LIBF CeMAP (Certificate in Mortgage Advice and Practice) — All Questions

Where a firm gives advice on a regulated mortgage, the suitability rules in MCOB 4.7A require it to:

• a.Recommend a mortgage that is suitable for the customer, having assessed their needs and circumstances✓
• b.Recommend the mortgage paying the firm the highest procuration fee, provided the customer can afford the payments
• c.Recommend any mortgage the customer requests without any assessment
• d.Provide information but never a recommendation

MCOB 4.7A requires that, on an advised sale, the firm assesses the customer's needs and circumstances and only recommends a regulated mortgage contract that is suitable, taking account of factors such as affordability, the term, and the customer's objectives.

Under the Mortgage Credit Directive, the pre-contract disclosure document a customer must receive, illustrating the mortgage's costs and features, is the:

• a.Consumer Duty outcomes statement
• b.Annual percentage rate table only
• c.Land Registry title plan
• d.European Standardised Information Sheet (ESIS)✓

Since the Mortgage Credit Directive (in force 21 March 2016), the ESIS replaced the old Key Facts Illustration (KFI) as the standard pre-application and pre-contract disclosure document (MCOB 5A), setting out the loan's key features, costs and the APRC.

A mortgage sale may proceed on an execution-only (non-advised) basis only where:

• a.The customer has rejected advice or the sale meets the specific MCOB conditions, and no personal recommendation is made✓
• b.The customer is a first-time buyer who has confirmed in writing that they do not want to receive any form of advice at all
• c.The adviser makes a recommendation but records no advice
• d.The loan is above £500,000

MCOB restricts execution-only sales: most interactive sales must be advised, and an execution-only route is only available in defined circumstances where no personal recommendation is made and the customer positively elects to proceed without advice (MCOB 4.8A).

A mortgage financial promotion issued by an authorised firm must be:

• a.Approved by the Bank of England
• b.Clear, fair and not misleading✓
• c.Free of any risk warnings
• d.Sent only to existing customers

MCOB and the FCA's Principles require that communications and financial promotions be clear, fair and not misleading, so that customers are not given a false impression of a mortgage's costs, risks or features.

At the outset of a mortgage interview, the adviser should disclose:

• a.The customer's full credit score and personal financial details to selected third-party lenders
• b.The nature and scope of the service and how the adviser will be paid, including any fees✓
• c.Only the lender's name
• d.Nothing until the application is submitted

MCOB disclosure rules require the firm to explain, early in the process, the type of service offered (advised or execution-only, whole-of-market or restricted) and the basis of its remuneration, including any fees the customer will pay, so the customer can make an informed choice.