Related provisions for MCOB 9.4.138
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Therefore, for example, an approved person performing controlled functions in a Solvency II firm or a small non-directive insurer2 should note that that term includes rights under a contract of insurance, meaning they should also take into account those parts of COCON which provide guidance on individual conduct rules that refer to ‘investments’.
2The following are indicators of whether action by the FCA or one of the other agencies is more appropriate. They are not listed in any particular order or ranked according to priority. No single feature of the case should be considered in isolation, but rather the whole case should be considered in the round.(a) 2 Tending towards action by the FCAWhere the suspected conduct in question gives rise to concerns regarding market confidence or protection of consumers of services regulated
2If the agencies identify that particular action by one party might prejudice an investigation or future proceedings by another, it is desirable for the parties concerned to discuss and decide what action should be taken and by whom. In reaching these decisions, they will bear in mind how the public interest is best served overall. The examples provided in App 2.1.9 above may also be used as indicators of where the overall balance of interest lies.
2The agencies will consider, as necessary, and keep under review whether an investigation has reached the point where it is appropriate to commence proceedings. Where agencies are deciding whether to institute criminal proceedings, they will have regard to the usual codes or guidance relevant to that decision. For example, agencies other than the PPS or COPFS will have regard to the Code for Crown Prosecutors (Note: Different guidance applies to the PPS and COPFS. All criminal
(1) The following example illustrates BIPRU 7.5.11R. In this example, a firm contracts to sell $106 for €108 in one year's time and the present values of each cash flow are $100 and €100 respectively.(2) In the non-trading book, this forward would be treated as a combination of a €108 long position and a $106 short position.(3) In the trading book, this forward would be treated as a combination of a €100 long position and a $100 short position.(4) Firms are reminded that foreign
(1) The following example illustrates BIPRU 7.5.13R. In this example a firm enters into a five year foreign currencyswap where it contracts to pay six month US$ Libor on $100 in return for receiving 6% fixed on €100. The present values of each leg are $100 and €98 respectively.(2) In the non-trading book, this swap would be treated as a combination of a €100 long position and a $100 short position.(3) In the trading book, this swap would be treated as a combination of a €98 long
A person is an indirect holder of shares for the purpose of the applicable definition of shareholder to the extent that he is entitled to acquire, to dispose of, or to exercise voting rights in any of the following cases or a combination of them:
Case |
|
(a) |
voting rights held by a third party with whom that person has concluded an agreement, which obliges them to adopt, by concerted exercise of the voting rights they hold, a lasting common policy towards the management of the issuer in question; |
(b) |
voting rights held by a third party under an agreement concluded with that person providing for the temporary transfer for consideration of the voting rights in question; |
(c) |
voting rights attaching to shares which are lodged as collateral with that person provided that person controls the voting rights and declares its intention of exercising them; |
(d) |
voting rights attaching to shares in which that person has the life interest; |
(e) |
voting rights which are held, or may be exercised within the meaning of points (a) to (d) or, in cases (f) and (h) by a person1 undertaking investment management, or by a management company, by an undertaking controlled by that person; 1 |
(f) |
voting rights attaching to shares deposited with that person which the person can exercise at its discretion in the absence of specific instructions from the shareholders; |
(g) |
voting rights held by a third party in his own name on behalf of that person; |
(h) |
voting rights which that person may exercise as a proxy where that person can exercise the voting rights at his discretion in the absence of specific instructions from the shareholders. |
[Note: article 10 of the TD]
Cases (a) to (h) in DTR 5.2.1 R identify situations where a person may be able to control the manner in which voting rights are exercised and where, (taking account of any aggregation with other holdings) a notification to the issuer may need to be made. In the FCA's view:(1) Case (e) produces the result that it is always necessary for the parent undertaking of a controlled undertaking to aggregate its holding with any holding of the controlled undertaking (subject to the exemptions
