Topic 8 - Regulation and the Buying Process Flashcards
Non-Real-Time Financial Promotion (SMS, email, faxes, letters, adverts, etc.) must include:
- Company details
- Terms of promotion
- Risk of repossession statement
- APRC, interest rate, credit, term, installments
When are unsolicited calls allowed?
They are only allowed where the recipient has an established existing customer relationship with the firm.
Rules for real-time promotions:
- Cannot be made at an unsocial hour
- Contact must be previously agreed
- The caller must identify themselves and their firm
- Caller must check that the customer agrees to continue with the conversation
- Call must be terminated if the customer doesn’t wish to proceed
- Content must be clear, fair and not misleading
What must initial disclosure tell the customer?
- Any limitations in the range of products offered
- How the firm will be remunerated (fees, commission)
- Alternative finance options
Types of service:
- Unlimited
- Limited range
- Single lender
Customers who can proceed on an execution-only basis:
- HNW customers - 300000 net income or net assets of 3m
- Professional customers
- Business customers
- Customers who receive a service through non-interactive channels
- Customers who have received and rejected advice
How long must firms keep customer information records used to make a recommendation for?
(Also same amount of time they should keep records demonstrating suitability for)
A minimum of three years from the date the advice was given/the recommendation was made
Who may not proceed on an execution-only basis?
- Those borrowing to exercise a statutory ‘right to buy’
- Those whose main purpose is to raise funds for debt consolidation
- Those entering into a sale and rent back agreement
- Those who have entered into dialogue with the firm at any point during the sale
- Those who are borrowing for a shared equity arrangement
Vulnerable customers
When it has issued a binding offer, the lender must allow the borrower a reflection period of how long?
At least seven days.
The firm must keep a record of the ESIS or KFI for how long?
One year from the date of the customer’s application
When must the ESIS be provided to the customer?
As soon as they have supplied the necessary information on their needs, financial situation and preferences, and before they are committed to any mortgage offer or contract.
If a recommendation is made over the telephone, it must be sent to the customer within 5 business days.
What are the main differences with non-MCD regulated mortgage contracts?
- KFI instead of ESIS when changing a pre March 2016 mortgage.
- No reflection period
- Offer is not subject to the MCD ‘binding offer’ requirement
- APR which is slightly different to APRC
Representative APRC
51%
No real time promotions must include
the name and contact details of the firm. Terms of the promotion m, risk of repossession, aprc, interest rate, credit, term, instalments, total, example aprc 51%
They must be clear, fair and not misleading. If comparisons are used, they must be with products that meet the same needs. They must state that ‘your home may be repossessed if you do not keep up repayments on your mortgage’. Records of non-real-time promotions must be retained for one year after their last use.
In initial disclosure what must the firm tell the customer in terms of remuneration
Any fees (rules on how these should be calculated) if fee is not known examples of how the fees work.
When the fees will be paid and if necessary reimbursement
Will the firm get commission or procuration fees
If commission can’t be stated , state it will be disclosed in the esis at a later stage
