For how long from the date of a customer’s mortgage application must a firm keep a record of a key features illustration or a European Standardised Information Sheet?
a) One year.
b) Three years.
c) Five years.
A) One Year
When advising on an MCD regulated mortgage, the lender or intermediary must provide the customer with:
a) a key features illustration explaining how the product works.
b) a suitability report outlining the product details and reasons for the recommendation.
c) an adequate explanation of the recommended product.
C) Suitability reports do not apply to mortgages. KFIs are given as part of the pre-application requirements for regulated (non-MCD) mortgages.
How long should records of execution only sales be kept for?
Records of execution-only sales must be kept for 36 months.
What are the features of an offer document?
There is no prescribed format for the offer document, but certain key information is required. Although described as a binding offer, there are circumstances where the lender can withdraw the offer. The document must confirm the customer’s repayment strategy, but that does not require details of any investment.
How long must firms keep marketing for?
12 Months
What days can real time promotions IE phone calls be made?
Sundays & Between 9pm and 9am any other day.
What are the three types of service and definitions?
Unlimited - Firm selects and recommends from a range of products that represent the whole market.
Limited range - Firm selects and recommends from a limited range of products, typically from a panel of lenders.
Single lender - Firm selects and recommends only the products of a single lender.
What is a professional customer?
The FCA defines a ‘professional customer’ as one who has worked in the home finance sector for at least a year, in a professional position that requires knowledge of the product or service to be arranged, and who the firm reasonably believes to be capable of understanding the risks involved in the proposed arrangements.
Execution only is permitted when:
- There is no interactive dialogue between the firm and the customer during the sale, eg website and postal applications, as opposed to instant messaging and social media; or
- There is interactive dialogue, but the customer is in one of three categories and has elected to proceed on an execution-only basis:
high-net-worth (HNW) customers (ie customers with minimum annual net income of £300,000, or minimum net assets of £3m);
professional customers (who must select the product they wish to arrange);
the loan is solely for business purposes; or
The customer has rejected the advice given, identified the product they wish to purchase and has elected to proceed on an execution-only basis. (This is not permitted for sale and rentback agreements – if advice is given and subsequently rejected, the provider must not proceed on any basis .)
Can a customer self certify their income?
NO - Lenders are required to obtain reliable evidence and verification to confirm that the income declared by the applicant is correct, and the lending decision should be based on that evidence. The rules specifically prohibit self-certification, where the applicant declares their own income and no evidence is sought to confirm their declaration. Instead, lenders must obtain evidence of income and it must be from a source independent of the customer, rather than from the customer themselves.
How long should a firm keep a ESIS or KFI?
One year from the date of the customers application.
How long is the reflection period for mortgages?
At least 7 days.
How long should firms keep a record of the offer document for?
At least one year.
Under MCOB rules, early repayment charges must be:
a reasonable pre-estimate of the costs of ending the contract early and capable of being shown as a cash amount.
What % is APRC?
51%
Lenders cannot make provisional offers to borrowers in relation to MCD regulated mortgages. True or false?
An offer of advance can be provisional, but once all due diligence has been completed the final offer for an MCD regulated mortgage is binding.
MCOB 7 covers the disclosure requirements at the start of a new mortgage contract. At what point must the required information be provided to the borrower?
The information covered by MCOB 7 must be disclosed before the first mortgage payment is made.
If a recommendation is made over the telephone, an illustration must be sent to the customer within:
If a recommendation is made over the telephone, an illustration must be sent to the customer within five business days.