A person falling within Cases (a) to (h) is an indirect holder of shares for the purpose of the definition of shareholder. These indirect holdings have to be aggregated, but also separately identified in a notification to the issuer. Apart from those identified in the Cases (a) to (h), the FCA does not expect any other significant category "indirect shareholder" to be identified. Cases (a) to (h) are also relevant in determining whether a person is an indirect holder of financial
The following is a non-exhaustive list of examples of conduct that would be in breach of rule SC1.(1) Failing to take reasonable steps to apportion responsibilities for all areas of the business under the approved person's control.(2) Failing to take reasonable steps to apportion responsibilities clearly among those to whom responsibilities have been delegated, which includes establishing confusing or uncertain:(a) reporting lines; or(b) authorisation levels; or(c) job descriptions
The following is a non-exhaustive list of examples of conduct that would be in breach of rule SC2.(1) Failing to take reasonable steps to implement (either personally or through a compliance department or other departments) adequate and appropriate systems of control to comply with the relevant requirements and standards of the regulatory system for the activities of the firm.(2) Failing to take reasonable steps to monitor (either personally or through a compliance department
A senior conduct rules staff member should have reasonable grounds for believing that the delegate has the competence, knowledge, skill and time to deal with the issue. For instance, if the compliance department only has sufficient resources to deal with day-to-day issues, it would be unreasonable to delegate to it the resolution of a complex or unusual issue without ensuring it had sufficient capacity to deal with the matter adequately.
The following is a non-exhaustive list of examples of conduct that would be in breach of rule SC3.(1) Failing to take reasonable steps to maintain an appropriate level of understanding about an issue or part of the business that the senior conduct rules staff member has delegated to an individual(s) (whether in-house or outside contractors) including:(a) disregarding an issue or part of the business once it has been delegated;(b) failing to require adequate reports once the resolution
MCOB applies to regulated mortgage contracts. For certain categories of regulated mortgage contract, MCOB applies from the dates mentioned in MCOB 1.2.21G. A credit agreement secured on land5 that is not a regulated mortgage contract, for example because the borrower is not an individual or a trustee,5 may be a regulated credit agreement to which the CCA and CONC apply (see CONC 1.2.7G).542421
(1) MCOB 1.6.4 R(2) means, for example, that if a firm discovered immediately after completion that a loan was a regulated mortgage contract, the firm would be required to comply with MCOB 7.4 (Disclosure at the start of the contract).(2) Although MCOB 1.6.4 R recognises that firms may become aware that a mortgage is a regulated mortgage contract at a late stage, the FCA expects this to be an extremely rare occurrence. It could arise, for example, if a firm has acted on the understanding,
Members will individually comply with this chapter if and only if all complaints by policyholders against members are dealt with under the Lloyd's complaints procedures. Accordingly, certain of the obligations under this chapter, for example the obligation to report on complaints received and the obligation to pay fees under the rules relating to the funding of the Financial Ombudsman Service (FEES 5), must be complied with by the Society on behalf of members. Managing agents
The5 following factors may5 be taken into account in determining whether or not refraining from action indicates behaviour5which falls under the scope of the Market Abuse Regulation,5 and are indications that it does:(1) if the person concerned has failed to discharge a legal or regulatory obligation (for example to make a particular disclosure) by refraining from acting; or(2) if the person concerned has created a reasonable expectation of him acting in a particular manner,
For example, if a passenger on a train passing a burning factory calls his broker and tells him to sell shares in the factory's owner, the passenger will be using5information which has been made public5, since it is information which has been obtained by legitimate means through observation of a public event.
The following are examples of behaviour5 that might fall within the scope of article 14(b) of the Market Abuse Regulation5:(1) a director of a company, while in possession of inside information, instructs an employee of that company to
sell a financial instrument5 in respect of which the information is inside information;(2) a person recommends or advises a friend to engage in behaviour5 which, if he himself engaged in it, would amount to market abuse.
