Financial Promotion of qualifying credit, home reversion plans and regulated sale and rent back agreements

Part

MCOB Mortgages and Home Finance: Conduct of Business sourcebook

Chapter

Financial Promotion of qualifying credit, home reversion plans and regulated sale and rent back agreements

Printed on: 14/10/2024

Rulebook at: 30/06/2010

MCOB 3

Financial Promotion of qualifying credit, home reversion plans and regulated sale and rent back agreements

MCOB 3.1

Application: who?

01/12/2004

MCOB 3.1.1

This chapter applies to every firm which communicates or approves a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement.

30/06/2010

MCOB 3.1.2

This chapter applies generally to firms in relation to all financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement. This wide application is however cut back by MCOB 3.2 (Application: what?) and MCOB 3.3 (Application: where?) which limit the application of this chapter for:

(1) financial promotions which would fall within the scope of the exemptions in the Financial Promotion Order or the additional exemptions set out in MCOB 3.2.5 R (Applications: what? Exemptions); and
(2) financial promotions to persons outside the United Kingdom.

30/06/2010

MCOB 3.1.3

MCOB 3.1.1 R means that:

(1) this chapter applies not only to financial promotions for regulated mortgage contracts, but also to promotions for qualifying credit; and
(2) this chapter applies to all aspects of a promotion by a firm of products which combine unsecured and secured lending.

31/10/2004

MCOB 3.1.4

In relation to MCOB 3.1.3 G(2), an example would be a promotion for a mortgage product, one feature of which was an unsecured lending facility or reserve.

31/10/2004

MCOB 3.1.5

Under section 39(3) of the Act, a firm is responsible for financial promotions communicated by its appointed representatives when acting as such.

31/10/2004

MCOB 3.1.7

A financial promotion may relate to other controlled investments in addition to qualifying credit, home reversion plans and regulated sale and rent back agreements, for example a building society leaflet which describes the range of mortgage, savings and insurance products it provides. In such cases, the financial promotion rules in this and other sourcebooks will each apply as relevant.

30/06/2010

MCOB 3.1.8

As a result of articles 90 and 91 of the Regulated Activities Order:

(1) a financial promotion of qualifying credit is not subject to the advertising provisions of the Consumer Credit Act 1974, unless it is an exempt generic promotion; and
(2) where a firm makes a communication, which consists of a financial promotion of qualifying credit and information relating to a different form of lending that is not qualifying credit (for example an unsecured personal loan), the content of the latter will need to comply with the relevant advertising provisions of the Consumer Credit Act 1974.

06/04/2007

Authorised professional firms

MCOB 3.1.9

(1) Except for MCOB 3.6.17 R to MCOB 3.6.25 R (Annual percentage rate (APR)), MCOB 3 does not apply to an authorised professional firm in relation to the communication of a financial promotion if the following conditions are satisfied:

(a) the firm's main business must be the practice of its profession (see IPRU(INV) 2.1.2R(3));
(b) the financial promotion must be made for the purposes of and incidental to the promotion or provision by the firm of:

(i) its professional services; or
(ii) its non-mainstream regulated activities (see PROF 5.2 (Nature of non-mainstream activities)); and

(c) the financial promotion must not be communicated on behalf of another person who would not be able lawfully to communicate the financial promotion if he were acting in the course of business.

(2) In (1)(b)(i), 'professional services' means services:

(a) which do not constitute a regulated activity; and
(b) the provision of which is supervised and regulated by a designated professional body.

06/04/2007

MCOB 3.1.10

Authorised professional firms are reminded that in circumstances in which MCOB 3 does not apply to the firm MCOB 2.2.6 R (Clear fair and not misleading communication) may apply.

31/10/2004

Nationals of other EEA States

MCOB 3.1.11

A national of an EEA State (other than the United Kingdom) wishing to take advantage of the exemption in article 36 of the Financial Promotion Order in respect of a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement should act in conformity with the rules in this chapter.

30/06/2010

Illustrative examples of qualifying credit promotions

MCOB 3.1.12

MCOB 3 Annex 1 gives examples of financial promotion of qualifying credit that would satisfy some of the provisions of MCOB 3.

06/04/2007

MCOB 3.2

Application: what?

01/12/2004

Application for a financial promotion of qualifying credit

MCOB 3.2.-3

This chapter applies to the communication or approval of a financial promotion of qualifying credit as follows:

Application, purpose and general

MCOB 3.1 to MCOB 3.5

Form and content of non-real time qualifying credit promotions

MCOB 3.6

Unsolicited real time promotions of qualifying credit or home reversion plans

MCOB 3.7

Form and content of real time qualifying credit promotions

MCOB 3.8

Confirmation of compliance: financial promotions of qualifying credit or home reversion plans

MCOB 3.9

Records: non-real time financial promotions of qualifying credit or home reversion plans

MCOB 3.10

Communication and approval of qualifying credit promotions for an overseas person or an unauthorised person

MCOB 3.11

The Internet and other electronic media

MCOB 3.12

06/04/2007

Application for a financial promotion of a home reversion plan

MCOB 3.2.-2

This chapter applies to the communication or approval of a financial promotion of a home reversion plan as follows:

Application, purpose and general

MCOB 3.1 to MCOB 3.5

Form and content of non-real time qualifying credit promotions

MCOB 3.6 in accordance with MCOB 3.8A

Unsolicited real time financial promotions of qualifying credit or home reversion plans

MCOB 3.7

Form and content of financial promotions of home reversion plans

MCOB 3.8A

Confirmation of compliance: financial promotions of qualifying credit or home reversion plans

MCOB 3.9

Records: non-real time financial promotions of qualifying credit or home reversion plans

MCOB 3.10

The Internet and other electronic media

MCOB 3.12

06/04/2007

Application for a financial promotion of a regulated sale and rent back agreement

MCOB 3.2.-2A

This chapter applies to the communication or approval of a financial promotion of a regulated sale and rent back agreement as follows:

Application, purpose and general

MCOB 3.1 to MCOB 3.5

Form and content of non-real time qualifying credit promotions

MCOB 3.6 in accordance with MCOB 3.8B

Unsolicited real time financial promotions of qualifying credit or regulated sale and rent back agreements

MCOB 3.7

Form and content of financial promotions of regulated sale and rent back agreements

MCOB 3.8B

Confirmation of compliance: financial promotions of qualifying credit or regulated sale and rent back agreements

MCOB 3.9

Records: non-real time financial promotions of qualifying credit or regulated sale and rent back agreements

MCOB 3.10

The Internet and other electronic media.

MCOB 3.12

30/06/2010

Application for a financial promotion of a home purchase plan

MCOB 3.2.-1

The rules in this chapter do not apply to the communication or approval of a financial promotion of a home purchase plan. However, the clear, fair and not misleading standard still applies as does certain relevant guidance from this chapter (see MCOB 2.2).

06/04/2007

What do "communicate", "approve" and "financial promotion" mean?

MCOB 3.2.1

(1) The rules in this chapter adopt various concepts from the restriction on financial promotion by unauthorised persons in section 21(1) of the Act (Restrictions on financial promotion). Guidance on that restriction is contained in PERG 8 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:

(a) 'communicate' is in PERG 8.6 (Communicate); and
(b) 'invitation or inducement' and 'engage in investment activity' (two elements which, with 'communicate', make up the definition of 'financial promotion') is in PERG 8.4 (Invitation or inducement) and PERG 8.7 (Engage in investment activity).

(2) Guidance on the approval of a financial promotion of qualifying credit is in MCOB 3.11.1 G (Approval of qualifying credit promotions).

