) a firm is required to include the date at which it updates the register. However, depending on the firm's processes for making information available for the purposes of ICOBS 8.4.11R (2)(b), the register may only be relied upon as being up-to-date as at a date three months prior to the date on which the firm has updated the register, or such lesser period as applicable to the firm as is consistent with the firm's processes. ICOBS 8.4.11R
3A firm must put in place a written policy for complying with ICOBS 8.4.14 R and operate in accordance with it. The policy must cover at least the following matters:(1) details of where the firm's historical policies are held or are likely to be held (including details of records which are archived or stored off site);(2) details of the different types of records to be searched by the firm, such as electronic files, paper files, and microfiche; and(3) details of how the searches
(1) 3When a firm receives a request under ICOBS 8.4.14 R, from a qualifying tracing office, it must provide a response, in writing, to the requestor within one month of receiving the request.(2) This rule does not apply when the firm has conducted a search but no historical policies have been found.(3) When a firm receives a request under ICOBS 8.4.14 R, other than from a qualifying tracing office, it must provide a response, in writing, to the requestor within two months of receiving
(1) 3Where a firm has established that a historical policy does exist, the response should confirm what cover was provided and set out any available information that is relevant to the request received.(2) Where there is evidence to suggest that a historical policy does exist, but the firm is unable to confirm what cover was provided, the response should set out any information relevant to the request and describe the next steps (if any) the firm will take to continue the search.
1Firms are reminded that, under COBS 6.1.7 R, a firm that holds client designated investments or client money must provide its clients with specific information about how the firm holds those clientdesignated investments and client money and how certain arrangements might give rise to specific consequences or risks for those clientdesignated investments and client money.
1A firm that holds custody assets or client money must:(1) provide the information in COBS 6.1.7 R for any custody assets the firm may hold for a client, including any custody assets which are not designated investments; and(2) provide the information in COBS 6.1.7 R and in (1) to each of its clients.
A firm must: (1) compare the benefits likely (on reasonable assumptions) to be paid under a defined benefits pension scheme with the benefits afforded by a personal pension scheme or stakeholder pension scheme , before it advises a retail client to transfer out of a defined benefits pension scheme;(2) ensure that that comparison includes enough information for the client to be able to make an informed decision;(3) give the client a copy of the comparison, drawing the client's
In particular, the comparison should: (1) take into account all of the retail client's relevant circumstances;(2) have regard to the benefits and options available under the ceding scheme and the effect of replacing them with the benefits and options under the proposed scheme; 3(3) explain the assumptions on which it is based and the rates of return that would have to be achieved to replicate the benefits being given up; and3(4) be illustrated on rates of return which take into
When a firm compares the benefits likely to be paid under a defined benefits pension scheme with the benefits afforded by a personal pension scheme or stakeholder pension scheme (COBS 19.1.2R (1)), it must:
- (1)
assume that:
(a) the annuity interest rate is the intermediate rate of return appropriate for a level or fixed rate of increase annuity in 2COBS 13 Annex 2 3.1R(6)2 unless COBS 19.1.4B R applies3 or the rate for annuities in payment (if less);3
444 2.5%
(c) the average earnings index and the rate for section 21 orders is
4.0%
(d) for benefits linked to the RPI,4 the pre-retirement limited price indexation revaluation is
2.5%
(e) the annuity interest4 rate for3 post-retirement limited price indexation based on the RPI4 with maximum pension4 increases less than or equal to 3.5% or with minimum pension4 increases more than or equal to 3.5% is the rate in (a) above allowing for increases at the maximum rate of pension increase4; otherwise it is the rate in (f) below;3
433 (f) the index linked annuity interest4 rate for pension benefits linked to the RPI4 is the intermediate rate of return in 2COBS 13 Annex 2 3.1 R (6)2 for annuities linked to the RPI4 unless COBS 19.1.4B R applies;3
44(g) the mortality rate used to determine the annuity is based on the year of birth rate derived from each of the Institute and Faculty of Actuaries’ Continuous Mortality Investigation tables PCMA00 and PCFA00 and including mortality improvements derived from each of the male and female annual mortality projections models, in equal parts;3
4(h) for benefits linked to the CPI, the pre-retirement limited price indexation revaluation is
2.0%
4(i) the index linked annuity interest rate for pension benefits linked to the CPI is the intermediate rate of return in COBS 13 Annex 2 3.1R(6) for annuities linked to the RPI plus 0.5% unless COBS 19.1.4B R applies in which case it is the annuity rate in COBS 19.1.4B R plus 0.5%;
4(j) the annuity interest rate for post-retirement limited price indexation based on the CPI with maximum pension increases less than or equal to 3.0% or with minimum pension increases more than or equal to 3.5% is the rate in (a) above allowing for increases at the maximum rate of pension increase; where minimum pension increases are more than or equal to 3% but less than 3.5% the annuity rate is the rate in (a) above allowing for increases at the minimum rate of pension increase otherwise it is the rate in (i) above;
or use more cautious assumptions;
- (2)
calculate the interest rate in deferment; and
- (3)
have regard to benefits which commence at difference times.
