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MCOB 3A.2 The fair, clear and not misleading rules

Fair, clear and not misleading communications

21/03/2016R
  1. (1)

    When a firm communicates information to a customer, it must take reasonable steps to do so in a way that is fair, clear and not misleading.

  2. (2)

    A firm must be able to show that it has taken reasonable steps to ensure that any illustration or ESIS is fair, clear and not misleading.

21/03/2016G

The purpose of MCOB 3A.2.1R is to restate, in a slightly amended form and as a separate rule, the part of Principle 7 (Communications with clients) that relates to communication of information.

28/02/2025G

A firm is reminded of its obligations under ESG 4.3.1R in relation to a communication, or when it communicates or approves a financial promotion, that references the sustainability characteristics of a product or service.

Communications to customers with different addresses

21/03/2016G

Where:

  1. (1)

    there are two or more customers or prospective customers in relation to the same home finance transaction;

  2. (2)

    a rule in MCOB requires the provision of information to such customers; and

  3. (3)

    the customers have different addresses

a firm should send the information to each address. If the customers share the same address, it will be sufficient to send a single copy of the information addressed to each of the customers.

Fair, clear and not misleading financial promotions

21/03/2016R
  1. (1)

    A firm communicating or approving a non-real time financial promotion of qualifying credit other than in (2), for a home reversion plan or a regulated sale and rent back agreement must be able to show that it has taken reasonable steps to ensure that the non-real time financial promotion is fair, clear and not misleading.

  2. (2)

    A firm communicating a financial promotion, or approving a non-real time financial promotion in relation to an MCD regulated mortgage contract must ensure that it:

    1. (a)

      is fair, clear and not misleading; and

    2. (b)

      in particular, does not contain wording that may create false expectations for a consumer regarding the availability or the cost of a credit.

[Note: article 10 of the MCD]

Fair, clear and not misleading rule: approval of home purchase plan financial promotions

21/03/2016R

A firm which approves a financial promotion of a home purchase plan must take reasonable steps to ensure that the financial promotion is fair, clear and not misleading.

Restrictions on use of terms

21/03/2016R

Any communication, including a non-real time financial promotion, must describe:

  1. (1)

    any early repayment charge as an “early repayment charge” and not use any other expression to describe such charges;

  2. (2)

    any higher lending charge as a “higher lending charge” and not use any other expression to describe such charges;

  3. (3)

    any lifetime mortgage as a “lifetime mortgage” and not use any other expression to describe such a mortgage;

  4. (4)

    any home reversion plan as a “home reversion plan” and not use any other expression to describe it; and

  5. (5)

    any regulated sale and rent back agreement as a “sale and rent back agreement” and not use any other expression such as “equity release” to describe it.