Conduct of business standards: general

The purpose of MCOB 2.2 is to restate, in slightly amended form, and as a separate rule, the part of Principle 7 (Communications with clients) that relates to communication of information. This enables a customer, who is a private person, to bring an action for damages under section 150 (Contravention of rules) of the Act to recover loss resulting from a firm that carries on the activities referred to in MCOB 2.1.3 R communicating information, in the course of those activities, in a way that is not clear or fair, or that is misleading. MCOB 2.2 also clarifies the expectations of the FSA where any rule requires the provision of information and there are two or more customers.

31/10/2004

General

MCOB 2.2.2

In many circumstances there will be two or more customers under any home finance transaction, or two or more prospective customers looking to enter into the same home finance transaction. In such circumstances, where a rule in MCOB requires the provision of information to such customers and the customers have different addresses, a firm sending out this information should send it to each address. If the customers share the same address it will be sufficient to send a single copy of the information addressed to each of the customers.

06/04/2007

Prescribed terms for regulated mortgage contracts, home reversion plans and regulated sale and rent back agreements

MCOB 2.2.3

In any communication to a customer, a firm must:

(1) describe any early repayment charge as an 'early repayment charge';
(2) describe any higher lending charge as a 'higher lending charge';
(3) describe any lifetime mortgage as a 'lifetime mortgage';
(4) describe any home reversion plan as a 'home reversion plan'; and
(5) describe any regulated sale and rent back agreement as a 'sale and rent back agreement';

and not use any other expression to describe them.

30/06/2010

Related investment advice

MCOB 2.2.5

Firms are reminded that they should follow the relevant rules in COBS 6 and COBS 13 relating to advice and disclosure on investments if they are advising the customer on an investment such as an annuity associated with an equity release transaction or an ISA used as a repayment vehicle.

01/11/2007

Clear, fair and not misleading communications and financial promotions

MCOB 2.2.6

(1) When a firm communicates information to a customer, it must take reasonable steps to communicate in a way that is clear, fair and not misleading.
(2) [deleted]

06/04/2007

MCOB 2.2.6A

A firm which approves a financial promotion of a home purchase plan must take reasonable steps to ensure that the financial promotion is clear, fair and not misleading.

30/06/2010

MCOB 2.2.7

When considering how to comply with the requirements of, these rules on clear, fair and not misleading communications and financial promotions, a firm should have regard to the customer's knowledge of the home finance transaction to which the information relates.

06/04/2007

MCOB 2.2.8

The rule on clear, fair and not misleading communications covers all communications with customers, for example any oral or written statements, telephone calls and any correspondence which is not a financial promotion to which MCOB 3 (Financial promotion) applies. In respect of financial promotions of qualifying credit, of home reversion plans or of regulated sale and rent back agreements, firms should note the separate requirements of MCOB 3.

30/06/2010

MCOB 2.2.8A

If a firm uses a figure equivalent to an APR in a communication of a financial promotion of a home purchase plan, when calculating that figure it must use an approach equivalent to the APR rules.

06/04/2007

MCOB 2.2.8B

The following guidance may be relevant to a firm that communicates or approves a financial promotion of a home purchase plan:

(1) guidance on what 'communicate', 'approve' and 'financial promotion' mean, and on the media of communication to which financial promotion rules apply (see MCOB 3.2.1 G and MCOB 3.2.2 G);
(2) guidance on other Handbook provisions relevant to financial promotions (see MCOB 3.2.8 G to MCOB 3.2.9 G);
(3) guidance on other regulations and guidelines relevant to financial promotions (see MCOB 3.5.3 G);
(4) guidance on referring to the FSA (see MCOB 3.6.2 G (3));
(5) guidance on the clear, fair and not misleading standard (see MCOB 3.6.5 G, MCOB 3.6.10 G and MCOB 3.6.14 G); and
(6) guidance on the use of the Internet for communicating financial promotions (see MCOB 3.12 and PERG 8.22).

06/10/2010

MCOB 2.2.9

Prominence of relevant information can play a key role in ensuring that a communication is clear, fair and not misleading. Where this is the case, the firm should consider prominence in the context of the communication as a whole. Use can be made of the positioning of text, background and text colour and type size to ensure that specified information meets the requirements of MCOB.