3When giving a personal recommendation about a pension transfer, a firm should clearly inform the retail client about the loss of the fixed benefits and the consequent transfer of risk from the defined benefits pension scheme to the retail client, including:(1) the extent to which benefits may fall short of replicating those in the defined benefits pension scheme ;(2) the uncertainty of the level of benefit that can be obtained from the purchase of a future annuity and the
(1) If a firm provides information orally during a sales dialogue with a customer on a main characteristic of a policy, it must do so for all the policy's main characteristics.(2) A firm must take reasonable steps to ensure that the information provided orally is sufficient to enable the customer to take an informed decision on the basis of that information, without overloading the customer or obscuring other parts of the information.
(1) A firm must draw a consumer's attention to the importance of reading payment protection contract documentation before the end of the cancellation period to check that the policy is suitable for the consumer.(2) This must be done orally if a firm provides information orally on any main characteristic of a policy.
Price information should be given in writing or another durable medium in good time before conclusion of the contract. This is in addition to any requirement or decision to provide the information orally. In the case of a distance contract concluded over the telephone, it may be provided in writing or another durable medium no later than immediately after conclusion.
(1) Throughout the term of a policy, a firm must provide a customer with information about any change to:(a) the premium, unless the change conforms to a previously disclosed formula; and(b) any term of the policy, together with an explanation of any implications of the change where necessary.(2) This information must be provided in writing or another durable medium in good time before the change takes effect or, if the change is at the customer's request, as soon as is practicable
(1) When explaining the implications of a change, a firm should explain any changes to the benefits and significant or unusual exclusions arising from the change.(2) Firms will need to consider whether mid-term changes are compatible with the original policy, in particular whether it reserves the right to vary premiums, charges or other terms. Firms also need to ensure that any terms which reserve the right to make variations are not themselves unfair under the Unfair Terms R
(1) A firm that manages investments for a client must establish an appropriate method of evaluation and comparison such as a meaningful benchmark, based on the investment objectives of the client and the types of designated investments included in the client portfolio, so as to enable the client to assess the firm's performance.(2) If a firm proposes to manage investments for a retail client, the firm must provide the client with such of the following information as is applicable:(a)
(1) A firm that holds designated investments or client money for a retail client subject to the custody chapter or the client money chapter must provide that client with the following information:444(a) if applicable,(i) that the designated investments or client money of that client may be held by a third party on behalf of the firm;(ii) the responsibility of the firm under the applicable national law for any acts or omissions of the third party; and(iii) the consequences for
A firm must provide a retail client with information on costs and associated charges including, if applicable:(1) the total price to be paid by the client in connection with the designated investment or the designated investment business or ancillary services, including all related fees, commissions, charges and expenses, and all taxes payable via the firm or, if an exact price cannot be indicated, the basis for the calculation of the total price so that the client can verify
(1) A firm must provide a client with the information required by this section in good time before the provision of designated investment business or ancillary services unless otherwise provided by this rule.(2) A firm may instead provide that information immediately after starting to provide designated investment business or ancillary services if:(a) the firm was unable to comply with (1) because, at the request of the client, the agreement was concluded using a means of distance
(1) A firm must notify a client in good time about any material change to the information provided under this section which is relevant to a service that the firm is providing to that client.(2) A firm must provide this notification in a durable medium if the information to which it relates was given in a durable medium. [Note: article 29(6) of the MiFID implementing Directive]
(1) A firm need not treat each of several transactions in respect of the same type of financial instrument as a new or different service and so does not need to comply with the disclosure rules in this chapter in relation to each transaction. [Note: recital 50 to the MiFID implementing Directive](2) But a firm should ensure that the client has received all relevant information in relation to a subsequent transaction, such as details of product charges that differ from those disclosed
