MCOB 2A.1 Remuneration: MCD regulated mortgage contracts

1. (1)

   An MCD mortgage lender must not remunerate its members of staff or MCD mortgage credit intermediaries in a way that impedes the MCD mortgage lender from complying with the rules.

2. (2)

   An MCD mortgage credit intermediary must not remunerate its members of staff or appointed representatives in a way that impedes the MCD mortgage credit intermediary from complying with the rules.

When establishing and applying remuneration policies for members of staff who are responsible for the assessment of affordability for consumers, an MCD mortgage lender must comply with the following principles:

1. (1)

   be consistent with, and promote, sound and effective risk management;

2. (2)

   not encourage risk-taking that exceeds the level of tolerated risk of the MCD mortgage lender;

3. (3)

   be in line with the business strategy, objectives, values and long-term interests of the MCD mortgage lender; and

4. (4)

   incorporate measures to avoid conflicts of interest, in particular by providing that remuneration is not contingent on the number or proportion of applications accepted.

An MCD mortgage lender must comply with MCOB 2A.1.2 R in a way and to the extent that is appropriate to its size, internal organisation and the nature, scope and complexity of its activities:

An MCD mortgage adviser, or any other firm that is an MCD mortgage lender or an MCD mortgage arranger that provides advisory services within the meaning of article 4(21) of the MCD, must ensure that the remuneration structure of the members of staff involved does not:

1. (1)

   prejudice the ability of the members of staff or the firm to act in the consumer's best interest; and

2. (2)

   be contingent on sales targets.