31/10/2004

MCOB 2.3

Inducements: regulated mortgage contracts, home reversion plans and regulated sale and rent back agreements

30/06/2010

Purpose

MCOB 2.3.1

The purpose of MCOB 2.3 is to ensure, in accordance with Principles 1, 6 and 8, that a firm does not conduct business under arrangements that might give rise to a conflict with its duty to customers or to unfair treatment of them.

06/04/2007

Prohibition of inducements

MCOB 2.3.2

A firm must take reasonable steps to ensure that it, and any person acting on its behalf, does not:

(1) offer, give, solicit or accept an inducement; or
(2) direct or refer any actual or potential business in relation to a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement to another person on its own initiative or on the instructions of an associate;

if it is likely to conflict to a material extent with any duty that the firm owes to its customers in connection with such a home finance transaction or any duty which such a recipient firm owes to its customers in connection with such a home finance transaction.

30/06/2010

MCOB 2.3.3

An inducement is a benefit offered with a view to bringing about a particular course of action.

31/10/2004

MCOB 2.3.4

The purpose of MCOB 2.3.2 R(2) is to prevent the requirement in MCOB 2.3.2 R(1) being circumvented by an inducement being given or received by an unregulated associate. There may be circumstances, however, where a firm is able to demonstrate that it could not reasonably have knowledge of an associate giving or receiving an inducement. It should not, however, direct business to another person on the instruction of an associate if this is likely to conflict with the interests of its customers.

31/10/2004

MCOB 2.3.5

MCOB 2.3.2 R does not prevent a firm:

(1) assisting a home finance intermediary so that the quality of the home finance intermediary's service to customers is enhanced; or
(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 likely to impair the ability of a firm to act in compliance with any rule in MCOB, for example the suitability requirements in MCOB 4.7 (Advised sales).

06/04/2007

MCOB 2.3.6

(1) A firm must not operate a system of giving or offering inducements to a mortgage intermediary, reversion intermediary, SRB intermediary or any other third party whereby the value of the inducement increases if the intermediary or third party, such as a packager, exceeds a target set for the amount of business referred (for example, a volume override).
(2) A firm must not solicit or accept an inducement whereby the value of the inducement increases if the firm exceeds a target set for the amount of business referred.

30/06/2010

Quantification of inducements

MCOB 2.3.7

(1) A mortgage lender, reversion provider or SRB agreement provider must quantify, in cash terms, any material inducement it offers to a mortgage intermediary, reversion intermediary, SRB intermediary or a third party.
(2) In quantifying the value of the material inducement, the firm must include any subsequent payments (such as a trail fee) made where the customer continues with the same home finance transaction.

30/06/2010

MCOB 2.3.8

(1) Quantification of any material inducement offered by the mortgage lender or reversion provider 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.
(1A) Quantification of any material inducement offered by a SRB agreement provider in connection with the conclusion of a regulated sale and rent back agreement must be included in the disclosures made to the potential SRB agreement seller under MCOB 5.9.1R (1A)(c).
(2) A payment made to a third party unconnected with the home finance intermediary, where that payment only reflects the cost of outsourcing work relating to the processing of mortgage applications, would not be considered an inducement for these purposes.

30/06/2010

MCOB 2.4

High pressure sales: regulated mortgage contracts, home reversion plans and regulated sale and rent back agreements

01/07/2009

Purpose

MCOB 2.4.1

The purpose of this section is to remind firms of the relevance of the high level standards in PRIN, especially with regard to the use of sales methods that may lead a customer to feel pressurised to enter into, or vary, a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement.

01/07/2009

Fair treatment

MCOB 2.4.2

(1) Principle 6 (Customers' interests) requires that a firm must pay due regard to the interests of its customers and treat them fairly. This means, for example, that a firm should avoid selling practices that commit customers (or lead customers to believe that they are committed) to any regulated mortgage contract or home reversion plan before they have been able to consider the illustration and offer document. One such practice might be to present a new customer with an illustration, offer document and mortgage deed at one time and to require the mortgage deed to be signed on the same occasion (when there is no urgent need to do so).
(2) For regulated sale and rent back agreements, the firm should avoid practices that commit customers (or lead customers to believe they are committed) to any such agreement before they have been able to consider the information that is required by MCOB 5.9.1 R (Pre-sale disclosure) and before the expiry of the 14 day cooling-off period as required by MCOB 6.9.4 R (Written pre-offer document: Stage One).

30/06/2010

Information

MCOB 2.4.3

Principle 7 (Communications with clients) requires that a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. This means, for example, that a firm should avoid giving any customer a false impression about the availability of a regulated mortgage contract, home reversion plan or regulated sale and rent back agreement, such as describing it as a 'special offer' not available after a certain date unless this is really the case.

