Related provisions for MCOB 7B.1.5
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(1) Except as specified in COBS 6.1D.6A R,1 a firm must not offer or pay (and must ensure that none of its associates offers or pays) any commissions, remuneration or benefit of any kind to another firm, an employee benefit consultant or to any other third party for the benefit of that firm, employee benefit consultant or third party in relation to the sale or purchase of: (a) a group personal pension scheme or group stakeholder pension scheme, whether or not that sale or purchase
1A firm and its associates may, except in connection with a qualifying scheme: 3(1) offer and pay a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1D.4 R if:(a) the employer’s part of the relevant scheme was established on or before 30 December 2012; and(b) the offer or payment was permitted by the rules in force on 30 December 2012; and(2) enter into an arrangement under which the right to receive the commission, remuneration or benefit
A firm should consider whether the flexibility in levels of consultancy charges it offers to facilitate is sufficient so as not to unduly influence or restrict the charging structure and consultancy charges that the firm providing advice to an employer in relation to a group personal pension scheme or group stakeholder pension scheme can use.
Where:(1) a firm enters into an agreement for high-cost short-term credit in contravention of a rule in CONC 5A.2; or(2) a firm facilitates an individual becoming a borrower under an agreement for high-cost short-term credit in contravention of a rule in CONC 5A.4; or(3) a firm within CONC 5A.5.1 R (1) imposes a charge in contravention of a rule in CONC 5A.3; or(4) a firm within CONC 5A.5.1 R (4) imposes a charge on behalf of a lender in contravention of a rule in CONC 5A.3; or(5)
Where an agreement for high-cost short-term credit provides for or imposes one or more charges that alone or in combination exceed or are capable of exceeding an amount set out in CONC 5A.2 or CONC 5A.3:(1) the agreement is unenforceable against the borrower to the extent that such a charge or such charges exceed or are capable of exceeding that amount; and (2) the borrower may choose not to perform the agreement to that extent and if that is the case at the written or oral request
What is a reasonable period for the borrower to repay the credit depends on the circumstances of the case, including the terms for repayment under the agreement. Where the agreement provided for repayment in instalments, the firm should consider issuing the borrower with a schedule for repayment under which the firm would collect the credit in instalments at the same periodic intervals as under the agreement.
CONC 5A.5.3 R is a residual provision that applies to a firm established in the UK which carries on debt administration or debt collection, but where the rules in CONC 5A do not apply to a lender because the lender is established outside the UK and provides electronic commerce activities into the UK. Where a borrower gives notice to the lender referred to in CONC 5A.5.3 R, only charges which exceed the amounts set out in CONC 5A.2 or CONC 5A.3 are void. The borrower remains
Where the firm did not disclose to the complainant in advance of a payment protection contract being entered into (and is not aware that any other person did so at that time): (1) the anticipated profit share plus the commission known at the time of the sale; or (2) the anticipated profit share plus the commission reasonably foreseeable at the time of the sale; or (3) the likely range in which (1) or (2) would fall;the firm should consider whether it can satisfy itself on reasonable
(1) The firm should presume that failure to disclose commission gave rise to an unfair relationship under section 140A of the CCA if: (a) the anticipated profit share plus the commission known at the time of the sale; or(b) the anticipated profit share plus the commission reasonably foreseeable at the time of the sale; was: (c) in relation to a single premium payment protection contract, more than 50% of the total amount paid in relation to the payment protection contract; or(d)
The presumption that failure to disclose commission gave rise to an unfair relationship is rebuttable. Examples of factors which may contribute to its rebuttal include:(1) the CCA lender did not know and could not reasonably be expected to know or foresee the level of commission and anticipated profit share; or(2) the complainant could reasonably be expected to be aware of the level of commission and anticipated profit share (e.g. because they worked in a role in the financial
For the purposes of the provisions in this section, what is reasonably foreseeable should be determined with regard to all relevant factors, including, where relevant, any agreement specifying rate changes over the first years of the payment protection contract’s life (as in some regular premium payment protection contracts), and the length of time over which the commission will be governed by the agreement between lender and insurer that is in place at the time of sale.
