Home Search Sitemap Contact Bookmark

Free Dissertations - Business Dissertations

More Specifically With Regard To The Main Focus Of This Report The Consumer ...


More specifically with regard to the main focus of this report the Consumer Credit Act (CCA) 2006 has new requirements for lenders, which includes the requirement to ensure that there is not a biased relationship whether towards or against the borrower. Among other things the amendments also propose to abolish the protection limit of £25,000. On the Council of Mortgage Lender's (CML) website it hints about the inherent need to reduce disruption within the lender operating environment which such a measure may cause and at its concerns about dual regularisation.
On the other hand with regards to the FSA the CML announced that it was pleased with its regulations and had a few minor complaints such as the increased mortgage interview time by an additional 30 minutes and the rigidity of the rules which the FSA wants to impose even though some detractors argue that the FSA regulations fall short e.g. home reversion schemes and buy to let mortgage are not within the scope of the FSA as they are not defined as investments.

Insurance Conduct of Business (ICOB)

The FSA made the ICOB rules I response to European legislation i.e. the Insurance Mediation Directive (IMD).The ICOB are a set of rules which relate to the conduct preceding selling and administering of non-investment insurance e.g.; marketing; sales; providing literature to customers on products; and handling claims.
Once an activity is deemed to fall within the Regulated Activities Order, it then needs to be determined whether it is defined as non-investment insurance; if it does then the ICOB will apply; such as: general insurance contracts e.g. auto or household insurance; or pure protection contracts.
Among other things the ICOB guides firms on how they can avoid breaching the rules on imposing an excessive charge or unfair inducement. It highlights the issues firms should consider and when determining whether a charge is excessive, consideration must be given to:
the amount of the charge compared with similar charges elsewhere in the market;
the degree to which the charge is an abuse of the trust the retail customer has put in the intermediary; and
the nature and extent of the disclosure to the retail customer
Unfortunately commissions paid out on premiums are not covered.
For the mortgage and investment business markets ICOB states:
Mortgages mortgage firms can only call themselves independent if they offer a ‘whole of market' service and give consumers the opportunity to pay a fee for this service. This applies to both advised and non-advised sales;
Investment business A firm that calls itself independent in relation to investment business must offer 'whole of market' advice and give customers the opportunity to pay a fee for this service.

Mortgage Conduct of Business (MCOB)
The MCOB rules were also created by the FSA so that ‘business loans only apply where the loan is for a business purpose.


Thanks