06/04/2007

Media of communication

MCOB 3.2.2

(1) There is no restriction on the media of communication to which this chapter applies. It applies to a financial promotion communicated by any means, including by way of printed advertising, radio and television broadcasts, a personal visit, a telephone call, an e-mail, the Internet and electronic media such as digital and other forms of interactive television or media. Both solicited and unsolicited communications are covered.
(2) Financial promotions may be communicated for example, by means of:

(a) product brochures;
(b) general advertising in magazines, newspapers, radio and television programmes and websites;
(c) mailshots (whether distributed by post, facsimile, e-mail or other media);
(d) telemarketing activities, such as telephone calls made by call centres;
(e) written correspondence, telephone calls and face-to-face discussions with customers;
(f) sales aids which themselves constitute a financial promotion;
(g) presentations to groups of customers; and
(h) other publications, which may contain non-personal recommendations as to obtaining qualifying credit or entering into a home reversion plan.

06/04/2007

MCOB 3.2.3

Guidance on the use of the Internet for communicating financial promotions is in MCOB 3.12 (The Internet and other electronic media) and PERG 8.22 (The Internet)

06/04/2007

Exemptions

MCOB 3.2.4

This chapter does not apply to a firm in relation to a financial promotion of qualifying credit of a kind listed in MCOB 3.2.5 R, except that if the firm approves the financial promotion, the following apply:

(1) MCOB 3.1 to MCOB 3.5 (Application, Purpose and General);
(2) MCOB 3.6.3 R (Clear, fair and not misleading);
(3) MCOB 3.11.1 G to MCOB 3.11.4 G (Approval of qualifying credit promotions; No approval of real time qualifying credit promotions; Approval of qualifying credit promotions when not all the rules apply); and
(4) if the firm approves a non-real time financial promotion of qualifying credit by an overseas person MCOB 3.11.5 R (Non-real time qualifying credit promotions for overseas persons) applies.

06/04/2007

MCOB 3.2.4A

This chapter does not apply to a firm in relation to a financial promotion of a home reversion plan or a regulated sale and rent back agreement of a kind listed in MCOB 3.2.5 R, unless the firm approves the financial promotion. However, for non-real time financial promotions of the kind listed in MCOB 3.2.5 R, the requirements in MCOB 3.8B.5 R apply in relation to how a regulated sale and rent back agreement can be described. Advertisements for other products that could result in the conclusion of regulated sale and rent back agreements must carry the sale and rent back risk warning (MCOB 3.8B.4 R).

30/06/2010

MCOB 3.2.5

This table belongs to MCOB 3.2.4 R and MCOB 3.2.4A R.

Exemptions

This chapter does not apply to the following:

(1)

an illustration produced in accordance with the requirements of MCOB 5, MCOB 6, MCOB 7 or MCOB 9;

(2)

a financial promotion which contains only one or more of the following:

(a)

the name of the firm (or its appointed representative);

(b)

a logo;

(c)

a contact point (address (including an e-mail address), telephone or facsimile number);

(d)

a brief, factual statement of the firm's (or its appointed representative's) main occupation;

(3)

a financial promotion which can lawfully be communicated by an unauthorised person without approval;

(4)

a financial promotion communicated from outside the United Kingdom which would be exempt under articles 30, 31, 32 or 33 of the Financial Promotion Order (Overseas communicators) if the office from which the financial promotion is communicated were a separate unauthorised person (but see GEN 4.4.1R (Business for private customers from non-UK offices));

06/04/2007

MCOB 3.2.6

MCOB 3.2.5 R(2) exempts a financial promotion made by a firm or an appointed representative which refers to its activities only in general terms in image or brand advertising. The items identified in MCOB 3.2.5 R(2) do not enable detailed information to be given about the qualifying credit, home reversion plan or regulated sale and rent back agreement available from the firm. Thus firms should avoid the use of names, logos or addresses, for example, which attempt to convey additional product or cost-related information.

30/06/2010

Combination of exemptions

MCOB 3.2.7

A firm may rely on more than one exemption (and also on MCOB 3.3.1 R (Application: where?)) in relation to the same financial promotion.

06/04/2007

Other relevant handbook rules

MCOB 3.2.8

Firms are reminded that financial promotion (including those which are exempt) may be subject to more general rules, including Principle 7 (Communications with clients), SYSC 3 to SYSC 10 (Systems and controls) and MCOB 2.2.6 R (Clear, fair and not misleading communication).

06/04/2007

MCOB 3.2.9

Firms are reminded that if in the course of making a financial promotion of any kind an adviser gives specific advice on a home finance transaction to a customer about the suitability of a product for that individual, the adviser in giving the advice is subject to the rules, as appropriate, on advising and selling in MCOB 4 (Advising and selling standards) and MCOB 8 (Equity release: advising and selling standards).

06/04/2007

MCOB 3.3

Application: where?

01/12/2004

Territorial Scope

MCOB 3.3.1

This chapter applies to a firm in relation to:

(1) the communication of a financial promotion to a person in the United Kingdom;
(2) the communication of an unsolicited real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement, unless it is made from a place, and for the purposes of a business which is only carried on, outside the United Kingdom;
(3) the approval of a non-real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement for communication to a person in the United Kingdom; and
(4) the communication or approval for communication of a financial promotion that is an electronic commerce communication to a person in an EEA state other than in the United Kingdom.

30/06/2010

MCOB 3.3.2

(1) The application under MCOB 3.3.1 R is relevant both when a firm communicates a financial promotion itself and when a firm approves a non-real time financial promotion for communication by others. But see also MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation) for approval of financial promotions).
(2) The exemptions in MCOB 3.2.5 R (Application: what?; Exemptions) also incorporate some territorial elements. In particular, the exemption for financial promotions originating outside the United Kingdom (section 21(3) of the Act (Restrictions on financial promotion)) (see MCOB 3.2.5 R (4)), the exemptions for overseas communicators (see MCOB 3.2.5 R (4)), the exemption for electronic commerce communications made from an establishment in an EEA State other than the United Kingdom to an ECA recipient in the United Kingdom (see PERG 8.12.38G (Incoming electronic commerce communication (article 20B)).
(3) [deleted]

01/11/2007

Exceptions to territorial scope: rules without territorial limitation for approval of financial promotions

MCOB 3.3.3

Subject to MCOB 3.3.5 R the following parts of this chapter apply without any territorial limitation if a firm approves a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement:

(1) MCOB 3.1 to MCOB 3.5 (Application, Purpose and General);
(2) rules requiring a financial promotion to be clear, fair and not misleading (see MCOB 3.6.3 R (1) in relation to qualifying credit, MCOB 3.8A.1 R in relation to a home reversion plan and MCOB 3.8B.1 R in relation to a regulated sale and rent back agreement); and
(3) the provisions regarding approval of financial promotions (except those relating to approval of financial promotions of qualifying credit provided by an overseas person) (see MCOB 3.11.1 G to MCOB 3.11.4 G and MCOB 3.8A.6 R).

30/06/2010

MCOB 3.3.4

There is no need for a financial promotion which is indicated in MCOB 3.3.1 R to be outside the territorial scope of the application of MCOB 3 to be approved before being communicated by an unauthorised person (because the restriction in section 21 of the Act (Restrictions on financial promotion) does not apply). If a firm nevertheless approves such a financial promotion, it must comply with the rules indicated. However, a firm must not approve a real time financial promotion (see MCOB 3.11.2 R (No approval of real time qualifying credit promotions) or MCOB 3.8A.6 R (No approval of real time financial promotions of a home reversion plan)).

06/04/2007

Exceptions to territorial scope: financial promotions of qualifying credit relating to distance contracts

MCOB 3.3.5

(1) Notwithstanding MCOB 3.3.1 R and MCOB 3.3.3 R, where a firm which satisfies the conditions in (2) communicates a financial promotion of qualifying credit, the rules in (3) do not apply.
(2) The conditions are that:

(a) the firm communicates the financial promotion of qualifying credit from an establishment maintained by the firm in an EEA State other than the United Kingdom, and not from an establishment maintained by the firm in the United Kingdom or outside the EEA;
(b) either that EEA State:

(i) has implemented the Distance Marketing Directive; or
(ii) has obligations in its domestic law corresponding to those provided for by the Distance Marketing Directive;

(c) the financial promotion of qualifying credit relates, exclusively, to a distance contract, for the conclusion of which the obligations provided for by the Distance Marketing Directive (or corresponding obligations) are applied by that State; and
(d) the firm is a national of an EEA State or a company or firm mentioned in article 54 of the Treaty.