Where it is known that a loan will be released in instalments, for example in the case of a self-build mortgage, the loan can involve a binding offer, ESIS and the reflection period either for:(1) the full amount; or(2) an initial amount, which would be replaced by a binding offer, an ESIS and reflection period for a larger amount and so on.
A firm must ensure that the offer document contains a prominent statement explaining:(1) the period for which the offer is valid;(2) where the MCD regulated mortgage contract contains features, such as additional unsecured borrowing facilities, which could result in the consumer borrowing more money that, where such features are used, the amount of the consumer's debt will increase;(3) when any interest rate change on the MCD regulated mortgage contract takes effect. This statement
In addition to the information required by MCOB 6A.3.9 R, a firm may include information about how to complain to any other firm about the services that firm provided to the consumer in relation to the MCD regulated mortgage contract. For example, where the consumer received advice from another firm, an MCD mortgage lender may include contact details for the firm that provided the advice.
A firm may satisfy MCOB 5A.3.5 R by drawing the consumer's attention orally to the importance of reading and understanding the ESIS. 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 ESIS.
MCOB 5A places no restrictions on the provision of information that is not specific to the amount the consumer 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. However, such literature may constitute a financial promotion and be subject to MCOB 3A (Financial promotions and communications with customers).
To demonstrate compliance with MCOB 5A.3.10R (1), a firm may wish to consider, for example, doing one or more of the following actions: (1) giving the messages to the consumer in a durable medium;(2) building the requirements into the firm's training of staff, as evidenced by its training and compliance manuals;(3) insert appropriate prompts into paper-based or automated sales systems;(4) having procedures to monitor compliance by its staff with that rule.What is required in each
In the FCA's view, money payable to an introducer on his own account includes money legitimately due to him for services rendered to the borrower, whether in connection with the introduction or otherwise. It also includes sums payable to an introducer (for example, a housebuilder) by a buyer in connection with a transfer of property. For example, article 33A allows a housebuilder to receive the purchase price on a property that he sells to a borrower, whom he previously introduced
In the FCA's view, details of fees or commission referred to in PERG 4.5.14G (2) does not require an introducer to provide an actual sum to the borrower, where it is not possible to calculate the full amount due prior to the introduction. This may arise in cases where the fee or commission is a percentage of the eventual loan taken out and the amount of the required loan is not known at the time of the introduction. In these cases, it would be sufficient for the introducer to
In the FCA's view, the information condition in PERG 4.5.14G (3) requires the introducer to indicate to the borrower any other advantages accruing to him as a result of ongoing arrangements with N relating to the introduction of borrowers. This may include, for example, indirect benefits such as office space, travel expenses, subscription fees and this and other relevant information may be provided on a standard form basis to the borrower, as appropriate.
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 3A4(Financial promotions and communications with customers).424
(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
2Examples of features of a regulated sale and rent agreement that a SRB agreement seller would reasonably need to know about (see MCOB 5.9.1R (1A)(m)) would include an arrangement under which the seller is to receive from the SRB agreement provider a refund of some agreed percentage of the discount (on the market value of the property) that was reflected in the sale price under the regulated sale and rent back agreement after the end of the agreed letting term. Should any restrictions
2What constitutes "materially altered" requires consideration of the facts of each individual case. For example, a change in the proposed purchase or valuation price of the property should normally be regarded as material, as would the introduction of an additional charge applying to the regulated sale and rent back agreement when it did not previously.
2If the firm has reasonable evidence that the contract is not a regulated sale and rent back agreement, for example where at least 40% of the property is not going to be occupied as a dwelling by the seller or his family, and has not provided the required pre-sale disclosures and the firm subsequently concludes that the contract does qualify as a regulated sale and rent back agreement, there is no requirement to provide separate pre-sale disclosures at the time the firm reaches
3The provisions in this sourcebook that apply to home reversion plans should be read in a purposive way. This means that firms should substitute equivalent home reversion terminology for lifetime mortgage terminology, where appropriate. Examples of terms and expressions that must be replaced are 'loan' or 'amount borrowed', which should be replaced with 'amount released' or 'amount to be released', as appropriate, and 'mortgage lender' and 'mortgage intermediary' which should
Given that the APR is presented as a percentage, and must be rounded to one decimal place in accordance with MCOB 10 (Annual Percentage Rate), firms should note that the tolerance allowed for the APR in MCOB 9.3.6 R(1)(b) means that, for example, where the actual APR is 5.0%, the quoted APR must be no lower than 4.9%, or where the actual APR is 16.0%, the quoted APR must be no lower than 15.9%.
