Financial Promotion

Part

MCOB Mortgages: Conduct of Business

Chapter

Financial Promotion

Printed on: 19/11/2024

Rulebook at: 31/10/2006

MCOB 3

Financial Promotion

MCOB 3.1

Application: who?

01/12/2004

MCOB 3.1.1

This chapter applies to every firm which communicates or approves a qualifying credit promotion financial promotion of qualifying credit or of a home reversion plan.

31/10/2004

MCOB 3.1.2

This chapter applies generally to firms in relation to all qualifying credit promotions. 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) qualifying credit 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) qualifying credit promotions to persons outside the United Kingdom.

31/10/2004

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 3.1.6

This chapter does not apply to a firm in relation to the communication or approval of a financial promotion that is not a qualifying credit promotion (but see COB 3 (Financial promotion)).

31/10/2004

MCOB 3.1.7

A communication may contain both a financial promotion and a qualifying credit promotion, for example a building society leaflet which describes the range of mortgage and savings products it provides. In such cases, both MCOB 3 and COB 3 will be relevant.

31/10/2004

MCOB 3.1.8

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

(1) a qualifying credit promotion 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 qualifying credit promotion 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.

31/10/2004

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 qualifying credit 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 qualifying credit 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 qualifying credit promotion must not be communicated on behalf of another person who would not be able lawfully to communicate the qualifying credit 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.

31/10/2004

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 qualifying credit promotion should act in conformity with the rules in this chapter.

31/10/2004

Illustrative examples of qualifying credit promotions

MCOB 3.1.12

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

31/10/2004

MCOB 3.2

Application: what?

01/12/2004

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 qualifying credit promotion is in MCOB 3.11.1 G (Approval of qualifying credit promotions).

01/07/2005

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 qualifying credit 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) Qualifying credit 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 qualifying credit promotion;
(g) presentations to groups of customers; and
(h) other publications, which may contain non-personal recommendations as to obtaining qualifying credit.

31/10/2004

MCOB 3.2.3

Guidance on the use of the Internet for communicating qualifying credit promotions is in PERG 8.22 (The Internet)

01/07/2005

Exemptions

MCOB 3.2.4

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

(1) MCOB 3.1 to MCOB 3.5 (Application, Purpose and General);
(2) MCOB 3.6.3 R (Non-real time qualifying credit promotions: 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 qualifying credit promotion relating to qualifying credit by an overseas person MCOB 3.11.5 R (Non-real time qualifying credit promotions for overseas persons) applies.

31/10/2004

MCOB 3.2.5

This table belongs to MCOB 3.2.4 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 qualifying credit 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)

aqualifying credit promotio nwhich can lawfully be communicated by an unauthorised person without approval;

(4)

a qualifying credit 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) i f the office from which thequalifying credit promotionis communicated were a separate unauthorised person (but see GEN 4.4.1R (Business for private customers from non-UK offices));

31/10/2004

MCOB 3.2.6

MCOB 3.2.5 R(2) exempts a qualifying credit 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 available from the firm. Thus firms should avoid the use of names, logos or addresses, for example, which attempt to convey additional mortgage or cost-related information.

31/10/2004

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 qualifying credit promotion.

31/10/2004

Other handbook rules relevant to qualifying credit promotions

MCOB 3.2.8

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

31/10/2004

MCOB 3.2.9

Firms are reminded that if in the course of making a qualifying credit promotion of any kind an adviser gives specific advice on regulated mortgage contracts 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 (Lifetime mortgages: advising and selling standards).

31/10/2004

MCOB 3.3

Application: where?

01/12/2004

Territorial Scope

MCOB 3.3.1

This chapter applies to a firm only in relation to:

(1) the communication of a qualifying credit promotion to a person inside the United Kingdom;
(2) the communication of an unsolicited real time qualifying credit promotion, unless:

(a) it is made from a place outside the United Kingdom; and
(b) it is made for the purposes of a business which is carried on outside the United Kingdom and which is not carried on in the United Kingdom; and

(3) the approval of a non-real time qualifying credit promotion for communication to a person inside the United Kingdom;

subject to MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation) and MCOB 3.3.5 R (Exceptions to territorial scope: distance contracts).

31/10/2004

MCOB 3.3.2

(1) The application under MCOB 3.3.1 R is relevant both when a firm communicates a qualifying credit promotion itself and when a firm approves a non-real time qualifying credit promotion for communication by others. But see also MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation) regarding approvals.
(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)) and the exemptions for overseas communicators (see MCOB 3.2.5 R (4)) and the exemption for incoming electronic commerce communications (see PERG 8.12.38G (Incoming electronic commerce communication (article 20B)).
(3) In the context of the provision of an electronic commerce activity to an EEA ECA recipient, the scope of MCOB 3 is extended by ECO 2.2.3 R (Financial promotion). This means that MCOB 3 will apply for communications to EEA ECA recipients.

