Related provisions for MCOB 1.1.1
1 - 20 of 29 items.
1(1) This sourcebook3 applies to every firm that:113(a) carries on a home finance activity3 (subject to 31the business loan and loans to high net worth mortgage customers7 application provisions3); or3(b) communicates or approves a financial promotion of qualifying credit, of a home purchase plan,6of a home reversion plan3or of a regulated sale and rent back agreement.636(2) Where a firm has outsourced activities to a third party processor, any rule in MCOB which requires the
In relation to a regulated mortgage contract for a business purpose(1) MCOB applies if the customer is not a large business customer; and(2) if MCOB applies, a firm must either:(a) comply with MCOB in full (disregarding the tailored provisions for regulated mortgage contracts for a business purpose in the remainder of MCOB); or(b) comply with MCOB in full, but taking account of all7 those tailored provisions, including MCOB 1.2.7 R.7
7In relation to a regulated mortgage contract with a high net worth mortgage customer, a firm must either:(1) comply with MCOB in full (disregarding the tailored provisions for regulated mortgage contracts with high net worth mortgage customers in the remainder of MCOB); or(2) subject to MCOB 1.2.9C R, comply with MCOB in full, but taking account of all those tailored provisions, including MCOB 1.2.7 R.
7Certain other provisions of MCOB apply in all cases in respect of high net worth mortgage customers or of transactions which are solely for a business purpose. The application of the tailored and other provisions for high net worth mortgage customers and transactions for a business purpose are summarised in the table at MCOB 1.2.4B G.
The disclosure rules in MCOB place particular emphasis on the description of borrowing. Where the regulated mortgage contract is for a business purpose or with a high net worth mortgage customer7 who is not a consumer under an MCD regulated mortgage contract8, a firm should reflect this emphasis in any disclosure by first describing any borrowing before addressing the other facilities provided under the regulated mortgage contract.
7A firm may not treat a customer as being a high net worth mortgage customer for the purposes of MCOB unless either:(1) it is aware, from evidence already in its possession as a result of a business relationship between it and the customer, that the customer satisfies the definition of high net worth mortgage customer; or(2) it has first obtained a written statement which:(a) confirms that the customer satisfies the definition of high net worth mortgage customer;(b) specifies
10Where the regulated mortgage contract is a legacy CCA mortgage contract, the firm should not treat the customer as a high net worth mortgage customer for the purposes of MCOB unless it is aware from evidence in its possession that the customer satisfied the definition of high net worth mortgage customer at the time the contract was entered into.
The effect of article 28A of the Regulated Activities Order would normally mean that arrangements made by a party to a home finance transaction3 would not fall within the home finance activity3 of arranging. So in a direct sale, a home finance provider3 would not be carrying on the regulated activity of arranging but, where the transaction proceeds to completion, would instead be involved in a regulated activity comprising entering into a home finance transaction3. However, the
(1) 8 For any regulated mortgage contract which is not an MCD regulated mortgage contract, a firm may elect to comply with any part of MCOB as if the contract was an MCD regulated mortgage contract. (2) Where the contract in (1) is an MCD exempt lifetime mortgage that is not a retirement interest-only mortgage12, the firm must continue to provide an illustration in accordance with the relevant requirements in MCOB, rather than an ESIS.
8The purpose of MCOB 1.2.16 R is to allow a firm to apply provisions of MCOB which implement the MCD for an MCD regulated mortgage contract to regulated mortgage contracts that are not MCD regulated mortgage contracts, save in respect of MCD exempt lifetime mortgages (other than retirement interest-only mortgages)12 where the firm must continue to provide an illustration in accordance with the relevant requirements in MCOB, rather than an ESIS.
(1) 10By virtue of amendments to articles 60B, 60C and 61 of the Regulated Activities Order which came into force on 21 March 2016, certain regulated credit agreements became regulated mortgage contracts (but see the transitional provisions described in (3) below). The provisions of MCOB that apply to these regulated mortgage contracts include:(a) MCOB 7 (Disclosure at start of contract and after sale);(b) MCOB 12 (Charges); and(c) MCOB 13 (Arrears, payment shortfalls and repossessions:
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
If, notwithstanding the steps taken by a firm to comply with MCOB 1.6.3 R, it transpires that a mortgage which the firm has treated as unregulated or as a regulated credit agreement4 is in fact a regulated mortgage contract, the firm must as soon as practicable after the correct status of the mortgage has been established:(1) contact the customer and provide him with the following information in a durable medium:(a) a statement that the mortgage contract is a regulated mortgage
(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,
Except as set out in this section, MCOB applies if the customer of a firm carrying on home finance activities2 is resident in:2(1) the United Kingdom; or(2) another EEA State where7 the activity is carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom;at the time that the home finance activity2 is carried on.2
(1) 7The provisions of MCOB listed in MCOB 1.3.1AR(2) apply to a UKfirm where it carries on MCD credit intermediation activity for a customer who is resident in another EEA State through an establishment maintained by the firm in that State.(2) The provisions mentioned in MCOB 1.3.1AR(1) are:(a) MCOB 2A.1.1R(2);(b) MCOB 2A.1.4R;(c) MCOB 2A.2.1R and 2A.2.2G; and(d) MCOB 7.6.28R.[Note: article 34(2) of the MCD]
Parts of MCOB relate to distance contracts (or distance mortgage mediation contracts and distance home purchase mediation contracts2) with consumers3. These expressions are derived from the Distance Marketing Directive, and the following paragraphs provide some guidance to firms on their meaning:3(1) consumer3The Distance Marketing Directive applies for distance contracts with 'any natural person who is acting for purposes which are outside his trade, business or profession',
Except for MCOB 11.6.21A R, each2rule in MCOB that requires a record also sets out a period that the record must be kept for. While not a requirement of MCOB, firms may choose to keep records for longer periods, for example, where there is the possibility of customer complaint or legal action against the firm.