(1) A firm carrying on MiFID business must make available to a client, who has used or intends to use those services, information necessary for the identification of the compensation scheme or any other investor-compensation scheme of which the firm is a member (including, if relevant, membership through a branch) or any alternative arrangement provided for in accordance with the Investor Compensation Directive.(2) The information under (1) must include the amount and scope of
(1) A firm must make an adequate record of each offer document which it issues to a customer in accordance with MCOB 6.(2) The record required by (1) must be retained for a year from the date that the offer document is issued to the customer.(3) If, in accordance with MCOB 6.5 (Information to be provided in the offer document or separately), information is included in a separate document that is sent with the offer document, that information must also be retained as part of the
(1) One consequence of MCOB 6.4.4 R(5)(b) is that the mortgage lender will need to know, for each individual transaction arranged by a mortgage intermediary, whether or not the customer has received advice from that mortgage intermediary.(2) When complying with MCOB 6.4.4 R(5)(b), mortgage lenders may wish to include a statement after the level of service in Section 2 confirming that the level of service described was given by another firm, and explaining that they, as the mortgage
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.
For the agreements referred to in CONC 4.2.1R (3), (4) and (5), a firm within CONC 4.2.1R (1) or CONC 4.2.1R (2) should consider whether it is necessary or appropriate to provide explanations of the matters in CONC 4.2.5R (2); in particular, a firm should consider highlighting the principal consequences to the customer including the consequences of missing payments or under-paying, including, where applicable, the risk of repossession of the customer's property.[Note: section
(1) Before making a regulated credit agreement the firm must:(a) provide the customer with an adequate explanation of the matters referred to in (2) in order to place the customer in a position to assess whether the agreement is adapted to the customer's needs and financial situation;(b) advise the customer:(i) to consider the information which is required to be disclosed under section 55 of the CCA; and(ii) where the information is disclosed in person, that the customer is able
In deciding on the level and extent of explanation required by CONC 4.2.5 R, the lender or credit broker should consider (and each of them should ensure that anyone acting on its behalf should consider), to the extent appropriate to do so, factors including:(1) the type of credit being sought;(2) the amount of credit to be provided and the associated cost and risk to the customer (the risk to the customer is likely to be greater the higher the total cost of the credit relative
Where the regulated credit agreement is high-cost short-term credit, the lender or a credit broker must explain under CONC 4.2.5R (1)(a) that entering into that agreement would be unsuitable to support sustained borrowing over long periods and would be expensive as a means of longer term borrowing. [Note: paragraph 3.13 (box) of ILG]
The following information must be provided by the lender or a credit broker as part of, and in addition to that provided under, the adequate explanation required by CONC 4.2.5 R, where applicable, in the specified cases: (1) for credit token agreements:(a) different rates of interest and different charges apply to different elements of the credit provided (for example, a higher cost of withdrawing cash);(b) the implications of only making minimum repayments; (c) interest rates
Where a customer does not have a good understanding of the English language, the lender or credit broker may need to consider alternative methods of providing relevant information concerning the explanation required by CONC 4.2.5 R in order for the customer to make an informed decision, such as, providing the information to a person with such understanding who can assist the customer, for example, a friend or relative. [Note: paragraph 3.4 (box) of ILG]
For telephone or face-to-face transactions, interaction between the customer and the firm's representative is also important. It should be made clear to the customer that the customer can ask questions or request further information or explanation and, for example, the representative solely providing the customer with a written explanation of an agreement, or relying solely on a written script in relation to an agreement, is unlikely to comply with the requirement in CONC 4.2.5
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
Where a firm provides a customer with a statement containing the information set out in MCOB 7.5.3 R(2) more frequently than once a year, the information set out in MCOB 7.5.3 R(1), MCOB 7.5.3 R(3) and MCOB 7.5.3 R(4) may be provided in a separate communication, but must be provided at least once a year.