01/07/2009

MCOB 2.5

Reliance on others

01/12/2004

Purpose

MCOB 2.5.1

Principle 2 requires a firm to conduct its business with due skill, care and diligence. MCOB 2.5 indicates the extent to which firms that carry on home finance activities and that communicate or approve a financial promotion can meet this requirement by relying on others.

06/04/2007

When firms can rely on others

MCOB 2.5.2

A firm will be taken to be in compliance with any rule in MCOB that requires a firm to obtain information to the extent that the firm can show that it was reasonable for it to rely on information provided to it by another person.

31/10/2004

MCOB 2.5.3

(1) In relying on MCOB 2.5.2 R, a firm should take reasonable steps to establish that the other person providing the information is:

(a) not connected with the firm; and
(b) competent to provide the information.

(2) Compliance with (1) may be relied on as tending to establish compliance with MCOB 2.5.2 R.
(3) Contravention of (1) may be relied on as tending to establish contravention of MCOB 2.5.2 R.

31/10/2004

MCOB 2.5.4

(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.

31/10/2004

MCOB 2.6

Exclusion of liability

01/12/2004

Purpose

MCOB 2.6.1

Principle 6 (Customers' interests) requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm may not exclude the duties it owes or the liabilities it has to a customer under the regulatory system. It may exclude other duties and liabilities only if it is reasonable for it to do so.

31/10/2004

Limits on the exclusion of liability

MCOB 2.6.2

A firm must not, in any written or oral communication, seek to exclude or restrict, or to rely on any exclusion or restriction of, any duty or liability it may have to a customer under the regulatory system.

31/10/2004

MCOB 2.6.3

A firm must not, in any written or oral communication to a customer, seek to exclude or restrict, or to rely on any exclusion or restriction of, any duty or liability not referred to in MCOB 2.6.2 R unless it is reasonable for it to do so.

31/10/2004

MCOB 2.6A

Protecting customer's interests: home purchase plans, home reversion plans and regulated sale and rent back agreements

01/07/2009

MCOB 2.6A.1

A firm must ensure that the interests of its customer under a home purchase plan, home reversion plan or regulated sale and rent back agreement are protected to a reasonable standard.

01/07/2009

MCOB 2.6A.2

Circumstances that a firm should consider include how the customer will be protected in the event of:

(1) the failure of a reversion provider, home purchase provider or SRB agreement provider;
(2) the transfer of a reversion provider's, home purchase provider's or SRB agreement provider's interest (or the interest the provider would have had, had it not nominated a third party to hold it) in the property to a third party;
(3) other dealings by a reversion provider, home purchase provider or SRB agreement provider (or its nominee) with a third party; and
(4) a reversion provider's, home purchase provider's or SRB agreement provider's (or its nominee's) failure to perform obligations owed to third parties, or imposed by statute.

01/07/2009

MCOB 2.6A.3

The steps that a firm might take in order to protect its customer's interests will depend on a number of factors, including the nature and structure of the home purchase plan, home reversion plan or regulated sale and rent back agreement and the jurisdiction in which the property is situated. If it is not possible to achieve reasonable protection (for example, due to impediments under a particular legal system) then a firm should not enter into, arrange or administer the plan.

01/07/2009

MCOB 2.6A.4

(1) In the FSA's view, a customer's interests will include:

(a) protection of the customer's rights under the plan, in particular the right to occupy the property throughout its term;
(b) protection of any interest (legal or beneficial) that the customer retains, acquires or is intended to acquire in the property, including the expectation that such interests will be unencumbered by third party interests;
(c) that, where a customer pays sums under a home purchase plan towards the purchase price of the property, those sums will be applied towards the purchase price. Or, in circumstances where that is not practicable (for example, on repossession), that an appropriate amount will be returned to the customer; and
(d) a customer's contractual entitlement to receive certain sums back after a qualifying period, such as where it has been agreed that a certain percentage of discount will be refunded to the customer after a set period of tenancy.