(3) The rules which do not apply are:

(a) MCOB 3.6.1 R (Name and contact point);
(b) MCOB 3.6.13 R (Required risk statements);
(c) MCOB 3.6.15 R (Transient advertising);
(d) MCOB 3.6.26 R (Multi-rate mortgages);
(e) MCOB 3.6.27 R (Fees for advice or arranging); and
(f) MCOB 3.8.2 R (3) and (4) (Form and content of real time qualifying credit promotions).

01/12/2009

Meaning of 'communicated to a person inside or outside the United Kingdom'

MCOB 3.3.6

For the purposes of this chapter:

(1) a financial promotion is communicated to a person outside the United Kingdom if it is:

(a) made to a person who receives it outside the United Kingdom; or
(b) directed only at persons outside the United Kingdom; and

(2) a financial promotion is communicated to a person inside the United Kingdom if it is communicated to a person other than as described in (1);

and see MCOB 3.3.7 R and MCOB 3.5.6 R which amplify this rule.

06/04/2007

MCOB 3.3.7

Meaning of "'directed only at persons outside the United Kingdom'

(1) If the conditions set out in 4(a), (b), (c) and (d) are met, a financial promotion directed from a place inside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.
(2) If the conditions set out in 4(c) and (d) are met, a financial promotion directed from a place outside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.
(3) In any other case, where one or more of the conditions in 4(a) to (e) is met, that fact will be taken into account in determining whether a financial promotion is directed only at persons outside the United Kingdom (but a financial promotion may still be regarded as directed only at persons outside the United Kingdom even if none of these conditions is met).
(4) The conditions are that:

(a) the financial promotion is accompanied by an indication that it is directed only at persons outside the United Kingdom;
(b) the financial promotion is accompanied by an indication that it must not be acted upon by persons in the United Kingdom;
(c) the financial promotion is not referred to in, or directly accessible from, any other financial promotion which is made to a person or directed at persons in the United Kingdom by the same person;
(d) there are in place proper systems and procedures to prevent recipients in the United Kingdom (other than those to whom the financial promotion might otherwise lawfully have been made) obtaining the product to which the financial promotion relates, from the person directing the financial promotion, a close relative of his or a member of the same group;
(e) the financial promotion is included in:

(i) a website, newspaper, journal, magazine or periodical publication which is principally accessed in or intended for a market outside the United Kingdom; and
(ii) a radio or television broadcast or teletext service transmitted principally for reception outside the United Kingdom.

06/04/2007

MCOB 3.4

Purpose

01/12/2004

MCOB 3.4.1

(1) Section 21(1) of the Act (Restriction on financial promotion) imposes a restriction on the communication of financial promotions by unauthorised persons. A person must not, in the course of business, communicate a financial promotion unless:

(a) he is an authorised person; or
(b) the content of the financial promotion is approved by an authorised person.

(2) However, the Financial Promotion Order exempts from the restriction created by section 21(1) of the Act certain types of financial promotions.

06/04/2007

MCOB 3.4.2

(1) The purpose of this chapter is to provide rules and guidance for a firm which wishes to communicate or approve a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement.
(2) This chapter amplifies, for activities within its scope Principle 6 (Customers' interests) and Principle 7 (Communications with clients).

30/06/2010

MCOB 3.5

General

01/12/2004

MCOB 3.5.1

[deleted - see application tables in MCOB 3.2]

06/04/2007

Other regulations and guidelines

MCOB 3.5.3

A firm communicating a financial promotion may also be subject to other regulations and guidelines, outside the remit of the FSA, such as:

(1) the codes issued from time to time by the Advertising Standards Authority, the Independent Television Commission and the Radio Authority;
(2) regulations of any overseas regulator (where relevant) if the firm intends to market from the United Kingdom into any other country;
(3) the Privacy and Electronic Communications (EC Directive) Regulations 2003
(4) the Timeshare Act 1992, as amended by the Timeshare Regulations 1997 (SI 1997/1081); and
(5) the Consumer Protection Act 1987, or Consumer Protection (Northern Ireland) Order 1987 (SI 1987/2049 (N.I 20)).

06/04/2007

'Real time' and 'non-real time' qualifying credit promotions

MCOB 3.5.4

This chapter draws a distinction between real time and non-real time financial promotions. Guidance on the meaning of those expressions, which are based upon article 7 of the Financial Promotion Order, is contained in PERG 8.10.2G (Real time v. non-real time promotions).

06/04/2007

MCOB 3.5.5

(1) A 'real time financial promotion' is a financial promotion which is communicated in the course of a personal visit, telephone conversation or other interactive dialogue.
(2) A 'non-real time financial promotion' is a financial promotion that is not a real time financial promotion. It includes a financial promotion made by letter, e-mail or contained in a newspaper, journal, magazine, other periodical publication, website, television or radio programme, or teletext service.
(3) The following are to be regarded as indications that a financial promotion is a non-real time financial promotion:

(a) the financial promotion is communicated to more than one person in identical terms (save for details of the recipient's identity);
(b) the financial promotion is communicated by way of a system which in the normal course constitutes or creates a record of the communication which is available to the recipient to refer to at a later time; and
(c) the financial promotion is communicated by way of a system which in the normal course does not enable or require the recipient to respond immediately to it.

06/04/2007

Meaning of 'made', 'directed at' and 'recipient' in MCOB 3

MCOB 3.5.6

(In accordance with article 6 of the Financial Promotion Order (Interpretation: communications)) any reference in this chapter to:

(1) a communication being made to another person is a reference to a communication being addressed, whether verbally or in legible form, to a particular person or persons (for example, where it is contained in a telephone call or letter);
(2) a communication being directed at persons is a reference to a communication being addressed to persons generally (for example where it is contained in a television broadcast or website); and
(3) a 'recipient' of a communication is the person to whom the communication is made or, in the case of a non-real time financial promotion which is directed at persons generally, any person who reads or hears the communication.

06/04/2007

MCOB 3.6

Form and content of non-real time qualifying credit promotions

01/12/2004

Name and contact point

MCOB 3.6.1

A non-real time financial promotion must contain the name of the firm or its appointed representative and either an address or a contact point from which an address is available.

06/04/2007

MCOB 3.6.2

(1) For the purposes of MCOB 3.6.1 R, the name may be a trading name or shortened version of the legal name of the firm (although other legislation, for example, the Companies Act 2006, may require a firm to include information not required by this rule).
(2) The type of contact point envisaged for a firm by MCOB 3.6.1 R is an e-mail address or telephone or facsimile number, where a customer can contact the firm for its address.
(3) A firm is not required in a financial promotion which it communicates or approves to name the FSA as its regulator. However, to ensure the financial promotion is clear, fair and not misleading, if the firm chooses to name the FSA as its regulator and the financial promotion refers to matters not regulated by the FSA, it should also make clear that those matters are not regulated by the FSA. This might arise, for example, where the communication included both a financial promotion of qualifying credit and a promotion for unsecured lending.

