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

The Financial Conduct Authority (FCA) derives its powers principally from:

• a.The Consumer Credit Act 1974 alone, together with the voluntary lending codes issued by the trade associations
• b.The Mortgage Credit Directive
• c.The Data Protection Act 2018
• d.The Financial Services and Markets Act 2000, as amended by the Financial Services Act 2012✓

FSMA 2000, as amended by the Financial Services Act 2012, established the FCA and sets out its objectives and rule-making powers. The other statutes address specific areas such as credit, mortgages and data protection, but do not constitute the FCA.

Which of the following is one of the FCA's three operational objectives under FSMA 2000?

• a.Fixing mortgage interest rates
• b.Guaranteeing every lender a profit
• c.Securing an appropriate degree of protection for consumers✓
• d.Setting house prices

The FCA's three operational objectives are consumer protection, market integrity, and promoting effective competition in the interests of consumers, supporting its single strategic objective that markets function well (FSMA 2000, ss.1B-1E).

Under the FCA's Consumer Duty, in force from 31 July 2023, firms must:

• a.Apply the Duty only to wholesale market counterparties
• b.Prioritise shareholder returns over customer outcomes
• c.Act to deliver good outcomes for retail customers✓
• d.Treat all customers identically regardless of their needs

The Consumer Duty introduced Principle 12, requiring firms to act to deliver good outcomes for retail customers, with detailed rules in PRIN 2A and four outcomes: products and services, price and value, consumer understanding, and consumer support. It sets a higher standard than the earlier Treating Customers Fairly framework.

If an authorised mortgage adviser gives negligent advice and later becomes insolvent, an eligible consumer's claim may be protected by the Financial Services Compensation Scheme (FSCS) up to:

• a.There is no protection for advice claims
• b.£170,000
• c.£50,000
• d.£85,000✓

The FSCS protects eligible claims for home-finance advice and arranging up to £85,000 per person per firm (raised from £50,000 in April 2019). It is the compensation scheme of last resort when an authorised firm cannot meet claims made against it.

A customer who is dissatisfied with how a mortgage firm has handled their complaint, and who cannot resolve it with the firm, may refer it to the:

• a.Financial Services Compensation Scheme
• b.Bank of England
• c.Financial Ombudsman Service✓
• d.HM Land Registry

The Financial Ombudsman Service (FOS) resolves unresolved complaints between consumers and financial firms. Its service is free to consumers and its decisions are binding on the firm if the consumer accepts them. The FSCS, by contrast, pays compensation when an authorised firm has failed.

Before advising on regulated mortgage contracts, a firm must generally:

• a.Hold a banking licence from the Bank of England
• b.Be authorised by the FCA, or act as an appointed representative of an authorised firm✓
• c.Obtain planning permission
• d.Register only with HM Land Registry and the local trading standards office before giving any advice

Advising on and arranging regulated mortgage contracts is a regulated activity under FSMA 2000, so a firm must be FCA-authorised or act as an appointed representative of an authorised principal that accepts responsibility for its regulated activities.

The 'general prohibition' means that a person must not carry on a regulated activity in the UK unless they are authorised or exempt. It is set out in:

• a.The Bribery Act 2010
• b.The Consumer Rights Act 2015, supplemented by the various voluntary lending codes issued by the banking and building-society trade associations
• c.The Mortgage Credit Directive
• d.Section 19 of the Financial Services and Markets Act 2000✓

FSMA 2000 s.19 contains the general prohibition: carrying on a regulated activity without authorisation or exemption is a criminal offence, and any resulting agreement is generally unenforceable against the customer. This is the foundation of the UK authorisation regime.