(2) The protections that a firm should consider include:

(a) the extent to which different forms of tenure protect the tenant's right to occupy the property and afford protection against removal. In particular, granting the customer a licence to occupy the property is unlikely to provide an adequate level of security;
(b) (except in Scotland) the need for any agreement under which a customer has a right to acquire an interest in the property to be specifically enforceable;
(c) the extent to which appropriate registrations, restrictions, notices or other entries should be made in the relevant land register;
(d) the timing of entries in the relevant land register and who should be responsible for making them; and
(e) the customer's need for a full and clear understanding of all the steps that the firm expects him or his advisers to take to protect his interests both at the time the plan is entered into, and throughout its duration.

30/06/2010

Protecting customers' interests: additional material for home reversion plans

MCOB 2.6A.5

Unless it is satisfied on reasonable grounds based on the customer's knowledge, expertise and experience that it is unnecessary, a firm must obtain from its customer's legal adviser, before its customer enters into a home reversion plan, confirmation that:

(1) he has been instructed to ensure that the customer's legal rights under the plan are protected to a reasonable standard; and
(2) he has explained to the customer those aspects of the customer's legal rights and obligations under the home reversion plan that he needs to understand.

06/04/2007

Protecting customer's interests: regulated sale and rent back agreements

MCOB 2.6A.5A

A firm must ensure that before a SRB agreement seller enters into a regulated sale and rent back agreement, the SRB agreement seller is made aware of the availability and importance of independent legal or professional advice.

01/07/2009

Protecting customers' interests under regulated sale and rent back agreements: security of tenure

MCOB 2.6A.5B

(1) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement:

(a) the entitlement of the SRB agreement seller (or trust beneficiary or related person) to occupy the property is governed by a tenancy, which is structured:

(i) if the property is in England and Wales, as an assured tenancy (including an assured shorthold tenancy) under the Housing Act 1988 (as amended);
(ii) if the property is in Scotland, as an assured tenancy (including a short assured tenancy) under the Housing (Scotland) Act 1988, (as amended); and
(iii) if the property is in Northern Ireland, as a private tenancy under the Private Tenancies (Northern Ireland) Order 2006;

(b) the tenancy is for a fixed term of no less than five years;
(c) the terms of the tenancy provide for the tenant to terminate the tenancy during the fixed term on no more than three months' notice (and with no other conditions attached); and
(d) each of the terms of the tenancy is fair.

(2) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement, if the property is in England and Wales, the terms of the tenancy do not:

(a) give the landlord power to determine the tenancy in certain circumstances as referred to in section 5(1) of the Housing Act 1988, as amended; or
(b) otherwise make provision for the tenancy to be brought to an end by the landlord save on a ground or grounds for possession applicable for an assured tenancy under the Housing Act 1988, as amended; or
(c) make provision for the tenancy to be brought to an end on any of Grounds 2, 6, 8 or 9 under the Housing Act 1988, as amended.

A firm may not rely during the fixed term of the tenancy on any ground for possession of the property other than a ground for possession on which the terms of the tenancy may under this paragraph (2) make provision for the tenancy to be brought to an end by the landlord, and a firm may only rely on any ground for possession if it is fair for the firm to do so.
(3) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement, if the property is in Scotland, the terms of the tenancy do not include:

(a) any provision for it to be brought to an end by the landlord during the fixed term other than a ground for possession applicable for an assured tenancy under the Housing (Scotland) Act 1988, as amended; or
(b) Grounds 2, 6, 8 or 9 under the Housing (Scotland) Act 1988, (as amended).

A firm may not rely during the fixed term of the tenancy on any ground for possession of the property other than the grounds permitted under this paragraph (3) to be included in the terms of the tenancy, and a firm may only rely on any ground for possession if it is fair for the firm to do so.
(4) When entering into a regulated sale and rent back agreement, a firm must ensure that, under the terms of the regulated sale and rent back agreement, if the property is in Northern Ireland, the terms of the tenancy do not include:

(a) any provision which would permit the landlord to forfeit the lease and obtain possession of the property during the fixed term unless the provision is equivalent to a ground for possession applicable for an assured tenancy under Schedule 2 to the Housing Act 1988, as amended, in England; or
(b) any provision which would permit the landlord to forfeit the lease and obtain possession of the property on the basis that:

(i) a mortgagee (or chargee) under a mortgage (or charge) entered into by the landlord requires vacant possession for the purposes of exercising a power of sale of the property; or
(ii) the landlord intends to demolish or reconstruct, or carry out substantial works on, the property or any part of the property; or
(iii) there are arrears of rent, unless the conditions applicable to either Ground 9 or Ground 10 under the Housing Act 1988, as amended, in England, are satisfied; or
(iv) alternative accommodation is available for the tenant.