A firm must ensure that any regulated mortgage contract that it enters into does not impose, and cannot be used to impose, an early repayment charge other than one that is:(1) able to be expressed as a cash value; and(2) a reasonable pre-estimate of the costs as a result of the customer repaying the amount due under the regulated mortgage contract before the contract has terminated.
A firm may calculate the same level of early repayment charge for all regulated mortgage contracts of a similar type (for example a tranche of regulated mortgage contracts offering a particular fixed rate of interest), rather than on the basis of the individual regulated mortgage contract with the particular customer.
Before: (1) entering into a regulated mortgage contract with a customer; or(2) making a further advance on an existing regulated mortgage contract; or (3) changing all or part of a regulated mortgage contract from one interest rate to another;1a firm must disclose to the customer:(a) in the illustration provided in accordance with MCOB 5, MCOB 7.6.7 R, MCOB 7.6.18 R, MCOB 7.6.22 R, MCOB 7.6.31 R, or MCOB 9; and(b) in the illustration provided as part of the offer document in accordance
The effect of article 29 of the MCD Order is that various provisions of, or made under, the CCA continue to apply to “consumer credit back book mortgage contracts” (as defined in article 2 of the MCD Order). These include the5Consumer Credit (Early Settlement) Regulations 2004, which5 continue to apply to a second charge regulated mortgage contract entered into before 21 March 2016 and to a legacy CCA mortgage contract5.4
Whenever the opening or maintaining of an account is obligatory to obtain the credit, or to obtain it on the terms and conditions marketed, the total cost of credit to the consumer must include the following costs:(1) opening and maintaining a specific account;(2) using a means of payment for both transactions and drawdowns on that account; (3) other costs relating to payment transactions;[Note: article 17(2) of the MCD]
If an MCD regulated mortgage contract allows variations in the:(1) borrowing rate; or(2) charges contained in the APRC;and they are unquantifiable at the time the APRC is calculated, the APRC must be calculated on the assumption that the borrowing rate and other charges will remain fixed in relation to the level set when the contract is entered into.[Note: article 17(4) of the MCD]
If an MCD regulated mortgage contract contains a fixed borrowing rate in relation to the initial period of at least five years, at the end of which a negotiation on the borrowing rate must take place to agree on a new fixed rate for a further material period, the calculation of the additional, illustrative APRC disclosed in the ESIS must:(1) cover only the initial fixed-rate period; and(2) be based on the assumption that, at the end of the fixed borrowing rate period, the capital
If an MCD regulated mortgage contract:(1) allows for variations in the borrowing rate; and(2) it does not fall within MCOB 10A.1.5 R,the ESIS must contain an additional APRC which illustrates the possible risks linked to a significant increase in the borrowing rate. Where the borrowing rate is not capped, this information must be accompanied by a warning highlighting that the total cost of the credit to the consumer, shown by the APRC, may change.[Note: article 17(6) of the M
(1) 1This appendix sets out how:3(a) 3a firm should handle complaints relating to the sale of a payment protection contract by the firm which express dissatisfaction about the sale, or matters related to the sale, including where there is a rejection of claims on the grounds of ineligibility or exclusion (but not matters unrelated to the sale, such as delays in claims handling); and3(b) 3a firm that is a CCA lender and which has received such a complaint should consider whether
3This appendix provides for a two-step approach to handling complaints. Firms should apply it as follows: (1) a firm which is not a CCA lender should only consider step 1;(2) a CCA lender which did not sell the payment protection contract should only consider step 2, but does not have to do so if it knows the complainant has already made a complaint about a breach or failing in respect of the same contract and the outcome was that the firm which considered that complaint concluded
3At step 2, the aspects of complaint handling dealt with in this appendix are how a CCA lender should:(1) assess a complaint to establish whether failure to disclose commission gave rise to an unfair relationship under section 140A of the CCA; and(2) determine the appropriate redress (if any) to offer to a complainant.