The 'financial promotion restriction' provides that a person must not, in the course of business, communicate an invitation or inducement to engage in investment or lending activity unless it is approved by an authorised person or an exemption applies. This restriction is found in:

• a.The Data Protection Act 2018
• b.Section 21 of FSMA 2000✓
• c.The Land Registration Act 2002
• d.Section 19 of FSMA 2000

FSMA 2000 s.21 restricts financial promotions: an unauthorised person's promotion must be approved by an authorised firm (which must itself have the relevant approval permission), unless exempt. This ensures that promotions meet the FCA's clear, fair and not misleading standard.

Under the UK's 'twin peaks' model of regulation, prudential supervision of banks, insurers and major investment firms is carried out by the:

• a.Prudential Regulation Authority (PRA), part of the Bank of England✓
• b.The Competition and Markets Authority, working jointly with HM Treasury and the local trading standards departments across each region
• c.Financial Ombudsman Service
• d.HM Land Registry

Since the Financial Services Act 2012, the PRA (part of the Bank of England) supervises the safety and soundness of deposit-takers, insurers and major investment firms, while the FCA regulates conduct. Larger firms are therefore 'dual-regulated'; most mortgage intermediaries are solo-regulated by the FCA.

A small mortgage brokerage that advises and arranges regulated mortgages, but does not lend or take deposits, will normally be:

• a.Solo-regulated by the FCA✓
• b.Regulated by the Bank of England's Monetary Policy Committee
• c.Regulated solely by the PRA
• d.Dual-regulated by the PRA and FCA

Firms that only carry on conduct activities such as advising and arranging, without prudential-critical activities like deposit-taking or insurance underwriting, are solo-regulated by the FCA. Only deposit-takers, insurers and PRA-designated investment firms are dual-regulated.

Before granting authorisation, and on an ongoing basis, the FCA requires a firm to meet the 'threshold conditions'. These are best described as:

• a.The minimum number of clients and the minimum volume of annual lending a firm must achieve before it may apply to the regulator
• b.The maximum interest rate a lender may charge
• c.The pass mark for the CeMAP examination
• d.The minimum standards a firm must satisfy to become and remain authorised, such as appropriate resources and suitability✓

The threshold conditions (FSMA 2000 Schedule 6 and the FCA's COND sourcebook) are the minimum standards for authorisation, covering matters such as location, effective supervision, adequate financial and non-financial resources, suitability and a viable business model. A firm must meet them continuously, not just at authorisation.

The specific regulated activities a firm is permitted to carry on are set out in its:

• a.Part 4A permission (scope of permission)✓
• b.The buildings insurance policy the firm takes out over its own offices and the professional indemnity cover held by its advisers
• c.VAT registration
• d.Land Registry title

When the FCA authorises a firm under Part 4A of FSMA 2000, it grants a permission specifying which regulated activities and which types of investment/product the firm may deal with. Acting outside the scope of that permission breaches the requirements of authorisation.

Under the Senior Managers and Certification Regime (SM&CR), individuals holding the most senior roles, such as a firm's chief executive, must be:

• a.Elected by the firm's customers
• b.Licensed by HM Land Registry
• c.Registered only with Companies House and separately listed on the local authority's register of approved financial businesses
• d.Pre-approved by the FCA to perform a Senior Management Function✓

Under the SM&CR, individuals performing a Senior Management Function (SMF) must be approved by the regulator before taking up the role and must have a Statement of Responsibilities. The regime aims to make senior individuals personally accountable for the areas they run.

Under the SM&CR certification regime, staff who are not Senior Managers but whose role could cause significant harm to customers or the firm must be:

• a.Approved directly by the FCA before starting
• b.Licensed by the local authority
• c.Certified by the firm itself as fit and proper, at least annually✓
• d.Registered directly with the Financial Ombudsman Service and re-examined by it in person before dealing with any retail customers

Certification-function staff are not pre-approved by the FCA; instead the firm itself must assess and certify them as fit and proper at least once a year. This includes many customer-facing mortgage advisers whose advice could cause significant harm.