01/07/2005

Exceptions to territorial scope: rules without territorial limitation

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 qualifying credit promotion:

(1) MCOB 3.1 to MCOB 3.5 (Application, Purpose and General);
(2) MCOB 3.6.3 R(1) (Non-real time qualifying credit promotions: clear, fair and not misleading); and
(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).

31/10/2004

MCOB 3.3.4

There is no need for a qualifying credit 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 qualifying credit promotion, it must comply with the rules indicated in MCOB 3.3.3 R. However, a firm must not approve a real time qualifying credit promotion (see MCOB 3.11.2 R (No approval of real time qualifying credit promotions).

31/10/2004

Exceptions to territorial scope: 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 qualifying credit promotion, the rules in (3) do not apply.
(2) The conditions are that:

(a) the firm communicates the qualifying credit promotion 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 DMD; or
(ii) has obligations in its domestic law corresponding to those provided for by the DMD;

(c) the qualifying credit promotion relates, exclusively, to a distance contract, for the conclusion of which the obligations provided for by the DMD (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 48 of the Treaty.

(3) The rules which do not apply are:

(a) MCOB 3.6.1 R (Non-real time qualifying credit promotions: 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).

31/10/2004

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

MCOB 3.3.6

For the purposes of this chapter:

(1) a qualifying credit 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 qualifying credit 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.

31/10/2004

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 qualifying credit 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 qualifying credit 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 qualifying credit promotion is directed only at persons outside the United Kingdom (but a qualifying credit 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 qualifying credit promotion is accompanied by an indication that it is directed only at persons outside the United Kingdom;
(b) the qualifying credit promotion is accompanied by an indication that it must not be acted upon by persons in the United Kingdom;
(c) the qualifying credit promotion is not referred to in, or directly accessible from, any other qualifying credit 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 qualifying credit promotion might otherwise lawfully have been made) obtaining the qualifying credit to which the qualifying credit promotion relates, from the person directing the qualifying credit promotion, a close relative of his or a member of the same group;
(e) the qualifying credit 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.

01/10/2005

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 (qualifying credit promotions in MCOB) by unauthorised persons. A person must not, in the course of business, communicate a qualifying credit promotion unless:

(a) he is an authorised person; or
(b) the content of the qualifying credit 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 (qualifying credit promotions in MCOB).

31/10/2004

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 qualifying credit promotion. MCOB 3.5.2 G (Application: what? Exemptions) provides a guide to the topics covered in this chapter.
(2) This chapter amplifies, for activities within its scope:

(a) Principle 6 (Customers' interests) which requires a firm to pay due regard to the interests of its customers and treat them fairly; and
(b) Principle 7 (Communications with clients) which requires a firm to 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.

31/10/2004

MCOB 3.5

General

01/12/2004

Topics covered in this chapter

MCOB 3.5.1

MCOB 3 includes some provisions which are applicable to all types of qualifying credit promotion and others which apply only to specific types. MCOB 3.5.2 G has been provided to help locate the areas of particular relevance to types of qualifying credit promotion.

31/10/2004

MCOB 3.5.2

This table belongs to MCOB 3.5.1 G

Areas of particular relevance to types of qualifying credit promotion

(1)

Provisions applying to all qualifying credit promotions

Application - who?

MCOB 3.1

Application - what?

MCOB 3.2

Application - where?

MCOB 3.3

Purpose

MCOB 3.4

General

MCOB 3.5

(2)

Provisions applying only to non-real time qualifying credit promotions

Form and content of non-real time qualifying credit promotions

MCOB 3.6

Confirmation of compliance

MCOB 3.9

Records

MCOB 3.10

(3)

Provisions applying only to real time qualifying credit promotions

Unsolicited real time qualifying credit promotions

MCOB 3.7

Form and content of real time qualifying credit promotions

MCOB 3.8

(4)

Provisions applying only to certain types of qualifying credit promotions

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

MCOB 3.11

The Internet and other electronic media

MCOB 3.12

31/10/2004

Other regulations and guidelines

MCOB 3.5.3

A firm communicating a qualifying credit 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)).

31/10/2004

'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 qualifying credit 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).

01/07/2005

MCOB 3.5.5

(1) A 'real time qualifying credit promotion' is a qualifying credit promotion which is communicated in the course of a personal visit, telephone conversation or other interactive dialogue.
(2) A 'non-real time qualifying credit promotion' is a qualifying credit promotion that is not a real time qualifying credit promotion. It includes a qualifying credit 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 qualifying credit promotion is a non-real time qualifying credit promotion:

(a) the qualifying credit promotion is communicated to more than one person in identical terms (save for details of the recipient's identity);
(b) the qualifying credit 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 qualifying credit 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.