A firm may not rely during the fixed term of the tenancy on any circumstance to forfeit the lease and obtain possession of the property other than the circumstances permitted under this paragraph (4) to be included in the tenancy agreement, and a firm may only rely on any circumstance if it is fair for the firm to do so.
(5) A firm must not take, or propose or threaten to take, any steps to evict the SRB agreement seller (or trust beneficiary or related person) other than by applying to the court for a possession order based on the grounds or circumstances, reliance on which is not prohibited by this rule, and enforcing that order in a lawful manner.
(6) Where a SRB agreement provider enters into or proposes to enter into (whether before or after the commencement of the tenancy) a mortgage (or charge or standard security) over the interest it obtains under a regulated sale and rent back agreement, the firm must ensure that the mortgagee (or chargee or security holder) has agreed in writing to the proposed letting under the agreement, and to the terms of the agreement. The firm must provide to the SRB agreement seller a copy of the agreement in writing of the mortgagee (or chargee or security holder).

[Note: In England, Wales and Scotland a landlord, such as a SRB agreement provider, can only seek possession of a property during the fixed term of an assured tenancy if one or more of a limited number of grounds for possession set out in (in England and Wales) the Housing Act 1988, as amended, or (in Scotland) the Housing (Scotland) Act 1988, as amended, applies and the terms of the tenancy make provision for it to be ended on any of these grounds. Once the fixed term of the assured tenancy has ended, the landlord has the right to seek possession on broader grounds. Where the tenancy is (in England) an assured shorthold tenancy or (in Scotland) a short assured tenancy, the landlord has an additional right to seek possession from the end of the fixed term.

In Northern Ireland, the position is governed by the Private Tenancies (Northern Ireland) Order 2006 and the parties are free to agree the terms of a tenancy including its duration and the grounds on which the landlord may seek possession, including during any fixed term.

In any event it is for the court to decide whether one or more of the grounds for possession actually applies in the particular circumstances of any case.

In Northern Ireland, a tenant must give at least four weeks' notice to quit. Northern Ireland law implies a fixed term of six months in a private tenancy unless the parties agree an alternative fixed term, so a notice to quit expiring before the first six months of the tenancy may not be effective.]

30/06/2010

MCOB 2.6A.5C

In the light of MCOB 2.6A.5BR (1)(c), and in accordance with Principle 6, a firm should not seek to prevent a tenant in Northern Ireland from ending the tenancy on less than the agreed notice period (not exceeding three months in accordance with MCOB 2.6A.5BR (1)(c)), where the notice is given in the first six months of the tenancy.

30/06/2010

MCOB 2.6A.6

Firms remain responsible for ensuring that their customers' interests are protected to a reasonable standard.

06/04/2007

Protecting customers' interests: additional material for home purchase plans

MCOB 2.6A.7

A home purchase provider should consider obtaining confirmation from the customer's legal adviser that he has carried out, or will carry out, the steps that the firm expects the customer or his legal advisers to take to protect his interests at the time the plan is taken out.

06/04/2007

Treating customers fairly: home purchase plans, home reversion plans and regulated sale and rent back agreements

MCOB 2.6A.8

A firm must pay due regard to the interests of its customer and treat him fairly when drafting, amending the terms of, or imposing obligations or exercising rights or discretions under, a home purchase plan, home reversion plan or regulated sale and rent back agreement.

01/07/2009

MCOB 2.6A.9

A firm is unlikely, for example, to be treating its customer fairly in relation to termination of a home purchase plan, home reversion plan or regulated sale and rent back agreement if:

(1) the grounds on which it may terminate all or part of a plan or agreement are unduly wide, or on which a customer may terminate are unduly narrow; or
(2) the customer is not given appropriate notice of termination.

01/07/2009

MCOB 2.6A.10

A firm is also unlikely to be treating its customer fairly if, upon termination of an agreement under a home purchase plan, home reversion plan or regulated sale and rent back agreement, the customer does not receive (net of any reasonable sums payable by the customer):

(1) in the case of a home reversion plan or regulated sale and rent back agreement where the customer retains a beneficial interest in the property, the value of that beneficial interest; or
(2) in the case of a home purchase plan, the value of purchase payments made.