The individual Conduct Rules under the SM&CR require that a person subject to them must, among other things:

• a.Act with integrity and pay due regard to the interests of customers and treat them fairly✓
• b.Only ever recommend the firm's most profitable product to each customer, provided that customer can technically afford the monthly payments
• c.Avoid all contact with the FCA
• d.Guarantee investment returns to clients

The individual Conduct Rules (COCON) include acting with integrity, acting with due skill, care and diligence, being open and cooperative with regulators, paying due regard to customers' interests and treating them fairly, and observing proper market conduct. They apply to almost all staff in a regulated firm.

When assessing whether an individual is 'fit and proper' to perform a controlled or certification function, a firm will consider their:

• a.Nationality only
• b.Preferred lender only
• c.Honesty and integrity, competence and capability, and financial soundness✓
• d.Their marital status, their nationality and the amount of the deposit they are personally able to put towards the purchase

The FCA's 'fit and proper' test (FIT) focuses on honesty, integrity and reputation; competence and capability (including qualifications and training); and financial soundness. Firms must assess this before appointment and on an ongoing basis.

The FCA's SYSC sourcebook is primarily concerned with:

• a.Registering land and legal charges at HM Land Registry and dealing with the conveyancing paperwork on behalf of the borrower
• b.A firm's senior management arrangements, systems and controls✓
• c.The wording of mortgage deeds
• d.Setting stamp duty rates

SYSC (Senior Management Arrangements, Systems and Controls) requires firms to organise and control their affairs responsibly and effectively, with adequate risk management, compliance, record-keeping and governance. It supports Principle 3, that a firm must take reasonable care to organise its affairs responsibly.

The FCA's Principles for Businesses (PRIN) are:

• a.Optional guidelines that firms are free to ignore whenever complying with them would be inconvenient or reduce their profit margin
• b.A list of approved lenders
• c.Rules that apply only to unauthorised firms
• d.High-level, fundamental obligations that underpin the detailed rules and apply to authorised firms✓

The Principles for Businesses are fundamental, high-level obligations (for example integrity, skill/care/diligence, management/control, and customers' interests). Breaching a Principle is itself actionable by the FCA, even where no more detailed rule has been broken.

Principle 6 of the FCA's Principles for Businesses states that a firm must:

• a.Lend only to homeowners
• b.Never communicate with the regulator and instead deal with all supervisory correspondence through the firm's external solicitors only
• c.Maximise its own profit
• d.Pay due regard to the interests of its customers and treat them fairly✓

Principle 6 requires firms to pay due regard to the interests of their customers and treat them fairly - the basis of the 'Treating Customers Fairly' (TCF) framework. For most retail business this has been reinforced by Principle 12 and the Consumer Duty.

The FCA's Consumer Duty is built around four specified outcomes. These are products and services, price and value, consumer understanding and:

• a.Consumer support✓
• b.Advertising spend
• c.Branch numbers
• d.Shareholder value

The Consumer Duty's four outcomes are: products and services (fit for the target market), price and value (fair value), consumer understanding (clear communications) and consumer support (meeting customers' needs). They sit under Principle 12 and PRIN 2A.

The three 'cross-cutting rules' that support the Consumer Duty require firms to act in good faith, avoid causing foreseeable harm and:

• a.Charge the same fee to everyone
• b.Only sell to existing customers
• c.Guarantee a profit to every customer and compensate any customer whose investment or property does not increase in value over the term
• d.Enable and support customers to pursue their financial objectives✓

The three cross-cutting rules under the Consumer Duty are: act in good faith, avoid foreseeable harm, and enable and support retail customers to pursue their financial objectives. They shape how firms must deliver the four outcomes.

Under the Consumer Duty's 'price and value' outcome, a firm must ensure that:

• a.Its products are always the very cheapest available anywhere in the market, even where that would make the product unprofitable to run
• b.It never charges any fees
• c.Prices are set by the Bank of England
• d.There is a reasonable relationship between the price a customer pays and the benefit they receive (fair value)✓

The price and value outcome does not require the lowest price; it requires fair value - a reasonable relationship between total price and the benefits of the product or service. Firms must carry out and evidence a fair-value assessment.