In this appendix:(1) (a) at step 1,3 “historic interest” means the interest the complainant paid to the firm because a payment protection contract was added to a loan or credit product;3(b) at step 2, “historic interest” means in relation to any sum, the interest the complainant paid as a result of that sum being included in the loan or credit product;32(2) "simple interest" means a non-compound rate of 8% per annum;3(3) "claim" means a claim by a complainant seeking to rely upon
3For the purposes of the definitions of “actual profit share”, “anticipated profit share” and “commission”, where the firm has no or incomplete records of the level of commission or profit share arrangements relevant to a particular payment protection contract, it should make reasonable efforts to obtain relevant information from third parties. Where no such information can be obtained, the firm may make reasonable assumptions based on, for example, commission levels or profit
(1) The distance marketing rules in CONC 2.6, including the right to cancel in CONC 11, apply to firms with respect to distance contracts which are credit agreements, consumer hire agreements and agreements the subject matter of which comprises, or relates to, debt counselling, debt adjusting, providing credit information services and providing credit references. CONC 11 excludes various credit agreements from the right to cancel.(2) Where a consumer uses the right to cancel under
A firm must ensure that the obligations of the customer in relation to the amount, or the timing of payment, of its fees or charges:(1) do not have the effect that the customer pays all, or substantially all, of those fees in priority to making repayments to lenders in accordance with the debt management plan; and(2) do not undermine the customer's ability to make (through the firm acting on the customer's behalf) significant repayments to the customer'slenders throughout the
(1) For the purposes of CONC 8.7.2R (2), an obligation is likely to be viewed as undermining the customer's ability to make significant repayments to the customer'slenders if it has the effect that the firm may allocate more than half of the sums received from the customer in any one-month period from the start of the debt management plan to the discharge (in whole or in part) of its fees or charges.(2) Once the customer has paid any initial fee for the arrangement and preparation
A firm must:(1) in good time before entering into a contract with the customer, disclose the existence of any commission or incentive payments relevant to the service provided to the customer between the firm and any third party and at any time, if the customer requests, disclose the amount of any such commission or incentive payment; [Note: paragraph 3.34b and c of DMG](2) send a revised financial statement in the same format as that required under CONC 8.5.1 R to the customer'slenders
A firm must not:(1) without a reasonable justification, switch a customer from one debt solution to another while making a further charge for setting up or administering the new debt solution to the extent that some or all of that work has already been carried out by the firm; [Note: paragraphs 3.32 and 34k of DMG](2) switch a customer to a different debt solution, without obtaining the customer's consent after having fully explained to the customer the reason for the change;
A firm must ensure that its charges to a customer in connection with the firmentering into, making a further advance or further release on, administering, arranging or advising on a regulated mortgage contract,2home reversion plan or regulated sale and rent back agreement2, or arranging or advising on a variation to the terms of a regulated mortgage contract,2home reversion plan or regulated sale and rent back agreement2are not excessive.1122
When determining whether a charge is excessive, a firm should consider:(1) the amount of its charges for the services or products in question compared with charges for similar products or services on the market; (2) the degree to which the charges are an abuse of the trust that the customer has placed in the firm; and (3) the nature and extent of the disclosure of the charges to the customer.
In good time before a credit agreement is made and, where section 58 applies, before an unexecuted agreement is sent to the customer for signature a firm must:(1) disclose key contract terms and conditions of the prospective credit agreement;(2) disclose any features of the prospective credit agreement which carry a particular risk to the customer;(3) inform the customer of the consequences of missing payments or of making underpayments, including the imposition of default charges,
Before a regulated credit agreement secured on land is entered into: (1) the firm should consider the adequate explanations it should give to the customer under CONC 4.2; and[Note: paragraph 3.1 (box) of ILG](2) the firm is required under CONC 5.2A to carry out a creditworthiness assessment5.[Note: paragraphs 1.14 and 4.1 of ILG]
Where rates and charges under a credit agreement are variable, a firm must:(1) before entering into the agreement, explain to the customer the consequences of such variations on the amount of periodic instalments payable and on the total amount payable;(2) only increase rates or charges to recover genuine increases in costs of the firm which have an effect on the credit provided under the agreement; and (3) explain to the customer before changing any rate or charge under the
Where a customer wishes to make repayments ahead of time:(1) a firm's charges for early repayment must be fair and reasonable and must reflect the firm's necessary costs in relation to such repayment; (2) the firm must fully explain the process and costs involved in early repayment; and(3) the firm must allow the customer to make part early repayment of the capital.