01/10/2009

Clear, fair and not misleading

MCOB 3.6.3

(1) A firm must be able to show that it has taken reasonable steps to ensure that a non-real time financial promotion is clear, fair and not misleading.
(2) A non-real time financial promotion which includes a comparison or contrast must:

(a) compare credit meeting the same needs or which is intended for the same purpose;
(b) objectively compare one or more material, relevant, verifiable and representative features of that credit, which may include price;
(c) not create confusion in the market place between the firm itself (or the person whose qualifying credit promotion it approves) and a competitor or between the firm's trademarks, trade names, other distinguishing marks, qualifying credit (or those of the person whose qualifying credit promotion it approves) and those of a competitor;
(d) not discredit or denigrate the trademarks, trade names, other distinguishing marks, qualifying credit, services, activities or circumstances of a competitor;
(e) not take unfair advantage of the reputation of a trademark, trade name or other distinguishing marks of a competitor;
(f) not present qualifying credit as an imitation or replica of qualifying credit bearing a protected trademark or trade name; and
(g) indicate in a clear and unequivocal way in any comparison referring to a special offer the date on which the offer ends or, where appropriate, that the special offer is subject to the availability of the qualifying credit, and, where the special offer has not yet begun, the date of the start of the period during which the special price or other specific conditions will apply.

06/04/2007

MCOB 3.6.4

(1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:

(a) it does not omit any matters the omission of which causes the financial promotion of qualifying credit not to be clear, fair and not misleading;
(b) if it describes a feature of any qualifying credit, it gives no less prominence to the possible disadvantages than to the benefits associated with that feature;
(c) it uses plain and intelligible language, and is easily legible (or, in the case of oral promotions, clearly audible);
(d) the accuracy of all statements of fact in it can be substantiated;
(e) its promotional purpose is not in any way disguised or misrepresented;
(f) any statement of fact, promise or prediction is clear, fair and not misleading and any relevant assumptions are clearly and prominently disclosed (but a firm is not required to explain, on the face of the financial promotion of qualifying credit, the basis on which a stated APR is calculated: see MCOB 3.6.18 G);
(g) any statement of opinion is honestly held and, unless consent is impracticable, given with the written consent of the person concerned;
(h) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are prominently disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
(i) it does not contain any false indications, in particular as to:

(i) the firm's independence;
(ii) the firm's resources and scale of activities; or
(iii) the scarcity of any qualifying credit;

(j) the design, content or format does not in any way disguise, obscure or diminish the significance of any statement, warning or other matter which the financial promotion of qualifying credit is required by this chapter to contain;
(k) it does not include any reference to approval by the FSA or any government body, unless such approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA));
(l) where it contains information required as a consequence of the following provisions, the items of information provided in relation to each provision appear in proximity to each other:

(i) MCOB 3.6.11 R;
(ii) MCOB 3.6.13 R (Required risk statements), unless MCOB 3.6.15 R(transient advertising) applies;
(iii) MCOB 3.6.17 R (Annual percentage rate (APR));
(iv) MCOB 3.6.25 R;
(v) MCOB 3.6.26 R (Multi-rate mortgages); and
(vi) MCOB 3.6.27 R (Fees for advice or arranging).

(a) Contravention of MCOB 3.6.4 E(1) may be relied on as tending to show contravention of MCOB 3.6.3 R(1).
(b) Compliance with MCOB 3.6.4 E(1) may be relied on as tending to show compliance with MCOB 3.6.3 R(1).

06/04/2007

MCOB 3.6.5

In relation to MCOB 3.6.3 R:

(1) firms should avoid the use of small print to qualify prominent claims;
(2) if a non-real time financial promotion includes information on the performance of the firm, on conditions in the market, interest rates, APRs or other price information this information should be relevant and recent. Firms should therefore avoid including this information in financial promotions which have a long shelf-life without a clear and prominent warning that the information can become outdated; and
(3) firms must ensure that an adequate description of mortgage products is given. For example, firms should take care to ensure that where a rate is variable at any time during the term of the mortgage, the content of the financial promotion does not imply the rate may be fixed.

06/04/2007

MCOB 3.6.6

The effect of MCOB 3.6.4 E(1)(b) will depend upon the content of the promotion. A non-exhaustive list of examples satisfying MCOB 3.6.4 E(1)(b) follows:

(1) a promotion which, when describing any cashback offered to the customer, also clearly refers to any relevant conditions, such as a requirement to pay back some or all of the cashback on early repayment of the mortgage;
(2) a promotion which, when describing any fixed or discount rate, also clearly states the duration of any early repayment charges;
(3) a promotion which, when describing any reduction in regular payments following from the re-arrangement of existing loans, also clearly indicates any increase in the total cost and any extension to the repayment period for the customer;
(4) a promotion which, when describing any possible monetary saving, also clearly states how this could be achieved;
(5) a promotion which, when including references to non-standard services or facilities, also clearly states that an additional fee may be payable for these; and
(6) a promotion which, when it includes an indication of an initial payment holiday (for example, 'pay nothing for 3 months'), also makes clear whether or not interest will be charged during this period.

31/10/2004

MCOB 3.6.7

The requirement in MCOB 3.6.4 E(1)(l) that certain information must be given in proximity means, for example, in relation to printed qualifying credit promotions, that this information is all visible at the same time.

31/10/2004

MCOB 3.6.8

In ensuring a financial promotion is clear fair and not misleading, a firm must ensure that the financial promotion does not contain any of the following words or expressions, unless the relevant condition applies:

(1) the word 'overdraft' or any similar expression as describing any agreement for running-account credit except an agreement enabling the customer to overdraw on a current account;
(2) the expression 'interest free' or any similar expression (such as '0% Finance' or 'Interest Free Option') indicating that a customer is liable to pay no greater amount in respect of a transaction financed by credit than the customer would be liable to pay as a cash purchaser in relation to the same transaction, except where:

(a) the total amount payable by the customer does not exceed the cash price; or
(b) MCOB 3.6.26 R (Multi-rate mortgages) applies, in which case the expression may be used in respect of any rate of charge of 0% provided that during the period in which the rate applies there is no interest charged and no increase in the amount of the mortgage loan.

(3) the expression 'no deposit' or any similar expression, except where no advance payments are required to be made on the loan;
(4) the expression 'mortgage guaranteed', 'pre-cleared' or any similar expression, unless the financial promotion invites entry into a contract that is free of any conditions regarding the credit status of the customer; and
(5) the expression 'gift', 'present' or any similar expressions, unless there are no conditions which would require the customer to return the money or items that are the subject of the claim.

06/04/2007

MCOB 3.6.9

A non-real time financial promotion must:

(1) describe any early repayment charge as an 'early repayment charge' and not use any other expression to describe such charges;
(2) describe any higher lending charge as a 'higher lending charge' and not use any other expression to describe such charges;
(3) not contain the 'key facts' logo unless it is required by a rule; and
(4) describe any lifetime mortgage as a 'lifetime mortgage' and not use any other expression to describe such a mortgage.

06/04/2007

MCOB 3.6.10

(1) It cannot be assumed that customers necessarily have an understanding of the qualifying credit being promoted. If a non-real time financial promotion is specially designed for a targeted collection of customers who are reasonably believed to have particular knowledge of the qualifying credit being promoted, this fact should be made clear.
(2) In relation to quotations of opinion:

(a) where only part of an opinion is quoted, it should nevertheless be a fair representation; and
(b) any connection between the holder of the opinion and the firm should be made clear.

06/04/2007

MCOB 3.6.11

A non-real time financial promotion that features qualifying credit which is conditional upon the customer obtaining one or more further products from a specific firm (or its agents or associates) must prominently state the compulsory nature of these purchases.

06/04/2007

MCOB 3.6.12

MCOB 3.6.11 R is concerned with ensuring that customers are adequately informed, at an early stage, as to the existence of any tied products or services. However, it does not introduce equivalent disclosure requirements for services or products that must be obtained as a condition for the making of the loan, but where the customer has a free choice as to the supplier.