The maximum binding award the Financial Ombudsman Service (FOS) can require a firm to pay, for complaints about acts or omissions on or after 1 April 2019, is (subject to periodic review):

• a.£430,000✓
• b.£1,000,000
• c.Unlimited
• d.£25,000

The FOS's higher award limit is £430,000 for complaints about acts or omissions on or after 1 April 2019 (a lower limit applies to earlier events). The limit is index-linked and reviewed periodically, so the current figure should always be checked. The ombudsman can recommend more, but only up to the limit is binding.

A key feature of the Financial Ombudsman Service is that its decision is:

• a.Binding on the firm if the consumer accepts it, but the consumer remains free to reject it and go to court✓
• b.Only advisory and binding on no one
• c.Automatically enforced by HM Land Registry
• d.Binding on the consumer but not on the firm, so the firm may simply decline to pay any award that the ombudsman decides to make

If the consumer accepts a final FOS decision it becomes binding on the firm and enforceable through the courts. If the consumer rejects it, they are not bound and may still pursue the matter in court. The service is free to consumers.

The general time limit for referring a complaint to the Financial Ombudsman Service is:

• a.There is no time limit at all
• b.One calendar month from the event complained of, with absolutely no exceptions permitted whatever the consumer's personal circumstances
• c.Twenty years from the event in every case
• d.Six years from the event complained of, or (if later) three years from when the consumer knew or ought reasonably to have known they had cause to complain✓

Under DISP, the FOS can normally only consider a complaint made within six years of the event, or if later within three years of the consumer becoming aware (or reasonably ought to have been aware) of cause for complaint. Separately, the consumer usually has six months from the firm's final response to refer the matter.

Under the FCA's DISP complaint-handling rules, a firm must send the complainant a final response (or explain why it cannot yet do so) within:

• a.Two years
• b.Eight weeks of receiving the complaint✓
• c.24 hours
• d.Ten working days in all cases, regardless of the seriousness or complexity of the complaint or the amount of money involved

DISP requires a firm to resolve or issue a final response within eight weeks of receiving a complaint. If it cannot, it must explain why and tell the complainant of their right to refer the matter to the Financial Ombudsman Service.

Once a firm issues its final response to a complaint, the complainant generally has how long to refer the matter to the Financial Ombudsman Service?

• a.There is no deadline
• b.24 hours
• c.Six months✓
• d.One week

Under DISP, a consumer normally has six months from the date of the firm's final response to refer the complaint to the FOS. The final response must tell the consumer about this right and the six-month time limit.

For the purposes of the FCA's complaints rules, a 'complaint' is best defined as:

• a.A general enquiry about current interest rates or product features that a customer makes before deciding whether to apply for a mortgage
• b.Any request for a mortgage
• c.A request to change a payment date
• d.An expression of dissatisfaction, oral or written, alleging the complainant has suffered (or may suffer) financial loss, material distress or inconvenience✓

DISP defines a complaint broadly as any oral or written expression of dissatisfaction about a firm's provision of a financial service, where the complainant alleges financial loss, material distress or material inconvenience. This wide definition means firms must log and handle many everyday grievances as complaints.

The Financial Services Compensation Scheme (FSCS) is best described as:

• a.A government department that sets interest rates
• b.A private insurer that firms must buy cover from
• c.A body that settles day-to-day disputes between consumers and financial firms that are still trading and able to meet claims against them
• d.The compensation scheme of last resort, funded by levies on authorised firms, which pays eligible claimants when a firm is unable or unlikely to meet claims against it✓

The FSCS is the UK's statutory compensation scheme of last resort. It is funded by levies on authorised firms and pays eligible claimants when an authorised firm has failed (become insolvent) and cannot meet valid claims. Resolving disputes with a solvent firm is instead the role of the FOS.