31/10/2004

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 qualifying credit promotion which is directed at persons generally, any person who reads or hears the communication.

31/10/2004

MCOB 3.6

Form and content of non-real time qualifying credit promotions

01/12/2004

Non-real time qualifying credit promotions: name and contact point

MCOB 3.6.1

A non-real time qualifying credit 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.

31/10/2004

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 1985, 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 qualifying credit promotion which it communicates or approves to name the FSA as its regulator. However, to comply with MCOB 3.6.3 R (Non-real time qualifying credit promotions: clear, fair and not misleading), if the firm chooses to name the FSA as its regulator and the qualifying credit 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 qualifying credit promotion and a promotion for unsecured lending.

31/10/2004

Non-real time qualifying credit promotions: 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 qualifying credit promotion is clear, fair and not misleading.
(2) A non-real time qualifying credit 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.

31/10/2006

MCOB 3.6.4

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

(a) it does not omit any matters the omission of which causes the qualifying credit promotion 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 qualifying credit promotion, 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 qualifying credit promotion 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).

31/10/2004

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 qualifying credit 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 qualifying credit 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 qualifying credit promotion does not imply the rate may be fixed.

31/10/2006

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 complying with its obligations under MCOB 3.6.3 R (Non-real time promotions: clear fair and not misleading), a firm must ensure that the qualifying credit 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 qualifying credit 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.

31/10/2004

MCOB 3.6.9

A non-real time qualifying credit 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 regulated lifetime mortgage contract as a 'lifetime mortgage' and not use any other expression to describe such a mortgage.

31/10/2004

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 qualifying credit 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.

31/10/2004

MCOB 3.6.11

A non-real time qualifying credit 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.

31/10/2004

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 qualifying credit promotion must, unless MCOB 3.6.15 R (Transient advertising) applies, prominently contain one or more of the following statements in the circumstances described:

(1) where the qualifying credit promotion relates to a regulated lifetime mortgage contract: 'This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.'
(2) where the qualifying credit promotion 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 the qualifying credit promotion. 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.

31/10/2006

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 qualifying credit 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.

31/10/2004

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 qualifying credit 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'

31/10/2004

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 qualifying credit promotion.

31/10/2004

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 qualifying credit 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 qualifying credit promotion.

31/10/2004

MCOB 3.6.22

If the non-real time qualifying credit 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.

31/10/2004

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 qualifying credit promotion is for a new product or business, reference should instead be had to the relevant business plans.

31/10/2004

MCOB 3.6.25

If the non-real time qualifying credit promotion 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.'

31/10/2004

Multi-rate mortgages

MCOB 3.6.26

If the non-real time qualifying credit promotion 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 qualifying credit promotion contains information about any of these rates then:

(1) the non-real time qualifying credit promotion 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.

31/10/2004

Fees for advice or arranging

MCOB 3.6.27

If a non-real time qualifying credit promotion 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.

31/10/2004

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 qualifying credit promotions

01/12/2004

Meaning of 'solicited' and 'unsolicited' real time qualifying credit promotion

MCOB 3.7.1

(1) An unsolicited real-time qualifying credit promotion is a real time qualifying credit promotion which is not solicited as described in (2).
(2) A solicited real-time qualifying credit promotion is a real time qualifying credit 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 qualifying credit promotion; or
(b) takes place in response to an express request from the recipient of the qualifying credit 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 qualifying credit 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 qualifying credit 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 any contract for qualifying credit jointly with R.

31/10/2004

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 solicited real-time qualifying credit 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.

01/07/2005

Prohibition on unsolicited real time qualifying credit promotions to customers

MCOB 3.7.3

A firm must not make an unsolicited real time qualifying credit promotion unless the customer has an established existing customer relationship with the firm and the relationship is such that the customer envisages receiving unsolicited real time qualifying credit promotions.

31/10/2004

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 unsolicited real time qualifying credit promotion.
(2) MCOB 3.2.5 R(2) creates an exemption for qualifying credit 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 qualifying credit promotion.

31/10/2004

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 unsolicted real time qualifying credit promotion 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 qualifying credit promotions 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 qualifying credit promotions which are not exempt qualifying credit promotions and to unsolicited real time qualifying credit promotions within MCOB 3.7.3 R.

31/10/2004

MCOB 3.8.2

A firm must ensure that an individual who makes a real time qualifying credit promotion 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 qualifying credit 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.

31/10/2004

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 qualifying credit promotion with customers, including face-to-face and telephone qualifying credit 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

31/10/2004

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 with retail customers) in relation to telephone calls that may fall within the definition of a financial promotion.

31/10/2004

MCOB 3.9

Confirmation of compliance

01/12/2004

MCOB 3.9.1

(1) Before a firm communicates or approves a non-real time qualifying credit promotion it must confirm that the qualifying credit 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.

