Unit 3:8 MCOB Regulations

Question 1

MCD / MCOB Regulation

Answer 1

• any regulated mortgages before 2016 are MCOB regulated instead of MCD

Question 2

Financial Promotions (MCOB 3A)

Answer 2

• real time promotions not allowed (cold calling)
• non real time adverts (TV, radio etc)

Question 3

Non Real Time Promo Regulations

Answer 3

• Company Details
• Clarity (clear, fair, not misleading information)
• Risk of Repossession
• Annual Percentage Rate of Charge (APRC)
• Interest Rate
• Credit - the total amount of the credit
• Term
• Instalments (monthly)
• Total

Businesses Must KEEP records of non real time promo for 12 months

Question 4

Representative APR

Answer 4

• if this is in an advert it means at least 51% of people who entered the contract got charged APR quoted

Question 5

Real Time Promo Regulations

Answer 5

• no unreasonable hours (8-8, mon-fri usually)
• must identify yourself and business
• must check customer is happy to go along with the call
• must terminate call/discussion if they’re not happy
• clear, fair, non-misleading content

Question 6

Initial Disclosure Must Include (MCOB 4 and 4A)

Answer 6

• contact details
• method of communication
• that you are authorised with FCA
• independent or restricted advice
• if you charge fees and how you get paid

Question 7

Unlimited (Independent):

Answer 7

• Firm selects and recommends from a range of products that represent the whole market
• Offers true independent advice considering all available options
• Reviews products from across the entire mortgage market
• Not restricted to specific lenders or panels
• A sufficiently diverse amount of options available

Question 8

Limited Range (Restricted):

Answer 8

• Firm selects and recommends from a limited range of products
• Typically works with a panel of selected lenders
• Does not consider the whole market in recommendations
• May have preferred relationships with certain lenders

Question 9

Single Lender (Restricted):

Answer 9

• Firm selects and recommends only the products of a single lender
• Most restricted form of mortgage advice
• Only considers one lender’s products regardless of client needs
• Often found with in-house bank advisers or tied agents

Question 10

The firm must inform the customer of:

Answer 10

1. Any fees the firm will charge them
2. When such fees will be payable (and when reimbursable, if appropriate)
3. Whether the firm will receive commission or a procurement fee from the lender or a third party
4. The firm must state the amount of commission

Question 11

Execution Only Permissions

Answer 11

• Requires no interactive dialogue between customer and firm
• Limited to high-net-worth individuals, professional customers, or business loans
• Customer must explicitly choose to proceed without advice

Question 12

Execution-Only Restrictions

Answer 12

• purpose of the loan is to exercise a statutory ‘right to buy’ a home
• main purpose is to raise funds for debt consolidation
• mortgage is a shared equity arrangement

Question 13

Mortgage Suitability Requirements

Answer 13

• Affordable - customer must be able to afford the repayments
• Most suitable from the range offered - best match from available products
• Appropriate to customer’s needs and circumstances - meets specific requirements
• Records must be kept for at least 3 years from advice date

Question 14

Pre-Application Disclosure (MCOB 5 & 5A)

Answer 14

• Pre-application disclosure is the information that must be provided before the customer completes an application for a regulated mortgage contract
• This typically includes key product information, costs, features, and risks associated with the mortgage product.

Question 15

ESIS European Standardised Information Sheet.

Answer 15

• The period for which the ESIS remains valid
• The lender and contact details
• The intermediary firm - name and contact details, where applicable
• Whether the firm has recommended a specific mortgage or provided information on a mortgage based on the customer’s responses to questions
  1. Main features of the loan
  2. Interest rates and other costs:
  (Frequency and number of payments and installment amounts)
  3. Illustrative repayment table
  4. Additional obligations
  5. Early repayment
  6. Other rights of the borrower
  7. Complaints
  8. Non-compliance with the commitments linked to the loan
  9. The contact details of the FCA as the supervising authority

Question 16

Telephone Mortgage Recommendation Rule

Answer 16

• If a mortgage recommendation is made over the telephone, the illustration/ESIS must be sent to the customer within 5 business days.

Question 17

MCD Offer Document Content

Answer 17

• Period for which offer is valid
• When interest rate will change
• Consequences of not proceeding with mortgage
• Non-refundable fees already paid
• No right of withdrawal after completion
• Customer’s repayment strategy
• Information about retentions/re-inspections
• How to complain to the firm