31/10/2004

Required risk statements

MCOB 3.6.13

A non-real time financial promotion must, unless the transient advertising rule applies, prominently contain one or more of the following statements in the circumstances described:

(1) where it relates to a lifetime mortgage: 'This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.' If the promotion also relates to a home reversion plan the statement may be adapted to the extent necessary to comply with the equivalent requirement for a home reversion plan (see MCOB 3.8A.3R (2)(a));
(2) where it refers to paying off unsecured debts (for example, credit cards, personal loans or overdrafts) by taking out qualifying credit: 'Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.'
(3) in all cases except (1) and (2): 'Your home may be repossessed if you do not keep up repayments on your mortgage.'; or if it refers in whole or in part to qualifying credit secured on property which is not the customer's home the statement may be amended but only to the extent necessary in order to reflect that fact.
(4) where the mortgage will be denominated in a currency other than sterling: 'Changes in the exchange rate may increase the sterling equivalent of your debt.'
(5) where more than one of the statements in (1) to (4) applies, each relevant statement should be included. In such cases, the statement set out in (1), (2) or (3) should precede that in (4).
(6) where a non-real time financial promotion relates to both qualifying credit and credit which is not qualifying credit the statements required by (2) or (3) may be modified by replacing your mortgage with a mortgage or any other debt secured on it.

06/04/2007

MCOB 3.6.14

(1) Prominence of relevant information can play a key role in ensuring that a communication is clear, fair and not misleading. As a consequence, a number of requirements in MCOB relate to prominence. Where this is the case, the FSA will assess prominence in the context of the promotion as a whole. Use can be made of the positioning of text, background and text colour and typesize to ensure that prescribed information meets the requirements of MCOB. The surrounding of required statements with other information should be avoided where this might detract from the prominence which it is obligatory to afford to the statements.
(2) Firms may if they wish include a foreign language version of any required warning, in addition to the English language version required by these rules. If foreign language versions of warnings are included, firms are reminded of prominence requirements in MCOB 3.6.13 R and MCOB 3.6.14 G (1). Information should not be included which detracts from the required prominence of warning statements.

31/10/2004

Transient advertising

MCOB 3.6.15

MCOB 3.6.13 R (Required risk statements) does not apply if the non-real time financial promotion is communicated:

(1) by way of sound broadcasting or television where the primary purpose of the programming in which the promotion is contained is not to promote lending; or
(2) by an exhibition of pictures or photographic or cinematographic films.

06/04/2007

MCOB 3.6.16

(1) MCOB 3.6.15 R (1) is intended to distinguish between promotions in breaks between 'normal' commercial broadcast programming (where the text prescribed in MCOB 3.6.13 R (Required risk statements) is not required) and promotions in breaks which are in or around programming intended to promote lending where MCOB 3.6.13 R (Required risk statements) applies.
(2) In relation to promotions on dedicated interactive television services, if the promotion is not contained within programming but instead forms a separate feature, the exemption offered by MCOB 3.6.15 R (1) would not be available.

31/10/2004

Annual percentage rate (APR)

MCOB 3.6.17

(1) A firm must ensure that if a non-real time financial promotion contains either price information for specific qualifying credit, or makes reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted, the promotion also:

(a) states the APR;
(b) gives the APR, and the accompanying statement in (3), with no less prominence than any price information or reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted; and
(c) positions the APR after any other rate of charge relating to the qualifying credit, clearly distinguishing it from any such rate but without interjecting other information in between the APR and any other rate of charge.

(2) A firm must calculate the APR in accordance with MCOB 10 (Annual percentage rate).
(3) The APR must be expressed as follows, with X being the APR calculated for the particular qualifying credit: 'The overall cost for comparison is X% APR'

06/04/2007

MCOB 3.6.18

MCOB 3.6.17 R does not require a firm to explain the basis on which the APR is calculated, or to provide a figure for the total charge for credit, in the non-real time financial promotion.

06/04/2007

MCOB 3.6.19

For the purposes of MCOB 3.6.17 R(1), references to the availability of credit for customers who might otherwise consider their access restricted include references to:

(1) credit history; or
(2) credit rating; or
(3) county court judgments; or
(4) employment; or
(5) housing circumstances (for example, council tenants).

31/10/2004

MCOB 3.6.20

(1) In relation to MCOB 3.6.17 R(1)(c), the intention is that the APR should follow on, but be readily identifiable as different, from the indicated rate or rates of charge.
(2) For multi-rate products this should mean that the APR is presented, in sequence, after the different rates of charge that apply.
(3) The APR may be distinguished from other rates of charge by techniques such as using a contrasting (and legible) colour for text. However, the requirement of MCOB 3.6.17 R(1)(c) will not be satisfied by text devices such as the use of brackets which tend to diminish the impact of the APR.

31/10/2004

MCOB 3.6.21

If a financial promotion contains price information for more than one qualifying credit product, MCOB 3.6.17 R requires an APR to be provided for each product. Where more than one APR is required to be given, each APR will need to be no less prominent than:

(1) any price information relating to the particular product;
(2) any reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted; and
(3) any other APR in the financial promotion.

06/04/2007

MCOB 3.6.22

If the non-real time financial promotion concerns a contract under which the APR varies (for example, depending upon the circumstances of the customer), the APR required by MCOB 3.6.17 R (Annual percentage rate (APR)) is that which is representative of the business expected to arise from the promotion.

06/04/2007

MCOB 3.6.23

For the purposes of MCOB 3.6.22 R, an APR is not representative of business unless it is an APR at or below which at least 66% of customers responding to the promotion and who enter into a qualifying credit agreement which is the subject of the promotion would be charged.

31/10/2004

MCOB 3.6.24

(1) The FSA would not regard an APR described as 'from X%' as satisfying MCOB 3.6.22 R.
(2) In MCOB 3.6.22 R, when determining the representative APR, account should be taken of the business that has arisen from similar qualifying credit promotion in the previous 12 months. Where the financial promotion is for a new product or business, reference should instead be had to the relevant business plans.

06/04/2007

MCOB 3.6.25

If the non-real time financial promotion of qualifying credit concerns a contract where the APR varies depending upon the circumstances of the customer, the following further statement must be included with due prominence: 'The actual rate available will depend upon your circumstances. Ask for a personalised illustration.'

06/04/2007

Multi-rate mortgages

MCOB 3.6.26

If the non-real time financial promotion of qualifying credit is for a product where more than one rate of charge will or may apply during the course of the contract, and the non-real time financial promotion of qualifying credit contains information about any of these rates then:

(1) the non-real time financial promotion of qualifying credit must contain a clear and no less prominent description of all of the rates of charge that will apply;
(2) where any rate to be charged in the future is variable (such as the mortgage lender's standard variable rate), the rate indicated must be the level of that rate current at the time of the promotion; and
(3) the rates must be stated in sequence from the rate initially applying through to the rate assumed to apply at the end of the mortgage, and after each rate must be given a statement:

(a) of its period of application; and
(b) that the rate then changes.

06/04/2007

Fees for advice or arranging

MCOB 3.6.27

If a non-real time financial promotion of qualifying credit relates to the controlled activities of advising on or arranging qualifying credit and a fee may be charged for these activities, a firm must ensure that a prominent indication is given of:

(1) the amount of the fee (if known); or
(2) a representative fee based upon the business expected to arise from the promotion.

06/04/2007

MCOB 3.6.28

MCOB 3.6.27 R seeks to ensure that customers are given early notice of the existence of any fees charged by intermediaries in connection with the provision of qualifying credit. Where the fee is known at the outset, this must be indicated. The indication could be either as a cash value or as a percentage. If the charging of a fee, and the level of this, are dependent upon the circumstances of the customer, the indication must be based upon the business that is expected to result from the promotion.

31/10/2004

MCOB 3.6.29

MCOB 3.6.14 G(1) provides further guidance in relation to prominence.

31/10/2004

MCOB 3.6.30

MCOB 3.6.27 R(2) does not require the promotion to set out the characteristics of the representative business (loan amount etc) on which the indicated fee is based. For example, where the fee charged by a firm relates to circumstances of the customer such as their previous credit history, it would be sufficient to state that 'There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be X'.

