Topic 8 - Regulation and the Buying Process

Question 1

Non-Real-Time Financial Promotion (SMS, email, faxes, letters, adverts, etc.) must include:

Answer 1

• Company details
• Terms of promotion
• Risk of repossession statement
• APRC, interest rate, credit, term, installments

Question 2

When are unsolicited calls allowed?

Answer 2

They are only allowed where the recipient has an established existing customer relationship with the firm.

Question 3

Rules for real-time promotions:

Answer 3

• 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

Question 4

What must initial disclosure tell the customer?

Answer 4

• Any limitations in the range of products offered
• How the firm will be remunerated (fees, commission)
• Alternative finance options

Question 5

Types of service:

Answer 5

• Unlimited
• Limited range
• Single lender

Question 6

Customers who can proceed on an execution-only basis:

Answer 6

• HNW customers
• Professional customers
• Business customers
• Customers who receive a service through non-interactive channels
• Customers who have received and rejected advice

Question 7

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)

Answer 7

A minimum of three years from the date the advice was given/the recommendation was made

Question 8

Who may not proceed on an execution-only basis?

Answer 8

• 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

Question 9

When it has issued a binding offer, the lender must allow the borrower a reflection period of how long?

Answer 9

At least seven days.

Question 10

The firm must keep a record of the ESIS or KFI for how long?

Answer 10

One year from the date of the customer’s application

Question 11

When must the ESIS be provided to the customer?

Answer 11

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.

Question 12

What are the main differences with non-MCD regulated mortgage contracts?

Answer 12

• KFI instead of ESIS
• No reflection period
• Offer is not subject to the MCD ‘binding offer’ requirement
• APR which is slightly different to APRC

Question 13

Representative APRC

Answer 13

51%