TOPIC 21 - Conduct of business requirements II Flashcards
The lender has just discovered that Dave and Sheila are in arrears with their mortgage. Within what period must the lender write to them with specified information about the arrears?
a) 7 working days.
b) 10 working days.
c) 15 working days.
d) 30 working days.
c) 15 working days.
Which of the following is true regarding the Payments Services Directive?
a) In cases not involving fraud or negligence, the maximum a payer can be obliged to pay for an unauthorised payment is €150.
b) Banks do not have to give third‑party providers access to accounts in order to carry out transactions.
c) Payments are not covered by the Directive if one of the payment service providers is outside the European Economic Area.
d) Payment service providers must respond to complaints within 15 working days of receipt.
d) Payment service providers must respond to complaints within 15 working days of receipt.
When assessing affordability, MCOBS considers council tax to be what type of expenditure?
a) Discretionary.
b) Committed.
c) Basic essential.
d) Cost of living.
c) Basic essential.
In which one of the following situations would a mortgage be classified as a consumer buy-to-let mortgage?
a) Stephen, who has just moved into his new wife’s property and intends to raise a mortgage on his own property to bring it to a standard to let out long-term.
b) Clyde, who has inherited a house that needs major renovation. He needs a mortgage to complete the refurbishment before letting it out until he has decided on his next step.
c) Tim and Penny, who intend to raise a further mortgage on their property to buy a second property to rent out as a business.
d) Clare, who owns three rental properties and will use one as security for a mortgage to buy another rental property.
b) Clyde, who has inherited a house that needs major renovation. He needs a mortgage to complete the refurbishment before letting it out until he has decided on his next step.
In terms of mortgage regulation, which of the following is not one of the criteria for a mortgage to be regulated by MCOBS?
a) The mortgage is taken out by an individual or trustees.
b) The land or property must be in the UK or the European Economic Area.
c) The dwelling must occupy at least 40% of the land.
d) The mortgage must be secured on land
b) The land or property must be in the UK or the European Economic Area.
When a lender makes a mortgage offer, MCOBS requires that the:
a) offer cannot be conditional under any circumstances.
b) borrower must be given at least seven days to decide whether to accept the offer.
c) offer is binding on the lender and the borrower.
d) offer must remain valid for at least three months.
b) borrower must be given at least seven days to decide whether to accept the offer.
Mahir and Salena are arranging an interest-only mortgage, supported by an ISA, to buy their new home. What obligations does their lender have?
a) To advise them on their choice of ISA or refer them to an IFA.
b) To check at least once during the mortgage term that the ISA is still in place.
c) To check the performance of the ISA at least annually.
d) To insist that they have appropriate life cover in place for the mortgage.
b) To check at least once during the mortgage term that the ISA is still in place.
Which of the following customers would not be considered vulnerable under MCOBS?
a) Andy, who is entering a sale‑and‑rent‑back agreement.
b) Dorothy, who is applying for a lifetime mortgage.
c) Sarah, who is buying a shared-ownership flat.
d) John, who is exercising his statutory Right‑to‑Buy.
c) Sarah, who is buying a shared-ownership flat.
Jane’s adviser has explained that they will only provide advice on pensions for her. This is an example of:
a) focused advice.
b) generic advice.
c) simplified advice.
d) basic advice
c) simplified advice.
For how long must a firm keep a record of a non-real-time financial promotion for mortgages after it was last used?
a) 12 months.
b) 24 months.
c) 36 months.
d) Indefinitely.
a) 12 months.
A mortgage arranged for which of the following mortgagors would not be a regulated mortgage?
a) Terry and Angel, who are joint borrowers buying their first home.
b) Laszlo and Yuri, who are creating a mortgage in their capacity as trustees.
c) John, who is a sole borrower, trading up to a bigger property.
d) Décor Plus, which is a public limited company.
d) Décor Plus, which is a public limited company.
Which of the following methods of obtaining new business is not permitted for a regulated mortgage?
a) Cold calling.
b) Mortgage introducers.
c) Radio advertising.
d) TV advertising.
a) Cold calling.
Maurice wants to use the equity in his property by arranging a lifetime mortgage. He wants exactly the same product that his brother has and does not want to waste time considering other options. Why would it not normally be possible for Maurice
to proceed on an execution only basis, even though he knows exactly what he wants?
Execution only transactions are permitted only for business borrowers, high net worth individuals and mortgage professionals. Even if Maurice were a high net worth client, it would not be possible to carry out the transaction on an execution only basis because it is not possible to opt out of advice for an equity release scheme such as a lifetime mortgage.
Which of the following statements is untrue in relation to the offer document that is produced following a mortgage application?
a) It must contain details of the monthly payments.
b) It must state how long the offer is valid for.
c) It must explain how the customer can withdraw from the contract once the mortgage is completed.
d) It must be accompanied by an up to date tariff of charges.
c) It must explain how the customer can withdraw from the contract once the mortgage is completed.
When assessing affordability for a mortgage application, which of the following is regarded as committed expenditure?
a) Repayments on a personal loan.
b) Council tax.
c) Water bills.
d) Costs of travel to work.
a) Repayments on a personal loan.
