I ASSENT Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
2016
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
1989-47 Subsidiary 2016/055
Subsidiary Legislation made under ss. 5, 7 and 53 of the Financial Services
(Investment and Fiduciary Services) Act, as read with section 23(g)(i) of the
Interpretation and General Clauses Act and upon the Government by
sections 23(g)(ii) and 27 of that Act.
FINANCIAL SERVICES (MORTGAGE CREDIT)
REGULATIONS 2016
(LN. 2016/055)
Commencement 21.3.2016
Amending
enactments
Relevant current
provisions
Commencement
date
Transposing:
Directive 2008/48/EC
Directive 2013/36/EU
Directive 2014/17/EU
Regulation (EU) No 1093/2010
EU Legislation/International Agreements involved:
_______________________
ARRANGEMENT OF REGULATIONS.
Regulation
PART 1
PRELIMINARY AND INTERPRETATION
1. Title and commencement.
2. Interpretation.
3. Mortgage credit agreements.
4. Designation of competent authority.
5. Confidentiality.
PART 2
FINANCIAL EDUCATION
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
2016
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1989-47 Subsidiary 2016/055
6. Financial education of consumers.
PART 3
CONTROLLED MORTGAGE CREDIT ACTIVITY
7. Restriction on mortgage credit activity.
8. Non-credit institutions.
9. Licensing of mortgage credit intermediaries.
10. Exclusively-tied credit intermediaries.
11. Appointed representatives.
12. Register of mortgage credit intermediaries and appointed
representatives.
13. Supervision of mortgage credit intermediaries and appointed
representatives.
14. Revocation of licence or registration.
15. Mortgage credit intermediaries: freedom of establishment and
freedom to provide services.
16. Supervision of EEA branches in Gibraltar.
17. Reporting of breaches to home State authority.
PART 4
CONDITIONS APPLICABLE TO MORTGAGE CREDITORS,
MORTGAGE CREDIT INTERMEDIARIES AND APPOINTED
REPRESENTATIVES
18. Conduct of business obligations.
19. Obligation to provide information without charge.
20. Remuneration arrangements.
21. Knowledge and competence requirements.
PART 5
INFORMATION AND PRACTICES PRELIMINARY TO
CONCLUDING MORTGAGE CREDIT AGREEMENT
22. Advertising and marketing: general provisions.
23. Advertising: standard information.
24. Bundling and tying practices.
25. General information.
26. Pre-contractual information.
27. Information requirements: intermediaries and appointed
representatives.
28. Adequate explanations.
PART 6
ANNUAL PERCENTAGE RATE OF CHARGE
29. Calculation of the APRC.
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
2016
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
1989-47 Subsidiary 2016/055
PART 7
CREDITWORTHINESS ASSESSMENT
30. Obligation to assess creditworthiness.
31. Property valuation.
32. Disclosure and verification of consumer information.
PART 8
DATABASE ACCESS
33. Database access.
PART 9
MORTGAGE ADVISORY SERVICES
34. Standards for mortgage advisory services.
PART 10
FOREIGN CURRENCY AND VARIABLE RATE LOANS
35. Foreign currency loans.
36. Variable rate credit.
PART 11
SOUND EXECUTION OF MORTGAGE CREDIT AGREEMENTS
AND RELATED RIGHTS
37. Early repayment.
38. Flexible and reliable markets.
39. Information about borrowing rate changes.
40. Arrears and repossession or foreclosure.
PART 12
COOPERATION WITH OTHER COMPETENT AUTHORITIES
41. Obligation to cooperate.
PART 13
FINAL PROVISIONS
42. Offences and penalty fees.
43. Enforcement and sanctions.
44. Dispute resolution.
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1989-47 Subsidiary 2016/055
45. Imperative nature of rights.
SCHEDULE 1
CONSEQUENTIAL AMENDMENTS AND MODIFICATIONS
SCHEDULE 2
CALCULATION OF THE ANNUAL PERCENTAGE RATE OF
CHARGE (APRC)
SCHEDULE 3
EUROPEAN STANDARDISED INFORMATION SHEET (ESIS)
SCHEDULE 4
MINIMUM KNOWLEDGE AND COMPETENCE REQUIREMENTS
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
2016
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
1989-47 Subsidiary 2016/055
In exercise of the powers conferred upon the Minister by sections 5, 7 and
53 of the Financial Services (Investment and Fiduciary Services) Act, as
read with section 23(g)(i) of the Interpretation and General Clauses Act and
upon the Government by sections 23(g)(ii) and 27 of that Act and of all
other enabling powers, and in order to transpose Directive 2014/17/EU of
the European Parliament and of the Council of 4 February 2014 on credit
agreements for consumers relating to residential immovable property and
amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No
1093/2010, the Minister and the Government have made the following
Regulations–
PART 1
PRELIMINARY AND INTERPRETATION
Title and commencement.
1.(1) These Regulations may be cited as the Financial Services (Mortgage
Credit) Regulations 2016.
(2) These Regulations come into operation on 21 March 2016.
Interpretation.