[Note: The terms of a home purchase plan, home reversion plan or regulated sale and rent back agreement should take into account relevant legal obligations such as those under the Unfair Terms Regulations and, where applicable, the Housing Act 1988 (or, in Scotland, the Housing (Scotland) Act 1988). A firm may find material on the FSA website concerning the FSA's consumer protection powers useful. The Office of Fair Trading has also published guidance on the impact of the Unfair Terms Regulations on tenancy agreements.]

01/07/2009

Treating customers fairly: home reversion plans and regulated sale and rent back agreements

MCOB 2.6A.11

A firm is unlikely, for example, to be treating a reversion occupier or SRB agreement seller fairly if:

(1) the reversion occupier or SRB agreement seller is obliged to maintain the property to a standard which exceeds the standard that the property is in when the home reversion plan or regulated sale and rent back agreement commences;
(2) the reversion occupier or SRB agreement seller is not entitled to, or is not given, reasonable notice of an inspection, or the inspection is conducted in a way that is biased against him;
(3) unreasonable restrictions are imposed on who may occupy the property, taking into account the potential needs of the reversion occupier or SRB agreement seller throughout the duration of the home reversion plan or regulated sale and rent back agreement;
(4) unreasonable restrictions are imposed on the uses to which the property may be put;
(5) the reversion occupier or SRB agreement seller is unreasonably treated as having abandoned the property. For example, it is likely to be unreasonable to treat a property as abandoned based only on a period of non-occupation;
(5A) the rent payable under a regulated sale and rent back agreement is increased by an unreasonable amount or any charges payable under a regulated sale and rent back agreement are unreasonably imposed after the agreement is concluded; and
(6) where the reversion occupier has a reasonable expectation that the home reversion plan can be transferred to another property, agreement to such a transfer is, or can be, refused unreasonably.

01/07/2009

Independent valuation: home reversion plans and regulated sale and rent back agreements

MCOB 2.6A.12

A firm must ensure that any valuation is carried out by a competent valuer who is independent of the reversion provider or SRB agreement provider.

01/07/2009

MCOB 2.6A.12A

A firm must ensure that any valuation for the purposes of a regulated sale and rent back agreement is carried out by a valuer who owes a duty of care to the customer in valuing the property.

30/06/2010

MCOB 2.6A.13

(1) A valuer may be considered competent if he is a suitably qualified member of a professional body.
(2) A valuer may be considered independent if:

(a) the customer can choose the valuer subject to the firm objecting on reasonable grounds and to the valuer being competent;
(b) he owes a duty of care to the customer in valuing the property; and
(c) the customer has an appropriate remedy against him under a complaints procedure which allows the complaint to be referred to an independent person whose decision is binding on the valuer.

(3) Compliance with (1) and (2) (except, in the case of a regulated sale and rent back agreement, (2)(b)) may be relied on as tending to establish compliance with MCOB 2.6A.12 R.
(4) [deleted]
(5) For a regulated sale and rent back agreement, contravention of (1) or (2) (except (2)(b)) may be relied on as tending to show contravention of MCOB 2.6A.12 R.

30/06/2010

MCOB 2.6A.13A

A firm may wish to use the form of joint instruction letter set out in MCOB 2 Annex 1G with a view to establishing that a valuer owes a duty of care to the customer (see MCOB 2.6A.12A R). That form incorporates the definition of "market value" required by MCOB 6.9.2R (1)(b).

30/06/2010

MCOB 2.6A.14

Members of the Royal Institution of Chartered Surveyors, for example, are required to operate a complaints procedure that allows the complaint to be referred to an independent person whose decision binds the valuer and which, in the FSA's view, provides a customer with an appropriate remedy.

06/04/2007

Obtaining best price: partial home reversion plans or regulated sale and rent back agreements

MCOB 2.6A.15

A firm must take reasonable steps to ensure that, when a home reversion plan or regulated sale and rent back agreement ends and the customer retains a beneficial interest in the property:

(1) the property is sold within a reasonable period of time; and
(2) the best price that might reasonably be obtained is paid.

01/07/2009

MCOB 2.6A.16

It is recognised that a balance has to be struck between the need to sell the property as soon as possible, and other factors, such as market conditions, which may prompt the delay of the sale. Legitimate reasons for deferring action might include the expiry of a period when a grant is repayable on re-sale, or the discovery of a title defect that needs to be remedied if the optimal selling price is to be achieved.

06/04/2007

Arranging or administering for unauthorised providers: home reversion plans

MCOB 2.6A.17

For the purpose of this section (except this rule), a reversion arranger or reversion administrator's customer:

(1) includes a reversion occupier or potential reversion occupier who enters, or proposes to enter, into a home reversion plan with an unauthorised reversion provider who is the firm's customer; and
(2) excludes an unauthorised reversion provider.

