Annual Statements and Early Repayment | Mortgage and Home Finance Conduct of Business MCOB | Template for FCA Applications and Authorised Firms

Annual Statements

In compliance with the requirements under MCOB 7.5.2 R, the company always ensures that we provide every customer with a statement on an annual basis [edit if you provide statements more frequently].

Such statements cover the regulated mortgage contract and any tied products that have been purchased through us and provide the customer with information about the existence of any linked borrowing or linked deposits, or any other products purchased through us where the payments for those products are combined with the payments on the regulated mortgage contract.

[Insert a copy of the standard Annual Statement Template or the reference the location on an external system]

Our standard annual statement has been reviewed and authorised to comply with the MCOB 7.5.2R requirements and as such contains the following: –

• Information on the type of regulated mortgage contract, which includes:
  • a clear statement of whether the regulated mortgage contract is an interest-only mortgage, or repayment mortgage, or a combination of both
  • a prominent reminder, where all the regulated mortgage contract is an interest-only mortgage, that:
    • the customer’s payments to the company do not include any costs of the repayment strategy
    • the customer should have in place arrangements to pay off the capital and should check the performance of any investments they might have in place for this purpose. The text used in our annual statement to comply with this requirement is ‘This is an interest-only mortgage. Your mortgage payments [include the costs of a savings plan/an investment that you] / [do not include the costs of any savings plan or other investment you may] have arranged to build up a lump sum to repay the amount you borrowed. It is important to check regularly that your savings plan or other investment is on track to repay this mortgage at the end of the term.’
  • a prominent reminder, where only part of the regulated mortgage contract is an interest-only mortgage, that:
    • the customer’s payments to the company do not include any costs of the repayment strategy
    • the customer should have in place arrangements to pay off the amount of the loan that is on an interest-only basis and should check the performance of any investments they might have in place for this purpose. The text used in our annual statement to comply with this requirement is ‘This mortgage includes [insert amount] borrowed on interest-only terms. Your mortgage payments [include the costs of a savings plan/an investment that you]/[do not include the costs of any savings plan or other investment you may] have arranged to build up a lump sum to repay this amount. It is important to check regularly that your savings plan or other investment is on track to repay the interest-only part of your mortgage at the end of the term.’

• Details of the following transactions and information on the regulated mortgage contract during the period since the last statement (or, where the statement is the first statement, since the customer entered into the regulated mortgage contract):
  • the date and amount of each payment made
  • the amount of each payment that was due during the statement period
  • the rate(s) of interest applicable to the regulated mortgage contract during the statement period and, if applicable, the date(s) on which the rate(s) of interest changed
  • the amount of interest charged under the regulated mortgage contract during the statement period
  • any other amounts charged under the regulated mortgage contract during the statement period, including fees and any amounts due in relation to tied products
• A reminder that the customer should contact the firm if they are unable to make their regular payments under the regulated mortgage contract
• Information at the date the statement is issued on:
  • the amount owed by the customer under the regulated mortgage contract
  • the actual remaining term of the regulated mortgage contract (but if the term of the regulated mortgage contract is open-ended this should be clearly stated)
  • the date at which any early repayment charges on the regulated mortgage contract cease to apply
  • where applicable, the early repayment charge that applies, expressed as a monetary amount
  • the cost of redeeming the regulated mortgage contract
  • where applicable, the date on which the requirement for the customer to purchase any tied products from us come to an end

6.12.3 Early Repayment

In all instances where the company discharges its services as an MCD mortgage lender, we always ensure to give any consumer who enters into an MCD regulated mortgage contract with us, the right to discharge fully or partially his obligations under that MCD regulated mortgage contract prior to its expiry.

Where any consumer exercises their right to the above, we will always reduce the total cost of the credit to the consumer by an amount equal to the interest and costs for the remaining duration of the MCD regulated mortgage contract.

Below are the additional disclosures (over and above those stated in sections 16.12 and 16.13 of this manual), as required by the companies under our obligations as an MCD Mortgage Lender and a provider or MCD regulated mortgage contracts. Where a consumer notifies us that they wish to discharge their obligations under an MCD regulated mortgage contract prior to its expiry, we always provide the consumer, without delay, with the information necessary to allow them to consider that option.

This information always: –

• Quantifies the implications for the consumer of discharging their obligations prior to the expiry of the MCD regulated mortgage contract
• Sets out clearly any assumptions that have been used (which are always ensured and reviewed to be reasonable and justifiable)