An offer document may not always exactly match the illustration provided before application even when the equity release3 requirements have not changed. For example, where a fixed rate has a defined end date, the total amount payable may be different because the number of payments at the fixed rate has reduced, or the estimated amount of interest to be charged has changed, assuming a later date at which the lifetime mortgage3will start.33
(1) In assessing whether a penalty would cause an individual serious financial hardship, the FCA3 will consider the individual’s ability to pay the penalty over a reasonable period (normally no greater than three years). The FCA's3 starting point is that an individual will suffer serious financial hardship only if during that period his net annual income will fall below £14,000 and his capital will fall below £16,000 as a result of payment of the penalty. Unless the FCA3 believes
(1) The FCA3 will consider reducing the amount of a penalty if a firm will suffer serious financial hardship as a result of having to pay the entire penalty. In deciding whether it is appropriate to reduce the penalty, the FCA3 will take into consideration the firm’s financial circumstances, including whether the penalty would render the firm insolvent or threaten the firm’s solvency. The FCA3 will also take into account its statutory objectives3, for example in situations where
Where the FCA3 considers that, following commencement of an FCA3 investigation, an individual or firm has reduced their solvency in order to reduce the amount of any disgorgement or financial penalty payable, for example by transferring assets to third parties, the FCA3 will normally take account of those assets when determining whether the individual or firm would suffer serious financial hardship as a result of the disgorgement and financial penalty.333
(1) A policy's main characteristics include its significant benefits, its significant exclusions and limitations, its duration and price information.(2) A significant exclusion or limitation is one that would tend to affect the decision of customers generally to buy. In determining what exclusions or limitations are significant, a firm should particularly consider the exclusions or limitations that relate to the significant features and benefits of a policy and factors which may
(1) This guidance applies to policies bought as secondary products to revolving credit agreements (such as store cards or credit cards).(2) Price information should be given in a way calculated to enable a typical customer to understand the typical cumulative cost of taking out the policy. This does not require oral disclosure where there is a sales dialogue with a customer. However, consistent with Principle 7, a firm should ensure that this element of price information is not
(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 Regulations
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 including another policy (also see ICOBS 6A.3 (cross selling))6;(5) distance communication information requirements
To comply with the customer’s best interest rule and Principle 7 (communication with clients) a firm should:6(1) include consideration of the information needs of the customers including:6(a) what they need to understand the relevance of any information provided by the firm; and6(b) at which point in the sales process will the information be most useful to the customer to enable them to make an informed decision;6(2) provide evidence of cover promptly after inception of a policy,6taking
A firm must:(1) reproduce the text in MCOB 5A Annex 1 R in the ESIS;(2) replace the indications between square brackets with the corresponding information; (3) complete the ESIS in accordance with MCOB 5A Annex 2;(4) wherever the words “where applicable” are indicated:(a) provide the information required, if it is relevant to the MCD regulated mortgage contract; or(b) where the information is not relevant to the MCD regulated mortgage contract, delete the information in question
(1) The ESIS can contain the MCD mortgage lender's or MCD mortgage credit intermediary's logo and other 'brand' information, so long as the requirements of MCOB 5A.5 are satisfied.(2) The ESIS can contain page numbers and other references that aid understanding, record keeping and identification of a particular ESIS, such as the date and time it is produced or a unique reference number, provided these do not detract from the content of the ESIS. (3) Firms are reminded of their