06/04/2007

Arranging or administering for unauthorised providers: regulated sale and rent back agreements

MCOB 2.6A.17A

For the purpose of this section (except this rule), a SRB arranger's or SRB administrator's customer:

(1) includes a SRB agreement seller or potential SRB agreement seller who enters, or proposes to enter, into a regulated sale and rent back agreement with an unauthorised SRB agreement provider who is the firm's customer; and
(2) excludes an unauthorised SRB agreement provider.

01/07/2009

Arranging or administering for unauthorised providers: home reversion plans and regulated sale and rent back agreements

MCOB 2.6A.18

A person may enter into a home reversion plan or regulated sale and rent back agreement as provider or agreement provider without being regulated by the FSA (or an exempt person) if the person does not do so by way of business (see PERG 14.5). If a firm arranges or makes arrangements for such a person to enter into a home reversion plan or regulated sale and rent back agreement as provider or agreement provider, the firm will be responsible for ensuring that the reversion occupier's or SRB agreement seller's interests are protected to a reasonable standard, even if the reversion arranger or SRB arranger is not acting for the reversion occupier or SRB agreement seller. A reversion administrator or SRB administrator is under the same obligation in relation to a reversion occupier or SRB agreement seller under a home reversion plan or regulated sale and rent back agreement which it administers on behalf of an unauthorised reversion provider or unauthorised SRB agreement provider.

06/10/2009

MCOB 2.7

Application to electronic media and distance communications

01/12/2004

MCOB 2.7.1

GEN 2.2.14 R (References to writing) has the effect that electronic media may be used to make communications that are required by the Handbook to be 'in writing' unless a contrary intention appears. In MCOB, the use of an electronic medium is restricted in certain circumstances to a durable medium as required by the Distance Marketing Directive.

31/10/2004

Additional guidance in respect of electronic communication with or for customers

MCOB 2.7.2

For any electronic communication with a customer in relation to a home finance transaction a firm should:

(1) have in place appropriate arrangements, including contingency plans, to ensure the secure transmission and receipt of the communication; it should also be able to verify the authenticity and integrity of the communication together with the date and time sent and received; the arrangements should be proportionate and take into account the different levels of risk in a firm's business;
(2) be able to demonstrate that the customer wishes to communicate using this medium; and
(3) if entering into an agreement, make it clear to the customer that a contractual relationship is created that has legal consequences.

06/04/2007

MCOB 2.7.3

A firm should note that GEN 2.2.14 R (References to writing) does not affect any other legal requirement that may apply in relation to the form or manner of executing a document or agreement.

31/10/2004

General provisions related to distance contracts

MCOB 2.7.4

During the course of a distance contract with a consumer, the making or performance of which constitutes or is part of a regulated mortgage contract, home purchase plan or regulated sale and rent back agreement:

(1) the firm must, at the consumer's request, provide a paper copy of the contractual terms and conditions of the regulated mortgage contract, home purchase plan, regulated sale and rent back agreement or services being provided by the firm; and
(2) the firm must comply with the customer's request to change the means of distance communication used, unless this is incompatible with the regulated mortgage contract, home purchase plan, regulated sale and rent back agreement or service being provided by the firm.

30/06/2010

MCOB 2.7.5

A firm must ensure that information provided to a consumer before the conclusion of a distance contract about his contractual obligations under that contract conform with the contractual obligations that would be imposed on him under the law applying if the contract were concluded.

01/11/2007

Unsolicited services

MCOB 2.7.6

(1) A firm must not:

(a) supply a service to a consumer without a prior request on his part, when this activity includes a request for immediate or deferred payment; or
(b) enforce any obligations against a consumer in the event of unsolicited supplies of services, the absence of a reply not constituting consent.

(2) Paragraph (1) applies in relation to mortgage mediation activities, entering into a regulated mortgage contract, home purchase mediation activities or entering into a home purchase plan under an organised distance sales or service-provision scheme run by the firm or by an intermediary, who, for the purpose of that supply, makes exclusive use of one or more means of distance communication up to and including the time at which the services are supplied.

01/11/2007

MCOB 2.7A

E-Commerce

01/11/2007

Application

MCOB 2.7A.1

This section applies to a firm carrying on an electronic commerce activity from an establishment in the United Kingdom, with or for a person in the United Kingdom or another EEA state, in relation to a home finance transaction.