31/10/2004

MCOB 3.9.2

(1) In MCOB 3.9.1 R(2) 'appropriate expertise' will vary depending on the complexity of the qualifying credit promotion and the qualifying credit to which it relates. The individuals engaged by a firm to confirm the compliance of its qualifying credit 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 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 qualifying credit promotion remains with the firm.

06/04/2006

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 qualifying credit promotion no longer complies with the rules in this chapter, it must ensure that the qualifying credit 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).

31/10/2004

MCOB 3.9.4

(1) MCOB 3.9.3 R is of particular importance to a qualifying credit promotion, such as a product brochure, that a firm uses over a period of time. It has little application to a qualifying credit promotion which is of its nature ephemeral, for example a mobile phone text message. Further, a qualifying credit 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 qualifying credit promotion can include information (such as price information) which is likely to become outdated during the currency of the qualifying credit promotionwithout the firm having regard to the need for any qualifying credit 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 qualifying credit promotions as part of the firm's routine compliance monitoring procedures. A firm may find it helpful to designate a relevant qualifying credit promotion with a 'review date', a date at which the qualifying credit 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 qualifying credit promotion it should consider whether customers who have responded to the qualifying credit 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.

31/10/2004

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 qualifying credit 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 qualifying credit promotion in accordance with MCOB 3.9.1 R;
(2) A takes reasonable care to establish that A communicates the qualifying credit 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 qualifying credit promotion has not ceased to be clear, fair and not misleading since that time; and
(b) B has not withdrawn the qualifying credit promotion.

31/10/2004

MCOB 3.10

Records

01/12/2004

Requirement to make and retain records

MCOB 3.10.1

A firm must make an adequate record of each non-real time qualifying credit promotion 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 qualifying credit promotion was last communicated.

31/10/2004

Content of records

MCOB 3.10.2

In deciding what is an adequate record under MCOB 3.10.1 R, 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 qualifying credit 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 qualifying credit promotion was authorised;
(4) the evidence supporting any material factual statement about qualifying credit in the qualifying credit 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).

31/10/2004

MCOB 3.10.3

(1) A firm should also retain a copy of the qualifying credit 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 qualifying credit 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 qualifying credit promotion is not in written form, the record should represent the actual qualifying credit promotion as accurately as possible.

31/10/2004

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 (qualifying credit promotion in the case of MCOB), in the course of business, unless an exemption applies or the qualifying credit promotion is approved by a firm.
(2) Most of the rules in this chapter apply when a firm approves a qualifying credit promotion in the same way as when a firm communicates a qualifying credit promotion itself. A firm therefore has a similar responsibility for a qualifying credit promotion that it approves as for one that it communicates. For example, a firm which approves a non-real time qualifying credit promotion must:

(a) if MCOB 3.9.1 R applies, confirm that the qualifying credit promotion complies with the rules in this chapter; and
(b) if MCOB 3.6.3 R(1) applies, be able to show that it has taken reasonable steps to ensure that the qualifying credit promotion is clear, fair and not misleading.

(3) A firm may also wish to approve a qualifying credit promotion that it communicates itself. This would ensure that an unauthorised person who then also communicates the qualifying credit promotion 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)).

31/10/2004

No approval of real time qualifying credit promotions

MCOB 3.11.2

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

31/10/2004

Approval of qualifying credit promotions when not all the rules apply

MCOB 3.11.3

If a firm approves a qualifying credit promotion 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.

31/10/2004

MCOB 3.11.4

If an approval is limited in accordance with MCOB 3.11.3 R, and an unauthorised person communicates the qualifying credit 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.

31/10/2004

Non-real time qualifying credit promotions for overseas persons

MCOB 3.11.5

A firm must not communicate or approve a non-real time qualifying credit 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.

31/10/2004

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 qualifying credit promotions. Firms are also referred to the guidance in MCOB 2.7 (Application to electronic media and distance communications).

31/10/2004

Approach and general guidance

MCOB 3.12.2

Any material, which meets the definition of a qualifying credit promotion, including any video or moving image material incorporated in any website containing a qualifying credit 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.

01/07/2005

MCOB 3.12.3

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

(1) real time qualifying credit 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 qualifying credit promotions where the customer may, for example, choose from reading a description of the qualifying credit, 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 qualifying credit 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 qualifying credit promotions (see MCOB 3.5.5 R(2)).

31/10/2004

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 qualifying credit 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 qualifying credit promotion communicated by the Internet, digital or other forms of interactive television is subject to the requirements in MCOB 3.6 (Form and content of non-real time qualifying credit promotions) and MCOB 3.8 (Form and content of real time qualifying credit promotions) as applicable.

31/10/2004

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 qualifying credit promotion rules.

31/10/2004

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