Which of the following claimants would typically be eligible for FSCS protection in relation to a failed home-finance intermediary?

• a.A large multinational bank whose treasury team dealt with the failed intermediary as part of its wholesale market activities
• b.A private individual who received negligent regulated mortgage advice✓
• c.The FCA
• d.A central government department

The FSCS generally protects private individuals and smaller businesses. Large financial institutions, government bodies and the regulators themselves are not eligible claimants. Home-finance advice and arranging is protected up to £85,000 per person per firm.

Which of the following is a regulated activity under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 in relation to a regulated mortgage contract?

• a.Valuing the borrower's car
• b.Advising a customer on a particular regulated mortgage contract✓
• c.Printing mortgage brochures
• d.Cleaning the lender's offices and maintaining the computer systems used to store completed mortgage application documents

The RAO specifies the regulated activities for regulated mortgage contracts, including advising on, arranging (bringing about), entering into, and administering them. Giving a personal recommendation on a specific regulated mortgage is 'advising' and requires authorisation or exemption.

An intermediary who introduces a client to a lender and helps complete and submit the mortgage application is carrying on the regulated activity of:

• a.Administering an existing mortgage by collecting the monthly payments and notifying the borrower of any change in the interest rate
• b.Arranging (bringing about) a regulated mortgage contract✓
• c.Deposit-taking
• d.Underwriting insurance

'Arranging' covers making arrangements for a client to enter into a regulated mortgage contract, such as helping to complete and submit the application. It is a regulated activity distinct from 'advising', so a firm's permission must cover the activities it actually performs.

'Administering a regulated mortgage contract' refers to:

• a.Giving initial advice on which mortgage to take and preparing the personal recommendation before the application is submitted
• b.Setting the Bank of England Bank Rate
• c.Notifying the borrower of changes in payments and collecting or recovering payments due under the mortgage✓
• d.Building the property

Administering means servicing the loan after completion - for example collecting payments and notifying the borrower of rate changes. It is a separate regulated activity, which is why mortgage servicers must be authorised even if they gave no advice.

If an unauthorised person enters into a regulated mortgage contract as lender, in breach of the general prohibition, the agreement is:

• a.Fully enforceable against the borrower
• b.Generally unenforceable against the borrower without a court order, and the borrower may recover money paid✓
• c.Automatically registered at HM Land Registry and treated as a fully valid legal charge enforceable against the borrower in every case
• d.Converted into a buy-to-let loan

Under FSMA 2000, agreements made by a person carrying on a regulated activity in breach of the general prohibition are generally unenforceable against the customer, who may recover money paid and compensation, unless the court allows enforcement. This is a powerful consumer safeguard against unauthorised lending.

An appointed representative (AR) carries on regulated activities under the responsibility of:

• a.The Financial Ombudsman Service, which supervises the representative and pays any compensation due if the representative fails
• b.An authorised principal firm that has accepted responsibility for the AR's regulated activities✓
• c.HM Land Registry
• d.The local authority

An appointed representative is exempt from needing its own authorisation because an authorised 'principal' firm accepts full regulatory responsibility for the AR's regulated activities under a written contract. The principal must oversee and monitor the AR's conduct.

An appointed representative may only carry on regulated activities that are:

• a.Anything it chooses, without limit
• b.Only deposit-taking
• c.Only activities relating to commercial property and buy-to-let lending, but never any residential regulated mortgage business
• d.Within the scope of the written agreement with, and the permissions of, its principal firm✓

An AR can only conduct the regulated activities permitted by its principal and set out in their agreement; it cannot exceed the principal's own permission. The principal is required to ensure the AR stays within scope and to monitor it.