31/10/2004

MCOB 3.7

Unsolicited real time financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement

30/06/2010

Meaning of 'solicited' and 'unsolicited' real time financial promotion

MCOB 3.7.1

(1) An unsolicited real time financial promotion is a real time financial promotion which is not solicited as described in (2).
(2) A solicited real time financial promotion is a real time financial promotion which is solicited, that is, it is made in the course of a personal visit, telephone call or other interactive dialogue if that call, visit or dialogue:

(a) was initiated by the recipient of the financial promotion; or
(b) takes place in response to an express request from the recipient of the financial promotion;

and it is clear from all the circumstances when the call, visit or dialogue is initiated or requested that during the course of the visit, call or dialogue a financial promotion would be made.
(3) In (2), a person is not to be treated as expressly requesting a call, visit or dialogue:

(a) because he omits to indicate that he does not wish to receive any or any further visits or calls or to engage in any or any further dialogue;
(b) because he agrees to standard terms that state that such visits, calls or dialogues will take place unless he has signified clearly that, in addition to agreeing to the terms, he is willing for them to take place.

(4) If a financial promotion is solicited by a person ('R') it is treated as also having been solicited by any other person to whom it is made at the same time as R if that other person is a close relative of R or is expected to enter into a home reversion plan, a regulated sale and rent back agreement or any contract for qualifying credit jointly with R.

30/06/2010

MCOB 3.7.2

MCOB 3.7.1 R is based on article 8 of the Financial Promotion Order. Guidance on whether a real time financial promotion is solicited is contained in PERG 8.10.8G (Solicited v unsolicited real-time promotions). PERG 8.10.11G to PERG 8.10.14G also gives guidance on who will be considered the 'recipient' of a communication.

06/04/2007

Prohibition on unsolicited real time financial promotions to customers

MCOB 3.7.3

A firm must not make an unsolicited real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement unless the customer has an established existing customer relationship with the firm and the relationship is such that the customer envisages receiving such financial promotions.

30/06/2010

MCOB 3.7.4

(1) Firms are reminded of the exemptions in MCOB 3.2.5 R (Application: what? exemptions). MCOB 3.7.3 R does not prohibit an exempt real time financial promotion.
(2) MCOB 3.2.5 R(2) creates an exemption for financial promotions that contain only very limited information about the firm (such as its name or contact details). The limited nature of this exemption means that a firm is unlikely to be able to use it to induce a customer to approach the firm and turn any subsequent communication by the firm into a solicited real time financial promotion.

06/04/2007

MCOB 3.8

Form and content of real time qualifying credit promotions

01/12/2004

MCOB 3.8.1

A firm should note that MCOB 3.7.3 R (Prohibition on unsolicited real time promotions to customers) prevents a firm from communicating to a customer an unsolicited real time financial promotion of qualifying credit other than an exempt promotion (which is outside the scope of this chapter) or where MCOB 3.7.3 R applies. Many solicited real time financial promotion will be exempt promotions (and, therefore, outside the scope of this chapter). Accordingly, MCOB 3.8.2 R and MCOB 3.8.3 G apply only to solicited real time financial promotions which are not exempt financial promotions and to unsolicited real time financial promotion of qualifying credit within MCOB 3.7.3 R.

06/04/2007

MCOB 3.8.2

A firm must ensure that an individual who makes a real time financial promotion of qualifying credit on the firm's behalf:

(1) does so in a way which is clear, fair and not misleading;
(2) does not make any untrue claims;
(3) makes clear the purpose (or purposes) of the financial promotion at the initial point of communication, and identifies himself and the firm which he represents;
(4) if the time and method of communication were not previously agreed by the recipient:

(a) checks that the recipient wishes him to proceed;
(b) terminates the communication if the recipient does not wish him to proceed (but may ask for another appointment);
(c) recognises and respects, promptly, the right of the recipient to:

(i) end the communication at any time;
(ii) refuse any request for another appointment;

(5) gives any person with whom he arranges an appointment a contact point;
(6) does not communicate with a person:

(a) at an unsocial hour, unless the person has previously agreed to such a communication;
(b) on an unlisted telephone number, unless the person has previously agreed to such calls on that number.

06/04/2007

MCOB 3.8.3

In MCOB 3.8.2 R(6)(a) an unsocial hour usually means on a Sunday or before 9am or after 9pm on any other day. It could also mean other days of the week or other times if the firm knows that a particular customer would not wish to be called on that day or at that time for reasons of, for example, religious faith or night shift working.

31/10/2004

MCOB 3.8.4

The requirements of MCOB 3.8.2 R and MCOB 3.8.3 G:

(1) apply in respect of all individuals who initiate the communication, including advisers and call centre operators;
(2) apply to all forms of real time financial promotion of qualifying credit with customers, including face-to-face and telephone financial promotion;
(3) but do not prevent, for example, a telephone call centre which has received a call from a customer at an hour generally regarded as unsocial, either responding to that call or asking during the call if the customer would like details of other qualifying credit

06/04/2007

MCOB 3.8.5

SYSC 3.2.20 R (Records) requires a firm to take reasonable care to make and retain certain records. For a telemarketing campaign to which MCOB 3.8.2 R and MCOB 3.8.3 G apply, those records should include copies of any scripts used.

31/10/2004

MCOB 3.8.6

Firms should note the additional disclosure requirements in MCOB 4.4.7 R (Disclosure where initial contact is by telephone) and MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts and distance home purchase mediation contracts with retail customers) in relation to telephone calls that may fall within the definition of a financial promotion.

06/04/2007

MCOB 3.8A

Form and content of financial promotions of home reversion plans

06/04/2007

Clear, fair and not misleading

MCOB 3.8A.1

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

06/04/2007

MCOB 3.8A.2

The guidance on the clear, fair and not misleading standard at MCOB 3.6.5 G, MCOB 3.6.10 G and MCOB 3.6.14 G may be relevant.

Note: A comparative financial promotion will need to comply with regulation 4A of the Control of Misleading Advertisements Regulations 1988.

06/04/2007

Non-real time financial promotions to customers

MCOB 3.8A.3

A non-real time financial promotion of a home reversion plan must:

(1) describe any home reversion plan as a 'home reversion plan' and not use any other expression to describe it; and
(2) unless it is communicated by way of sound broadcasting or television where the primary purpose of the programming in which the promotion is contained is not to promote home finance or by an exhibition of pictures or photographic or cinematographic films:

(a) (if made to or directed at a customer other than an unauthorised reversion provider) prominently state that it relates to a home reversion plan and that the customer should ask for a personalised illustration to understand its features and risks; or
(b) (if made to or directed at an unauthorised reversion provider) prominently state that a home reversion plan is a long-term investment and a complex legal arrangement, and that expert independent legal advice should always be obtained before entering into any agreement.

06/04/2007

MCOB 3.8A.4

(1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:

(a) it includes any matters the omission of which causes the financial promotion not to be clear, fair and not misleading;
(b) if it describes a feature of any home reversion plan, it gives no less prominence to the possible disadvantages than to the benefits associated with that feature;
(c) it uses plain and intelligible language, and is easily legible (or, in the case of oral promotions, clearly audible);
(d) the accuracy of all statements of fact in it can be substantiated;
(e) its promotional purpose is not in any way disguised or misrepresented;
(f) any statement of fact, promise or prediction is clear, fair and not misleading and any relevant assumptions are clearly and prominently disclosed;
(g) any statement of opinion is honestly held and, unless consent is impracticable, given with the written consent of the person concerned;
(h) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are prominently disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
(i) it does not contain any false indications, in particular as to:

(i) the firm's independence; or
(ii) the firm's resources and scale of activities;

(j) the design, content or format does not in any way disguise, obscure or diminish the significance of any statement, warning or other matter which the home reversion plan is required by this chapter to contain;
(k) it does not include any reference to approval by the FSA or any government body, unless such approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA));

(a) Contravention of (1) may be relied on as tending to show contravention of MCOB 3.8A.1 R.
(b) Compliance with (1) may be relied on as tending to show compliance with MCOB 3.8A.1 R.