(1) Any information which a rule in MCOB requires to be sent to a customer may be sent to another person on the instruction of the customer, so long as the recipient is not connected with the firm. (2) There is no need for a firm to send information to a customer where it has taken reasonable steps to establish that this has been or will be supplied by another person.
The purpose of MCOB 14 is to apply rules and guidance in MCOB (including, but not restricted to, rules that implement the MCD) to: (1) MCD article 3(1)(b) creditors; and(2) MCD article 3(1)(b) credit intermediaries; and to identify rules and guidance in CONC that also apply, or may (subject to the election in MCOB 14.1.5R) apply, to them.
Subject to MCOB 14.1.5R and MCOB 14.1.7R: (1) MCD article 3(1)(b) creditors and MCD article 3(1)(b) credit intermediaries must comply with the following provisions in MCOB. These provisions apply with such changes as are necessary to apply them to MCD article 3(1)(b) credit agreements and activity undertaken in relation to those agreements (see MCOB 14.1.4G):(a) MCOB 1.2.19G (identifying MCD credit agreements);(b) MCOB 2.3 (inducements);(c) MCOB 2.5A (the customer’s best interests);(d)
MCOB 2.3.2 R does not prevent a firm: (1) assisting a home finance intermediary2 so that the quality of the home finance intermediary's2 service to customers is enhanced; or 22(2) giving or receiving indirect benefits (such as gifts, hospitality and promotional competition prizes); providing in either case this is not likely to give rise to a conflict with the duties that the recipient owes to the customer. In particular, such benefits should not be of a kind or value that is
(1) Quantification of any material inducement offered by the mortgage lender or reversion provider2 supports the disclosure requirements elsewhere in MCOB. Further guidance on the disclosure of any inducement in cash terms is provided in MCOB 5.6.118 G for regulated mortgage contracts other than lifetime mortgages, MCOB 9.4.124 G for lifetime mortgages and MCOB 9.4.173 G for home reversion plans.2(1A) Quantification of any material inducement offered by a SRB agreement provider
(1) Although MCOB does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of MCOB, anything done or omitted by a firm's appointed representative (when acting as such) will be treated as having been done or omitted by the
1 Firms are reminded that in accordance with MCOB 1.2.3R, they should comply in full with MCOB, but in doing so may opt to take account of4 all tailored provisions in MCOB that relate to loans solely for a business purpose or loans to high net worth mortgage customers4. Therefore, a firm may only follow the relevant 4tailored provisions in MCOB 13.7, if it also follows all other relevant 4tailored provisions in MCOB. In either case, the rest of MCOB applies in full.4444
(1) Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm is also under an obligation, as a consequence of this sourcebook's disclosure requirements,1 to make charges transparent to customers. This chapter reinforces these requirements by preventing a firm from imposing unfair and excessive charges.1(2) The level of charges under a regulated mortgage contract,2home reversion plan1 or regulated sale and rent back agreement2
1Firms are reminded that in accordance with MCOB 1.2.3 R and MCOB 1.2.3A R, they should comply in full with MCOB, but in doing so may opt to take account of all tailored provisions in MCOB that relate to business loans or loans to high net worth mortgages customers, as the case may be3. Therefore, a firm may only follow the tailored provisions in MCOB 4.9 in relation to one of these sectors if it also follows all other tailored provisions in MCOB that relate to that sector. In
(1) 2CONC does not apply to credit agreements secured on land, with some limited exceptions as set out in (3) and (4), below. (2) Agreements secured by a second or subsequent charge on the customer’s home are, where regulated, governed by MCOB from 21 March 2016 (subject to transitional provisions allowing for the earlier adoption of MCOB). For detailed guidance on the regulation of secured lending, see PERG 4.(3) The agreements secured on land to which CONC may apply include
Firms are reminded that, in accordance with MCOB 1.2.3 R, they should comply in full with MCOB, but in doing so may opt to take account of all tailored provisions in MCOB that relate to business loans or loans to high net worth mortgage customers. Therefore, a firm may only follow the tailored provisions in MCOB 5.7 in relation to one of these sectors if it also follows all other tailored provisions in MCOB that relate to that sector. In either case, the rest of MCOB applies in