Under the Money Laundering Regulations 2017, a firm must carry out customer due diligence (CDD), which includes:

• a.Identifying and verifying the customer's identity, normally before establishing the business relationship✓
• b.Guaranteeing the customer a mortgage
• c.Reporting the customer to HM Land Registry and to the local authority before the mortgage application can be formally submitted
• d.Fixing the customer's interest rate

The Money Laundering Regulations 2017 require CDD - identifying and verifying the customer (and any beneficial owner) and understanding the purpose of the relationship - generally before or at the start of the business relationship. Enhanced due diligence applies to higher-risk situations such as politically exposed persons (PEPs).

The individual within a regulated firm to whom staff report knowledge or suspicion of money laundering is the:

• a.Financial Ombudsman
• b.The external auditor of the Bank of England, who reviews every suspicious transaction reported by authorised financial firms
• c.Money Laundering Reporting Officer (MLRO), also known as the nominated officer✓
• d.Land Registrar

Staff who know or suspect money laundering must report internally to the firm's MLRO (nominated officer), who decides whether to submit a suspicious activity report (SAR) to the National Crime Agency. This internal-then-external routing is required by POCA 2002 and the MLR 2017.

'Tipping off' in the context of money laundering means:

• a.Rounding a customer's monthly payment up to the nearest pound and retaining the small difference in a separate suspense account
• b.Rewarding staff with a bonus
• c.Improperly disclosing to the person concerned that a suspicious activity report has been or may be made, in a way likely to prejudice an investigation✓
• d.Giving a client a small gift

Tipping off is a criminal offence under the Proceeds of Crime Act 2002: disclosing to the suspect (or others) that a SAR has been or may be made, or that a money-laundering investigation is under way, where that is likely to prejudice the investigation. Advisers must therefore report suspicions without alerting the client.

The principal money-laundering offences (concealing, arranging and acquiring/using criminal property) are contained in the:

• a.Proceeds of Crime Act 2002✓
• b.Financial Services Act 2012
• c.Consumer Rights Act 2015
• d.Land Registration Act 2002

The Proceeds of Crime Act 2002 (POCA) sets out the principal money-laundering offences - concealing/disguising, arranging, and acquiring, using or possessing criminal property - as well as the failure-to-disclose and tipping-off offences. The MLR 2017 sit alongside it, setting out preventive obligations.

Under the Bribery Act 2010, a commercial organisation can commit an offence of failing to prevent bribery. It has a defence if it can show that it:

• a.Employed fewer than 100 staff
• b.Had adequate procedures in place designed to prevent bribery✓
• c.Made a large profit that year
• d.Was genuinely unaware that bribery of a foreign official was illegal under the laws of the country where the payment was made

The Bribery Act 2010 creates a corporate offence of failing to prevent bribery by associated persons. The organisation's defence is to prove it had 'adequate procedures' in place to prevent bribery, so firms must maintain anti-bribery policies, training and controls.

When a mortgage adviser processes a client's personal data, they must comply with the UK GDPR and the Data Protection Act 2018, which require that personal data be:

• a.Processed lawfully, fairly and transparently, and kept only as long as necessary✓
• b.Sold to marketing companies for profit
• c.Kept forever regardless of need
• d.Shared freely with any third party who asks for it, as long as the customer's mortgage application is still being processed

The UK GDPR and DPA 2018 require personal data to be processed lawfully, fairly and transparently, collected for specified purposes, kept accurate, held no longer than necessary and kept secure. A firm must identify a lawful basis (such as contract, legitimate interests or consent) for each processing activity.

The UK regulator responsible for enforcing data protection law is the:

• a.HM Land Registry
• b.Bank of England
• c.The Financial Conduct Authority, acting jointly with the Prudential Regulation Authority for all data-protection enforcement matters
• d.Information Commissioner's Office (ICO)✓

The Information Commissioner's Office (ICO) enforces the UK GDPR and Data Protection Act 2018, can investigate breaches and issue substantial fines. Firms must also often register (pay the data protection fee) with the ICO.