(1) The FCA expects it will generally be in the customer's best interests to maintain regular payments to lenders (even if the repayment is less than the full sum due).(2) An example where it might be in the customer's best interests not to repay at the rate necessary to meet interest and charges accruing is where there is insufficient disposable income to meet essential expenditure of the type referred to in CONC 8.5.3 G. Where that is the case, the firm should explain clearly
Where a firm has advised a customer not to make contractual repayments (in full or in part) or to cancel the means of making such payments or not to make repayments necessary to meet interest and charges accruing, the firm must advise the customer if it becomes clear that that course of action is not producing effects in the customer's best interests to enable the customer to take action in the customer's best interests. Note: paragraph 3.28c of DMG]
(1) An example of an effect not in the customer's best interests would be if a lender does not agree to stop applying interest and charges to the customer's debt. [Note: paragraph 3.28c of DMG](2) Where it becomes clear that the course of action in CONC 8.6.5 R is not producing effects in the customer's best interests the firm should, where withdrawing from the debt management plan may be in the customer's best interests, advise the customer of the possibility of withdrawing from
The statement must contain: (1) details of the following transactions during the period since the last statement (or, where it is the first statement, since the customer entered into the instalment reversion plan):(a) the date and amount of each payment made by the reversion provider; and(b) any amounts charged under the instalment reversion plan during the statement period, including fees and any amounts due in relation to tied products;(2) information at the date the statement
If the tariff of charges has changed since the last annual statement was sent to the customer (or, where it is the first statement, since the customer entered into the instalment reversion plan) and a firm has not already sent a revised tariff of charges, it must include one with the annual statement.
The statement required by MCOB 7.5.1 R must contain the following information:(1) except in the case of mortgage credit cards, information on the type oflifetime mortgage,3 (for example, fixed rate or variable rate) including a clear statement of how the firm expects the capital, or capital and interest (whichever is applicable) to be repaid (for example, from the proceeds of the sale of the property);3(2) details of the following transactions and information on the lifetime
The illustration provided in accordance with MCOB 7.6.7 R must;(1) be based on the amount of the further advance only;(2) use the term 'additional borrowing' in place of the term 'lifetime mortgage' where appropriate throughout the titles and text of the illustration;(3) include an additional section headed: 'Total borrowing' and numbered '9' after Section 8, (with subsequent sections of the illustration renumbered accordingly) including the following text:(a) "This section gives
MCOB 9.4.18 R is replaced with the following: "Section 1: 'About this information' Under the section heading 'About this information', the following text must be included:"We are required by the Financial Conduct Authority (FCA) - the independent watchdog that regulates financial services - to provide you with this illustration. All firms selling lifetime mortgages are required to give illustrations, like this one, that contain similar information presented in the same way."