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
In some circumstances, a firm may agree a temporary payment plan with a customer that does not involve the customer paying the full amount he owes in each payment period. Where an account in arrears is subject to such a payment plan, and the amount that falls due each payment period is greater than the agreed payment, the firm will still need to show the payments that were due in accordance with MCOB 7.5.3 R(2)(b). However, in these circumstances, the firm may wish to add information
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.
A firm must give the customer reasonable notice, in advance, of:(1) any changes to the payments that the customer is required to make resulting from interest rate changes; and(2) any material change by the firm (other than changes which come within MCOB 7.6.2 R) to the terms and conditions of the regulated mortgage contract, where that change is permitted without the customer's prior consent.
A firm must notify a customer, as soon as the details are known, of who will be responsible for setting interest rates and charges on the regulated mortgage contract if any interest in the regulated mortgage contract is to be sold, assigned, or transferred, and the firm will no longer be responsible for this.
Where the customer has, in accordance with the terms of the regulated mortgage contract, taken up an additional tranche of borrowing on a mortgage that is released in tranches and this did not require any further approval of the mortgage lender, a firm must provide confirmation as soon as possible of:(1) the new amount owed by the customer under the regulated mortgage contract; (2) the amount of each payment that is due; and(3) the interest rate charged.
For the purposes of MCOB 7.6.9 R(3) and (4):(1) a customer's existing mortgage includes a mortgage entered into prior to 31 October 2004 as well as a regulated mortgage contract;(2) the frequency of payments is that in MCOB 5.6.40 R; and (3) a firm may generally rely on information provided by the customer unless, taking a common-sense view of this information, it has reason to doubt it.
If a customer requests, or agrees to, a change to a regulated mortgage contract (other than a change as described in MCOB 7.6.7 R to MCOB 7.6.26 G44) that changes the amount of each payment due, a firm must provide the customer with the following information, in a single communication (subject to MCOB 7.6.28AR (3))4, before the change takes effect:(1) the amount outstanding on the regulated mortgage contract at the date the change is requested;(2) the payment due and the frequency
(1) 4MCOB 7.6.28 R (5) does not apply where the regulated mortgage contract is changing to an interest-only mortgage and interest is being deferred and capitalised by the firm as a result of the customer having payment difficulties.(2) Where (1) applies, the firm must instead provide a prominent reminder to the customer of the amount outstanding together with an explanation of the implications of deferred payments being capitalised, before the change in the regulated mortgage
If a number of different firms are involved in relation to the transaction referred to in MCOB 7.6.28 R, having regard to MCOB 2.5.4 R(2), those firms should take reasonable steps to establish which one of them is responsible for providing the customer with the information required by MCOB 7.6.28 R.
