New requirements for intermediary service disclosure.
MCOB 4 and MCOB 4.4A set out the initial disclosure requirements for mortgage intermediaries.
The rules require intermediaries who are not also lenders to provide information on their service in good time before beginning the service, including:
- their identity and the geographical address (MCOB 4A.1.1R(1))
- their Financial Services Register entry (MCOB 4A.1.1R(2))
- whether they are a morgage adviser (MCOB 4A.1.1R(3))
- the procedures allowing consumers or other interested parties to complain to the intermediary, whether complaints may subsequently be referred to the Financial Ombudsman Service and, if so, the methods of accessing it (MCOB 4A.1.1R(4)).
When an intermediary is not offering products from an unlimited range across the market (for example, if it has ties to either one or a group of lenders), it must name those lenders for which it is acting.
Firms paid by commission must tell customers they have the right to ask for information on the commission paid by the lenders for which they are acting. This means ensuring firms have access to relevant market data to allow them to respond. Firms must also disclose the actual amount of commission.
If the amount is not known at the time of disclosure, the customer must be told that the actual amount will be disclosed at a later stage in the European Standardised Information Sheet (ESIS) (MCOB 4.4A.8R(1)(d)).
Timings of disclosure
Intermediaries must provide information about remuneration and the scope of their services ‘in good time’ (MCOB 4.4A.12R) before carrying out any MCD credit intermediation activity. This means before acting as a mortgage advisor or arranger regarding any mortgage contract covered by the MCD.
Firms should therefore consider the point at which this activity begins and provide the required disclosure 'in good time' before carrying out that activity. PERG 4.5 and 4.6 provide guidance on what counts as arranging and advising on regulated mortgage contracts. In addition, MCOB 4.4A.13G provides guidance on the interpretation of MCOB 4.4A.12R and states that 'in many cases, MCOB 4.4A.12R means that information will be given at the time of the first contact between the firm and the customer', although it explains this is not always the case.
Firms should also consider Principle 6 and ensure they pay due regard to the interests of their customers and treat them fairly.