If a customer requests, or agrees to, a change to a lifetime mortgage3 (other than a change as described in MCOB 7.6.7 R to MCOB 7.6.27 R (as modified by MCOB 9)) that changes the amount of each payment due (where payments are required), a firm must provide the customer with the following information, in a single communication, before the change takes effect:3(1) the amount outstanding on the lifetime mortgage3 at the date the change is requested;3(2) the payment due and the frequency
If a customer requests, or agrees to, a change to a lifetime mortgage.3(other than a change as described in MCOB 7.6.7 R to MCOB 7.6.27 R (as modified by MCOB 9)) that changes the amount paid to the customer under a drawdown mortgage, or the amount that the customer will owe under an interest roll-up mortgage5, or both, a firm must provide the customer with the following information, in a single communication, before the change takes effect:3(1) the amount outstanding on the lifetime
(1) When a consumer exercises the right to cancel he may only be required to pay, without any undue delay, for the service actually provided by the firm in accordance with the contract.(2) The amount payable must not:(a) exceed an amount which is in proportion to the extent of the service already provided in comparison with the full coverage of the contract; and(b) in any case be such that it could be construed as a penalty.(3) A firm must not require a consumer to pay any amount:(a)
The amount payable may include: (1) any sums that a firm has reasonably incurred in concluding the contract, but should not include any element of profit;(2) an amount for cover provided (i.e. a proportion of the policy's exposure that relates to the time on risk);(3) a proportion of the commission paid to an insurance intermediary sufficient to cover its costs; and(4) a proportion of any fees charged by an insurance intermediary which, when aggregated with any commission to be
An insurer and an insurance intermediary should take reasonable steps to ensure that double recovery of selling costs is avoided, particularly where the contract for the insurance intermediary's services is a distance contract, or where both commission and fees are recouped by the insurer and insurance intermediary respectively.
(1) The firm must, when the firm next sends a statement to the borrower, give or send the borrower a notice including the information set out in CONC 7.18.5 R.(2) A firm must accompany the notice required by (1) with a copy of the current arrears information sheet under section 86A of the CCA with the following modifications:(-a) for the heading “Arrears” substitute “Arrears – peer-to-peer lending”;1(a) for the bullet point headed “Work out how much money you owe” substitute:“Work
The notice referred to in CONC 7.18.3 R must contain the following information:(1) a form of wording to the effect that it is given in compliance with the rules because the borrower is behind with his payments under the agreement;(2) a form of wording encouraging the borrower to discuss the state of his account with the firm;(3) the date of the notice;(4) a description of the agreement sufficient to identify it;(5) (a) the name, telephone number, postal address and, where appropriate,
(1) Subject to (2), where the total amount which the borrower has failed to pay in relation to the last two payments due under the agreement prior to the date on which the firm came under a duty to give the borrower a notice under CONC 7.18.3 R is not more than £2, the notice:(a) need not include any of the information or statements referred to in CONC 7.18.4 R;(b) but, in that event, shall contain a statement in the following form:"You have failed to make two minimum paymentsFailing
The purpose of REC 3.9.2 R is to enable the FCA1to obtain information on changes to standard tariffs for matters such as membership and trading and of any scheme introduced by the UK recognised body for rebating or waiving fees or charges. A UK recognised body is not required to inform the FCA1of fees or charges for which the UK recognised body does not charge according to a standard tariff.11
A UK recognised body must give the FCA1a summary of:1(1) any proposal to change the fees or charges levied on its members (or any group or class of them), at the same time as the proposal is communicated to those members; and(2) any such change, no later than the date when it is published or notified to those members.
The firm should consider all of its sales of payment protection contracts to the complainant in respect of re-financed loans that were rolled up into the loan covered by the payment protection contract that is the subject of the complaint. The firm should consider the cumulative financial impact on the complainant of any previous breaches or failings in those sales or, where relevant, any previous failures to disclose commission1.
1A firm which:2(1) arranges for retail clients to buy retail investment products or makes personal recommendations to retail clients in relation to retail investment products; and22(2) uses a platform service for that purpose;must take reasonable steps to ensure that it uses a platform service which presents its retail investment products without bias.
(1) An insurance intermediary must, on a commercial customer's request, promptly disclose the commission that it and any associate receives in connection with a policy.(2) Disclosure must be in cash terms (estimated, if necessary) and in writing or another durable medium. To the extent this is not possible, the firm must give the basis for calculation.
(1) The commission disclosure rule is additional to the general law on the fiduciary obligations of an agent in that it applies whether or not the insurance intermediary is an agent of the commercial customer.(2) In relation to contracts of insurance, the essence of these fiduciary obligations is generally a duty to account to the agent’s principal. But where a customer employs an insurance intermediary by way of business and does not remunerate him, and where it is usual for