The Mortgage Conduct of Business (MCOB) Advising and Selling standards apply to businesses that advise on or arrange mortgage contracts, equity release transactions, home purchase plans or sale and rent back agreements.
These standards highlight three of the FCA's Principles of Business that relate to customers' interests, communications with customers and relationships of trust with customers.
Our MCOB for Advising and Selling Course explains the FCA's business rules that apply to advising and selling in the home finance business.
This SCORM-compatible course is part of our FCA Compliance Library.
This course will prepare your employees to:
- Purpose of MCOB
- Proving mortage advice
- Understanding clients' needs - Case 1
- Understanding clients' needs - Case 2
- Understanding clients' needs
- Understanding clients' needs - Case 3
- Exercise: Understanding clients' needs - Case 3
- Understanding clients' needs - Case 3 continued
- Range of products
- Examples of disclosures on product range
- Remuneration
- Exercise: Remuneration
- Information versus advice
- Exercise: Information versus advice
- Obtaining information
- Appropriateness to needs & circumstances
- Assessment - special situations
- Decision to purchase
- Affordability
- Exercise: Assessing the affordability of Paul's mortgage
- Exercise: Verifying the income of self-employed customers
- The challenges of assessing affordability
- Exercise: The relationship between expenditure & affordability
- Key requirements: Income multiples
- Existing borrowers
- Exercise: Business customers
- Exercise: High Net Worth (HNW) mortgage customers
- Why some sales must always be advised
- Stress-testing affordability
- Achieving good outcomes when assessing affordability
- Exercise: Customer rejects the recommendation
- Exercise: Customer enquires about an unsuitable mortgage
- When advice is rejected
- Rules for proceeding on an execution-only basis
- Debt consolidation
Approximately 45-minute long e-learning course followed by a 10-question assessment.
Suitable for all staff - examples and interactivities designed for staff at all levels. No previous knowledge or experience is required.
SHARD-compliant, responsive display on all devices, accessibility on screen readers, visual design controlled via a client style sheet.
All Windows, Mac OSX, iOS, Android (Flash-free for mobile compatibility). AICC and SCORM 1.2-compliant, suitable for both hosted and deployed SCORM or AICC.
Fully customisable on Skillcast Portal CMS.
Pre-translated versions not available, but all text content can be exported for translation into all languages.
Based on UK legislation, but suitable for global audiences upon the removal of UK-specific references and translation as necessary.
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In the United Kingdom, the Senior Managers and Certification Regime (SMCR) is designed to foster accountability among senior managers at financial services companies while elevating ethical and professional standards across the entire workforce.
The SMCR replaced the Approved Persons Regime (APR), which was previously applicable to key individuals in regulated entities. In the realm of insurance companies, this regime effectively superseded the Senior Insurance Managers Regime (SIMR), marking a significant shift in how financial services firms manage and hold their senior personnel accountable.
There are three key parts to the SMCR: Senior Managers Regime, Certified Persons Regime and Conduct Rules.
1. Statement of Responsibilities - Set out the areas for which each Senior Manager is personally accountable
2. Responsibilities Map - This knits together the Statement of Responsibilities
3. Pre-approval for all Senior Managers - obtain this from the regulators before they carry out their roles
4. Duty of Responsibility - Ensure that Senior Managers understand their responsibilities and take reasonable steps to prevent regulatory breaches in their areas of responsibility
5. Identify all Certified Persons - These are all material risk takers
6. Fit and Proper Assessment - Of all Certified Persons, then re-assess on an annual basis
7. Training - Of all those who are subject to the Conduct Rules
SMCR rollout waves
The SMCR has been rolled out in three waves:
Wave 1: Banks, building societies, credit unions and large investment firms in March 2016 (updated July 2018)
Wave 2: Extended to insurance firms (those regulated by the FCA and PRA) in December 2018
Wave 3: The remaining financial services firms (otherwise known as 'solo-regulated firms' since they are regulated only by the FCA, not the FCA and PRA) came under the scope of this regime in December 2019.
SMCR categories
The third wave encompasses a wide variety of firms. To ensure that regulation is appropriate to their sizes and activities, the FCA has categorised them into three distinct groups:
Core: Firms that have to comply with the baseline requirements for solo-regulated firms
Limited scope: Firms that already had exemptions under the Approved Persons Regime, and are exempt from some requirements and require fewer senior management functions
Enhanced: Firms that have extra requirements - these are large, complex firms with potential impact on consumers or markets which warrant more attention from the FCA
Senior Managers have a statutory duty of responsibility "to take reasonable steps to prevent regulatory breaches in the areas of the firm for which they are responsible". The FCA can take action against a Senior Manager (SM) where it can show that:
The burden of proof for all these elements lies on the FCA. The SM does not need to show that they took reasonable steps - rather, it is for the FCA to prove that they did not. The defence against such action is if the senior manager can show that they took "the steps that are reasonable for a person in that position to take to prevent a regulatory breach from occurring".
The FCA must approve all senior managers, which assess whether they are fit and proper to perform the given function or responsibility.
Three key factors determine whether you are Fit and Proper:
When assessing a person's financial soundness, the FCA typically does not require a statement of the individual's assets or liabilities. Having limited financial means does not, by itself, impact the suitability of a person to perform a Senior Management Function (SMF).
When appointing a Senior Manager or Certified Person, firms must obtain regulatory references from all of their past employers from the past six years. This requirement also applies to the appointment of Non-Executive Directors (NEDs) who are not Senior Managers.
To meet this requirement, firms must keep records of disciplinary actions and fit and proper assessments for the past six years and avoid any agreements that would conflict with their disclosure obligations.
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