06/04/2007

MCOB 3.8A.5

The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend upon the content of the promotion. The following non-exhaustive examples would satisfy the requirement:

(1) a promotion which, when describing any possible monetary saving, also clearly states how this could be achieved; and
(2) a promotion which, when including references to non-standard services or facilities, also clearly states that an additional fee may be payable for these.

06/04/2007

No approval of real time financial promotions of a home reversion plan

MCOB 3.8A.6

A firm must not approve a real time financial promotion of a home reversion plan.

06/04/2007

Referring to the FSA

MCOB 3.8A.7

The guidance on referring to the FSA in a financial promotion may be relevant (see MCOB 3.6.2 G (3)).

06/04/2007

MCOB 3.8B

Form and content of financial promotions of regulated sale and rent back agreements

30/06/2010

Clear, fair and not misleading

MCOB 3.8B.1

A firm which communicates or approves a financial promotion of a regulated sale and rent back agreement must take reasonable steps to ensure that the financial promotion is clear, fair and not misleading.

30/06/2010

MCOB 3.8B.2

The guidance on the clear, fair and not misleading standard at MCOB 3.6.5 G, MCOB 3.6.10 G and MCOB 3.6.14 G may be relevant.

[Note: A comparative financial promotion will need to comply with regulation 4A of the Business Protection from Misleading Marketing Regulations 2008.]

30/06/2010

Ban on SRB leaflet dropping

MCOB 3.8B.3

A regulated sale and rent back firm must not communicate an unsolicited non-real time financial promotion that relates to a regulated sale and rent back agreement to a potential SRB agreement seller in the form of a leaflet or brochure.

30/06/2010

Non-real time financial promotions to customers and advertisements

MCOB 3.8B.4

A non-real time financial promotion relating to a regulated sale and rent back agreement and any other advertisement which is issued by a regulated sale and rent back firm that could lead to the conclusion of a regulated sale and rent back agreement, must (unless it is of a kind listed in MCOB 3.2.5 R(2)) contain a risk warning that uses the following wording:

"If you enter into a sale and rent back agreement you are unlikely to get the market value of your home and, as a tenant, may only be able to remain there for a limited period. There may be other options available. Please ask for a key terms statement.".

30/06/2010

MCOB 3.8B.5

A non-real time financial promotion relating to a regulated sale and rent back agreement and any other advertisement which is issued by a regulated sale and rent back firm that could lead to the conclusion of a regulated sale and rent back agreement, must describe any regulated sale and rent back agreement as a "sale and rent back agreement" and not use any other expression such as "equity release" to describe it.

30/06/2010

MCOB 3.8B.6

(1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:

(a) it includes any matters the omission of which causes the financial promotion not to be clear, fair and not misleading;
(b) if it describes a feature of any regulated sale and rent back agreement, it gives no less prominence to the possible disadvantages than to the benefits associated with that feature;
(c) it uses plain and intelligible language, and is easily legible (or, in the case of oral promotions, clearly audible);
(d) the accuracy of all statements of fact in it can be substantiated;
(e) its promotional purpose is not in any way disguised or misrepresented;
(f) any statement of fact, promise or prediction is clear, fair and not misleading and any relevant assumptions are clearly and prominently disclosed;
(g) any statement of opinion is honestly held and, unless consent is impracticable, given with the written consent of the person concerned;
(h) the facts on which any comparison or contrast is made are verified, or, alternatively, that relevant assumptions are prominently disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
(i) it does not contain any false indications, in particular as to the firm's resources and scale of activities;
(j) the design, content or format does not in any way disguise, obscure or diminish the significance of any statement, warning or other matter which the regulated sale and rent back agreement is required by this chapter to contain; and
(k) it does not include any reference to approval by the FSA or any government body, unless that approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA)).

(a) Contravention of (1) may be relied on as tending to show contravention of MCOB 3.8B.1 R.
(b) Compliance with (1) may be relied on as tending to show compliance with MCOB 3.8B.1 R.

30/06/2010

MCOB 3.8B.7

The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend on the context of the promotion. The costs, restrictions or conditions relating to a feature such as any option available should be detailed for the following non-exhaustive examples:

(1) where any part of the discount on the market value of the property is to be repaid to the consumer after a qualifying period; and
(2) where a consumer is to benefit from shared appreciation in the value of the property.

30/06/2010

Exploitation of customer

MCOB 3.8B.8

A firm must not in any financial promotion of a regulated sale and rent back agreement exploit the vulnerable nature or circumstances of any customer who may be in financial difficulties and at risk of losing his or her home and must accordingly avoid using in the promotion phrases or terms such as "fast sales", "rescue" or "cash quickly" or any other similar expression.

30/06/2010

No approval of real time financial promotions of a regulated sale and rent back agreement

MCOB 3.8B.9

A firm must not approve a real time financial promotion of a regulated sale and rent back agreement.

30/06/2010

Referring to the FSA

MCOB 3.8B.10

The guidance on referring to the FSA in a financial promotion may be relevant (see MCOB 3.6.2 G (3)).

30/06/2010

MCOB 3.9

Confirmation of compliance: financial promotions of qualifying credit, home reversion plans or regulated sale and rent back agreements

30/06/2010

MCOB 3.9.1

(1) Before a firm communicates or approves a non-real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement it must confirm that the financial promotion complies with the rules in this chapter.
(2) A firm must arrange for the confirmation exercise in (1) to be carried out by an individual or individuals with appropriate expertise.

30/06/2010

MCOB 3.9.2

(1) 'Appropriate expertise' will vary depending on the complexity of the financial promotion and the qualifying credit, home reversion plan or regulated sale and rent back agreement to which it relates. The individuals engaged by a firm to confirm the compliance of its financial promotions with this chapter may themselves have different levels of expertise and therefore a different level of authority for confirmation depending on the type of promotion and the qualifying credit, home reversion plan or regulated sale and rent back agreement involved.
(2) A firm may arrange for a third party with appropriate expertise to carry out the confirmation exercise on the firm's behalf, but the responsibility for the financial promotion remains with the firm.

30/06/2010

Withdrawing confirmation

MCOB 3.9.3

If, at any time after it has completed a confirmation exercise in MCOB 3.9.1 R(1), a firm becomes aware that a financial promotion no longer complies with the rules in this chapter, it must ensure that the financial promotion is withdrawn as soon as is reasonably practicable by:

(1) ceasing to communicate it;
(2) withdrawing its approval (if applicable); and
(3) notifying any person that the firm knows to be relying on its approval (if applicable) or confirmation (under MCOB 3.9.5 R).

06/04/2007

MCOB 3.9.4

(1) MCOB 3.9.3 R is of particular importance to a financial promotion, such as a product brochure, that a firm uses over a period of time. It has little application to a financial promotion which is of its nature ephemeral, for example a mobile phone text message. Further, a financial promotion which clearly speaks as at a particular date will not cease to comply with the rules in this chapter merely because the passage of time has rendered it out-of-date. This does not mean, however, that a financial promotion can include information (such as price information) which is likely to become outdated during the currency of the financial promotion without the firm having regard to the need for any financial promotion to be clear, fair and not misleading. See further MCOB 3.6.5 G (2).
(2) For compliance with MCOB 3.9.3 R, the FSA will expect a firm to monitor its relevant financial promotions as part of the firm's routine compliance monitoring procedures. A firm may find it helpful to designate a relevant financial promotion with a 'review date', a date at which the financial promotion should be checked once more against the rules in this chapter. If it is found no longer to meet these requirements it should be withdrawn as soon as is reasonably practicable.
(3) If at any time a firm becomes aware that customers may have been misled by a financial promotion it should consider whether customers who have responded to the financial promotion should be contacted with a view to explaining the position and offering any appropriate form of redress to those who have suffered financial loss.