01/11/2007

Information about the firm and its products or services

MCOB 2.7A.2

A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:

(1) its name;
(2) the geographic address at which it is established;
(3) the details of the firm, including its e-mail address, which allow it to be contacted rapidly and communicated with in a direct and effective manner;
(4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R), together with a statement which explains that it is on the FSA register and includes its FSA register number;
(5) if it is a professional firm, or a person regulated by the equivalent of a designated professional body in another EEA State:

(a) the name of the professional body (including any designated professional body) or similar institution with which it is registered;
(b) the professional title and the EEA State where the professional title was granted;
(c) a reference to the applicable professional rules in the EEA State of establishment and the means to access them; and

(6) where the firm undertakes an activity that is subject to VAT, its VAT number.

[Note: article 5(1) of the E-Commerce Directive]

01/11/2007

MCOB 2.7A.3

If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and delivery costs.

[Note: article 5(2) of the E-Commerce Directive]

01/11/2007

MCOB 2.7A.4

A firm must ensure that commercial communications which are part of, or constitute, an information society service, comply with the following conditions:

(1) the commercial communication must be clearly identifiable as such;
(2) the person on whose behalf the commercial communication is made must be clearly identifiable;
(3) promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and
(4) promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously.

[Note: article 6 of the E-Commerce Directive]

01/11/2007

MCOB 2.7A.5

An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication as soon as it is received by the recipient.

[Note: article 7(1) of the E-Commerce Directive]

01/11/2007

Requirements relating to the placing and receipt of orders

MCOB 2.7A.6

A firm must (except when otherwise agreed by parties who are not consumers):

(1) give an ECA recipient at least the following information, clearly, comprehensibly and unambiguously, and before the order is placed by the recipient of the service:

(a) the different technical steps to follow to conclude the contract;
(b) whether or not the concluded contract will be filed by the firm and whether it will be accessible;
(c) the technical means for identifying and correcting input errors before the placing of the order; and
(d) the languages offered for the conclusion of the contract;

(2) indicate any relevant codes of conduct to which it subscribes and information on how those codes can be consulted electronically;
(3) (when an ECA recipient places an order through technological means), acknowledge the receipt of the recipient's order without undue delay and by electronic means (an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them); and
(4) make available to an ECA recipient, appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors before the placing of an order.

[Note: article 10(1) and (2) and 11(1) and (2) of the E-Commerce Directive]

01/11/2007

MCOB 2.7A.7

Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them.

[Note: article 10(3) of the E-Commerce Directive]

01/11/2007

Exception: contract concluded by e-mail

MCOB 2.7A.8

The requirements relating to the placing and receipt of orders do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications.

[Note: article 10(4) and 11(3) of the E-Commerce Directive]

01/11/2007

MCOB 2.8

Record keeping

01/12/2004

Purpose

MCOB 2.8.1

MCOB 2.8 provides details of the standard expected of firms where there is an obligation in MCOB requiring firms to maintain adequate records to evidence compliance. An overall view of the record keeping requirements in MCOB is in MCOB Sch 1.

31/10/2004

Accessibility of records

MCOB 2.8.2

The records required in MCOB must be readily accessible for inspection by the FSA.

31/10/2004

MCOB 2.8.3

A record would be 'readily accessible' if it were available for inspection within two business days of the request being received.

31/10/2004

MCOB 2.8.4

(1) A firm may arrange for records to be kept in such form as it chooses, provided the record is readily accessible for inspection by the FSA.
(2) Where a firm chooses to maintain records in electronic form, it should take reasonable steps to ensure that:

(a) the electronic record accurately reflects the original information; and
(b) the electronic record has not been subject to unauthorised or accidental alteration.

31/10/2004

MCOB 2.8.5

Each rule 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.

31/10/2004

Home purchase plans

MCOB 2.8.6

This sourcebook does not specify detailed record keeping requirements for a firm that carries on a home purchase activity or that communicates or approves a financial promotion of a home purchase plan (but note the high-level record-keeping provisions in the Senior Management Arrangements, Systems and Controls sourcebook).

06/04/2007

MCOB 2 Annex 1G

Form of joint instruction letter

30/06/2010

This Annex belongs to MCOB 2.6A.13A G. MCOB 2 Annex 1G - Form of joint instruction letter.

30/06/2010