Under UK data protection law, a customer who asks a firm for a copy of the personal data it holds about them is exercising their:

• a.Right of access (a subject access request)✓
• b.Right to a tax refund
• c.Right to a mortgage
• d.The statutory right to occupy the property free of the lender's charge once the mortgage application has been formally approved

Individuals have a right of access under the UK GDPR - the subject access request (SAR) - to obtain a copy of their personal data, usually free and within one month. Other rights include rectification, erasure, restriction, portability and objection.

Before an authorised firm approves the financial promotion of an unauthorised person, it must be satisfied the promotion is:

• a.The longest and most detailed advertisement possible, so that every conceivable feature of the product is described in full to the reader
• b.Clear, fair and not misleading, and it must have the FCA permission required to approve promotions✓
• c.Directed only at overseas customers
• d.Free of any mention of risks

An authorised firm 'approving' a s.21 promotion for an unauthorised person must ensure it is clear, fair and not misleading, and (under reforms to the approval gateway) must itself have specific FCA permission to approve promotions. This prevents unauthorised persons circulating unfair promotions.

The FCA's Training and Competence (TC) rules require that an employee who advises retail customers on regulated mortgages must:

• a.Attain an appropriate qualification and be assessed as competent, with competence maintained thereafter✓
• b.Work only in a branch
• c.Never be formally assessed again once they have first passed the relevant qualification examination at the start of their career
• d.Hold a banking licence personally

Under TC, advisers must attain an appropriate qualification (such as CeMAP), be assessed as competent before advising customers without supervision, and maintain their competence through ongoing training and assessment. This underpins the fitness of customer-facing staff.

To maintain competence, a qualified mortgage adviser is expected to undertake ongoing:

• a.Land registration
• b.Continuing professional development (CPD)✓
• c.Payment of stamp duty
• d.Property construction and maintenance work on the security, so that the adviser can personally inspect the condition of each house

Maintaining competence requires ongoing continuing professional development (CPD) - keeping technical knowledge, regulatory awareness and skills up to date. Firms must have arrangements to ensure advisers remain competent throughout their careers.

Under the Equality Act 2010, a mortgage adviser must not unlawfully discriminate against a client because of a protected characteristic such as:

• a.The type of property
• b.The size of their deposit and the loan-to-value band into which their proposed borrowing happens to fall on application
• c.Their chosen lender
• d.Their age, disability, race, religion, sex or other protected characteristic✓

The Equality Act 2010 protects characteristics including age, disability, gender reassignment, marriage/civil partnership, pregnancy/maternity, race, religion or belief, sex and sexual orientation. Firms must not discriminate and may need to make reasonable adjustments, for example for disabled customers.

FCA guidance on the fair treatment of vulnerable customers expects firms to:

• a.Charge vulnerable customers a higher rate
• b.Refuse to deal with anyone who shows any sign of vulnerability and instead direct them to seek advice from a debt charity
• c.Recognise and respond to the needs of vulnerable customers so they receive outcomes as good as those of other customers✓
• d.Ignore vulnerability as irrelevant

The FCA expects firms to understand and respond to the needs of vulnerable customers - for example those affected by poor health, life events, low resilience or low capability - so they achieve outcomes as good as other customers. Vulnerability is central to the Consumer Duty.

Since the Mortgage Credit Directive was implemented, second-charge (secured) regulated mortgage lending is regulated:

• a.Under the FCA's MCOB rules, in the same conduct regime as first-charge regulated mortgages✓
• b.Not at all
• c.Under the Consumer Credit Act 1974 exactly as before, entirely separately from the FCA's mortgage conduct-of-business rules
• d.By HM Land Registry

Before 21 March 2016 second-charge lending was regulated under the Consumer Credit Act regime; the Mortgage Credit Directive moved it into MCOB, so second-charge regulated mortgages now follow the same conduct rules (advice, ESIS, affordability) as first-charge mortgages.