06/04/2007

MCOB 3.9.5

A firm will not contravene any of the rules in this chapter in circumstances where it (firm 'A') communicates a non-real time financial promotion which has been produced by another person provided that:

(1) A takes reasonable care to establish that another firm (firm 'B') has already confirmed the compliance of the financial promotion in accordance with MCOB 3.9.1 R;
(2) A takes reasonable care to establish that A communicates the financial promotion only to recipients of the type for whom it was intended at the time B carried out the confirmation exercise; and
(3) so far as A is, or ought reasonably to be, aware:

(a) the financial promotion has not ceased to be clear, fair and not misleading since that time; and
(b) B has not withdrawn the financial promotion.

06/04/2007

MCOB 3.10

Records: non-real time financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement

30/06/2010

Requirement to make and retain records

MCOB 3.10.1

A firm must make an adequate record of each non-real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement which it has confirmed as complying with the rules in this chapter. The record must be retained for a year from the date at which the financial promotion was last communicated.

30/06/2010

Content of records

MCOB 3.10.2

In deciding what is an adequate record, a firm should consider including, or providing reference to, where appropriate, such matters as:

(1) the name of the individual or individuals who confirmed that the financial promotion complied with the rules in this chapter;
(2) the date of confirmation and (where appropriate) approval;
(3) details of the medium for which the financial promotion was authorised;
(4) the evidence supporting any material factual statement about qualifying credit, a home reversion plan or a regulated sale and rent back agreement in the financial promotion. For example, for any testimonial they use, advertisers should hold signed and dated proof, including a contact address. Unless they are genuine opinions taken from a published source, testimonials should only be used with the written permission of those giving them; and
(5) where the promotion contains a typical APR, evidence to show that the APR was representative of the business expected to arise from the promotion (see MCOB 3.6.22 R).

30/06/2010

MCOB 3.10.3

(1) A firm should also retain a copy of the financial promotion as finally published or, if this is not practicable, monitor the published version to verify that it is in substantially the same format as the version which the firm confirmed complied with the rules in this chapter.
(2) Records which should be retained include:

(a) any written financial promotion used by an adviser; and
(b) any written material which is used in an organised marketing campaign (including, for example, written mailshots whether sent by e-mail, post, facsimile or other media).

(3) If the financial promotion is not in written form, the record should represent the actual financial promotion as accurately as possible.

06/04/2007

Form of records

MCOB 3.10.4

MCOB 2.8 (Record keeping) applies to the form in which records required in accordance with this chapter must be kept.

31/10/2004

MCOB 3.11

Communication and approval of qualifying credit promotions for an overseas person or an unauthorised person

01/12/2004

Approval of qualifying credit promotions

MCOB 3.11.1

(1) Section 21(1) of the Act (Restrictions on financial promotion) prohibits an unauthorised person from communicating a financial promotion, in the course of business, unless an exemption applies or the financial promotion is approved by a firm.
(2) Most of the rules in this chapter apply when a firm approves a financial promotion of qualifying credit in the same way as when a firm communicates a financial promotion of qualifying credit itself. A firm therefore has a similar responsibility for a financial promotion of qualifying credit that it approves as for one that it communicates. For example, a firm which approves a non-real time financial promotion must:

(a) confirm that the financial promotion complies with the rules in this chapter; and
(b) be able to show that it has taken reasonable steps to ensure that the financial promotion is clear, fair and not misleading.

(3) A firm may also wish to approve a financial promotion of qualifying credit that it communicates itself. This would ensure that an unauthorised person who then also communicates it to another person will not contravene the restriction in section 21(1) of the Act (Restrictions on financial promotion).
(4) A firm which approves a promotion that is exempt under MCOB 3.2.5 R (Application: what?; exemptions) or MCOB 3.3.1 R (Application: where?) must still comply with certain rules in this chapter (see MCOB 3.2.4 R (Application: what? exemptions) and MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation)).

06/04/2007

No approval of real time qualifying credit promotions

MCOB 3.11.2

A firm must not approve a real time financial promotion of qualifying credit.

06/04/2007

Approval of qualifying credit promotions when not all the rules apply

MCOB 3.11.3

If a firm approves a financial promotion of qualifying credit in circumstances in which one or more of the rules in this chapter are expressly disapplied, the approval must be given on terms that it is limited to those circumstances.

06/04/2007

MCOB 3.11.4

If an approval is limited in accordance with MCOB 3.11.3 R, and an unauthorised person communicates the financial promotion to persons not covered by the approval, the unauthorised person may commit an offence under section 21(1) of the Act (Restrictions on financial promotion). A firm giving a limited approval may wish to advise the unauthorised person accordingly.

06/04/2007

Non-real time qualifying credit promotions for overseas persons

MCOB 3.11.5

A firm must not communicate or approve a non-real time financial promotion which relates to qualifying credit provided by an overseas person, unless:

(1) the qualifying credit promotion makes clear which firm has approved or communicated it and, where relevant, explains;

(a) that the rules made under the Act for the protection of customers do not apply;
(b) the extent and level to which the compensation scheme will be available, or if the scheme will not be available, a statement to that effect; and
(c) if the communicator wishes, the protection or compensation available under another system of regulation; and

(2) the firm has no reason to doubt that the overseas person will deal with customers in the United Kingdom in an honest and reliable way.

06/04/2007

MCOB 3.12

The Internet and other electronic media

01/12/2004

MCOB 3.12.1

This section contains guidance on the use of the Internet and other electronic media to communicate financial promotions. Firms are also referred to the guidance in MCOB 2.7 (Application to electronic media and distance communications).

06/04/2007

Approach and general guidance

MCOB 3.12.2

Any material, which meets the definition of a financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement, including any video or moving image material incorporated in any website containing such a financial promotion, should comply with the rules in this chapter. See PERG 8 (The Internet) for further guidance on financial promotions on the Internet, including the treatment of hyperlinks and banners.

30/06/2010

MCOB 3.12.3

As indicated in MCOB 3.3 (Application: where?), for the purposes of the financial promotion rules there are two types of approach to financial promotion communicated via the Internet and other electronic media:

(1) real time financial promotions where the communication is in the form, for example, of a telephone conversation, or other form of interactive dialogue; and
(2) non-real time financial promotions where the customer may, for example, choose from reading a description of the qualifying credit, home reversion plan or regulated sale and rent back agreement, through to the completion of a contract in a similar way to browsing through a leaflet rack. The rules in this chapter relating to hard copy financial promotions such as advertisements in magazines or newspapers apply equally to such promotions. E-mails, material displayed on a website and sound and television broadcasts are non-real time financial promotions (see MCOB 3.5.5 R(2)).

30/06/2010

MCOB 3.12.4

(1) Before using the Internet, digital or any other form of interactive television or other electronic media to promote its services, a firm should refer to legislation such as the Data Protection Act 1998 and the Computer Misuse Act 1990, as well as to this chapter.
(2) In relation to financial promotions communicated by way of television, firms will want to have regard to Guidance Note 3 of the ITC Code of Advertising Standards and Practice on the use and appearance of superimposed text.
(3) When designing websites and other electronic media, firms should be aware of the difficulties that can arise when reproducing certain colours and printing certain types of text. These difficulties could cause problems with the presentation and retrieval of required information. Any financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement communicated by the Internet, digital or other forms of interactive television is subject to the requirements on form and content in this chapter.

30/06/2010

Specific guidance

MCOB 3.12.5

The FSA website http://www.fsa.gov.uk contains a wide range of information including pages of specific relevance to customers. Firms may, if they wish, include a reference or hyperlink to the FSA's site; this will not, however, replace any requirements of the financial promotion rules.

06/04/2007

MCOB 3 Annex 1

Examples of qualifying credit promotions

01/12/2004

This annex consists only of one or more forms. Forms are to be found through the following address:

Examples of qualifying credit promotions - mcob3_annex1.pdf

31/10/2004