How is the provision of mortgage advice regulated
Has to meet the rules of mortgage and home finance: conduct of business (MCOB)
First charge
If lender has to take possession of property following a default on loan. The Holder of first charge loan would be paid ahead of any other charge holders from the proceeds
Second charge
If lender has to take possession of property following a default on loan. The holder of the second charge loan ranks after 1st once they get paid in full
What is consumer buy to let
CBTL is a transaction where the mortgage was entered not for the whole intentions of a business. E.G. unable to sell property
What are the key elements of MCOB
- Application and purpose
- General conduct o business standards
2a. Mortgage credit directive (MCD)
3a. Financial promotions and communications with customers
3b. MCD general information
- Advising and selling standards
- Pre- application disclosure
- Disclosure at the offer stage
- Disclosure at start of contract and after sale
8&9. Equity release - advising and selling standards and product disclosure
- Annual percentage rate (APR)
10a. Annual percentage rate of charge - Responsible lending
- Charges
- Arrears and repossessions
What are the insurance: conduct of business sourcebook rules (ICOBS)
- Application
- General matters
- Distance communications
- Information about the firm. It’s services and remuneration
- Identifying clients needs and advising
- Product Information
- Cancellation
- Claims handling
What are the banking: conduct of business sourcebook rules (BCOBS)
Applies to firms accepting despots from banking customers in the UK.
- Application
- Communications with banking customers and financial promotions
2a. Restriction on marketing or providing an optional product for which a fee is payable
- Distance communications and e-commerce
- Information to be communicated to banking customers and statements of account
- Post sale requirements
- Cancellation
- Information about current account services
What are the payment services regulations
They cover most payment services made in € or £. They cover:
- Banks
- Building societies
- e-money issuers
- Money remitters
- Non-bank credit card issuers
- Non-bank merchant acquires
What is a money remitter
A payment service provider that accepts funds without payee or payer having an account. You can send money to a destination using it’s services
What is a Non-bank merchant acquirer
A financial institution other than a bank that processes credit or debit card payments
What is payment services directive (PSD2)
Aims to increase competition in the payments industry bringing new way to pay, enhancing customer protection
Payment systems regulator
Is a subsidiary of the FCA and oversees all domestic payment systems that are brought into the scope by HM Treasury.
The standards of lending practise
6 main areas:
- Financial promotions & communications
- Product sale
- Account management and servicing.
- Money management
- Financial difficulty
- Customer vulnerability
What products are covered by the standards of lending practise
- Unsecured loans
- Current account overdrafts
- Credit cards and charge cards
What are the other categories of advice
- Basic advice
- Generic advice
- Focused advice
- Simplified advice
- Robo advice
Basic advice
Applied to stakeholder products. A use of scripted questions to establish is the product within the firms range is suitable for customer
Generic advice
Does not relate to a particular product/ investment. E.G. ‘It’s sensible to have financial protection in place’
Focused advice
Requested by the customer. Advice/recommendations relating to specific investment
Simplified advice
Limited advice to 1 or more customers needs. No analysis involved
Robo advice
Robo-advisers provide advise or portfolio management online based on mathematical rules or algorithms