Before a general insurance contract is concluded, a firm must inform a customer who is a natural person of:(1) the law applicable to the contract where the parties do not have a free choice, or the fact that the parties are free to choose the law applicable and, in the latter case, the law the firm proposes to choose; and(2) the arrangements for handling policyholders’ complaints concerning contracts including, where appropriate, the existence of a complaints body (usually the
(1) If the insurance undertaking is an EEAfirm, the firm must inform the customer, before any commitment is entered into, of the EEA State in which the head office or, where appropriate, the branch with which the contract is to be concluded, is situated.(2) Any documents issued to the customer must convey the information required by this rule.[Note: article 43(2) of the Third Non-Life Directive]
The contract or any other document granting cover, together with the insurance proposal where it is binding upon the customer, must state the address of the head office, or, where appropriate, of the branch of the insurance undertaking which grants the cover.[Note: article 43(2) of the Third Non-Life Directive]
(1) A firm must provide a consumer with information on the right to cancel a policy.(2) The information to be provided on the right to cancel is:(a) its existence;(b) its duration;(c) the conditions for exercising it;(d) information on the amount which the consumer may be required to pay if he exercises it;(e) the consequences of not exercising it; and(f) the practical instructions for exercising it.(3) The information must be provided in good time before conclusion of the contract
3A firm must, when dealing with any customer in payment difficulties: (1) make reasonable efforts to reach an agreement with a customer over the method of repaying any payment shortfall4 or sale shortfall, in the case of the former having regard to the desirability of agreeing with the customer an alternative to taking possession of the property;4(2) liaise, if the customer makes arrangements for this, with a third party source of advice regarding the payment shortfall4 or sale
The requirement in MCOB 13.3.1 R(2) for a written policy and procedures is intended to ensure that a firm has addressed the need for internal systems to deal fairly with any customer in financial difficulties. MCOB 13.3.1 R(2) does not oblige a firm to provide customers with a copy of the written policy and procedures. Nor, however, does it prevent a firm from providing customers with either these documents or a more customer-orientated version.
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);
The record referred to in MCOB 13.3.9 R should contain, or provide reference to, matters such as:(1) the date of first communication with the customer after the account was identified as having a payment shortfall;44(2) in relation to correspondence issued to a customer with a payment shortfall4, the name and contact number of the employee dealing with that correspondence, where known;4(3) the basis for issuing tailored information in accordance with MCOB 13.7.1 R in relation
(1) The purpose of this section is to ensure that a firm, which is communicating with a retail client about a pension decumulation product, gives appropriate retirement risk warnings at the point when the retail client has decided how to access their pension savings. (2) If the retail client has not yet decided what to do the firm should consider whether it is required to signpost the pensions guidance under COBS 19.4.5R (signposting pensions guidance).
(1) The first step is to ask the retail client whether they have received pensions guidance or regulated advice:(a) if the client says that they have, the firm must proceed to step 2; or(b) if the client says that they have not or is unsure, the firm must explain that the decision to access pension savings is an important one and encourage the retail client to use pensions guidance or to take regulated advice to understand their options at retirement.(2) If, after giving the explanation
For an internet sale, a firm should display the required information on a screen which the retail client must access and acknowledge as part of the sales process. It would not be sufficient for the information to be accessible only by giving the client the option to click on a link or download a document.
(1) 1In line with Principle 6, a firm should take reasonable steps to ensure that a customer only buys a policy under which he is eligible to claim benefits.(2) If, at any time while arranging a policy, a firm finds that parts of the cover apply, but others do not, it should inform the customer so he can take an informed decision on whether to buy the policy.(3) This guidance does not apply to policiesarranged as part of a packaged bank account.2
2(1) A firmarranging a payment protection contract must:2(a) 2take reasonable steps to ensure that the customer only buys a policy under which he is eligible to claim benefits; and(b) 2if, at any time while arranging the policy, it finds that parts of the cover do not apply, inform the customer so he can take an informed decision on whether to buy the policy.(2) This rule does not apply to payment protection contractarranged as part of a packaged bank account.2
2A firmarrangingpolicies as part of a packaged bank account must:(1) take reasonable steps to establish whether the customer is eligible to claim each of the benefits under each policy included in the packaged bank account which must include checking that the customer meets any qualifying requirements to claim each of the benefits under each policy; and(2) inform the customer whether or not he would be eligible to claim each of the benefits under each policy included in the packaged
(1) 32Throughout the term of a policy included in a packaged bank account, a firm must provide the customer with an eligibility statement, in writing,3 on an annual basis. This statement must set out any qualifying requirements to claim each of the benefits under the policy and recommend that the customer reviews his circumstances and whether he meets these requirements.(2) 3Where a customer has reached an age limit on claiming benefits under a travel insurance policy included