2. In these Regulations–
“ancillary service” means a service offered to a consumer in conjunction
with a mortgage credit agreement;
“annual percentage rate of charge” and “APRC” mean the total cost of
the credit to the consumer, expressed as an annual percentage of
the total amount of credit (including, where applicable, the costs
referred to in regulation 29(2) which equates, on an annual basis, to
the present value of all future or existing commitments
(drawdowns, repayments and charges) agreed by the mortgage
creditor and the consumer;
“appointed representative” has the meaning given in regulation 11(2);
“borrowing rate” means the interest rate expressed as a fixed or variable
percentage applied on an annual basis to the amount of credit
drawn down;
“bridging loan” means a credit agreement either of no fixed duration or
which is due to be repaid within 12 months, used by the consumer
as a temporary financing solution while transitioning to another
financial arrangement for the immovable property;
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
2016
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1989-47 Subsidiary 2016/055
“competent authority” means–
(a) in Gibraltar, the FSC; and
(b) in an EEA State, an authority designated in that State under
Article 5 of the Mortgage Credit Directive;
“consumer” means an individual acting for purposes which are outside
that individual’s trade, business or profession;
“Consumer Credit Directive” means Directive 2008/48/EC of the
European Parliament and of the Council of 23 April 2008 on credit
agreements for consumers and repealing Council Directive
87/102/EEC;
“contingent liability or guarantee” means a mortgage credit agreement
which acts as a guarantee to another separate but ancillary
transaction, and where the capital secured against an immovable
property is only drawn down if an event specified in the agreement
occurs;
“credit institution” means a credit institution as defined in point 1 of
Article 4(1) of Regulation (EU) No. 575/2013 of the European
Parliament and of the Council of 26 June 2013 on prudential
requirements for credit institutions and investment firms and
amending Regulation (EU) No 648/2012;
“creditworthiness assessment” means the evaluation of the prospect for
the debt obligation resulting from a mortgage credit agreement to
be met;
“durable medium” means paper or an instrument which enables a
consumer to store information addressed personally to the
consumer in a way accessible for future reference for a period of
time adequate for the purposes of the information and which allows
the unchanged reproduction of the information stored;
“EBA” means the European Supervisory Authority (European Banking
Authority) established under Regulation (EU) No. 1093/2010 of the
European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European Banking
Authority), amending Decision No 716/2009/EC and repealing
Commission Decision 2009/78/EC;
“EEA State” means–
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1989-47 Subsidiary 2016/055
(a) a Member State of the European Union; and
(b) any other state which is a party to the European Economic
Area Agreement;
“exclusively-tied credit intermediary” has the meaning given in
regulation 10(2);
“FSC” means the Financial Services Commission established under
section 3 of the Financial Services Commission Act 2007;
“foreign currency loan” means a mortgage credit agreement where the
credit is–
(a) denominated in a currency other than that in which the
consumer receives the income or holds the assets from which
the credit is to be repaid; or
(b) denominated in a currency other than that of the EEA State or
Gibraltar in which the consumer is resident;
“group” means a group of mortgage creditors which are to be
consolidated for the purposes of drawing up consolidated accounts,
as defined in Directive 2013/34/EU of the European Parliament and
of the Council of 26 June 2013 on the annual financial statements,
consolidated financial statements and related reports of certain
types of undertakings;
“home State” means–
(a) where a mortgage creditor or mortgage credit intermediary is
an individual, the EEA State or Gibraltar in which his or her
head office is situated;
(b) where a mortgage creditor or mortgage credit intermediary is a
legal person, the EEA State or Gibraltar in which–
(i) its registered office is situated or,
(ii) if under its national law it has no registered office, its head
office is situated;
“host State” means the EEA State or Gibraltar, other than its home State,
in which a mortgage creditor or mortgage credit intermediary has a
branch or provides services;
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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1989-47 Subsidiary 2016/055
“the Minister” means the Minister with responsibility for financial
services;
“mortgage advisory services” (referred to as advisory services in the
Mortgage Credit Directive) means the provision of personal
recommendations to a consumer in respect of one or more
transactions relating to mortgage credit agreements but does not
include recommendations provided in the context of managing
existing debt (but only in Gibraltar)–
(a) by an insolvency practitioner (within the meaning of the
Insolvency Practitioner Regulations 2014); or
(b) as part of a public or voluntary debt advisory service which
does not operate on a commercial basis;
“mortgage credit activity” has the meaning given in regulation 7(2);
“mortgage credit agreement” (referred to as a credit agreement in the
Mortgage Credit Directive) has the meaning given in regulation
3(2);
“Mortgage Credit Directive” means Directive 2014/17/EU of the
European Parliament and of the Council of 4 February 2014 on
credit agreements for consumers relating to residential immovable
property and amending Directives 2008/48/EC and 2013/36/EU
and Regulation (EU) No 1093/2010, as the same may be amended
from time to time;
“mortgage credit intermediary” means a person who in the course of that
person’s trade, business or profession, for remuneration (whether in
pecuniary form or any other agreed form of financial consideration)
performs one or more mortgage intermediation activities and, in
doing so, is not–
(a) acting as a mortgage creditor; or
(b) merely introducing, either directly or indirectly, a consumer to
a mortgage creditor or mortgage credit intermediary;
“mortgage creditor” (referred to as a creditor in the Mortgage Credit
Directive) means a person who, in the course of that person’s trade,
business or profession, grants or promises to grant credit falling
within the scope of regulation 3;
“mortgage intermediation activities” means any one or more of the
following activities–
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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1989-47 Subsidiary 2016/055
(a) presenting or offering mortgage credit agreements to
consumers;
(b) assisting consumers by undertaking preparatory work or other
pre-contractual administration in respect of mortgage credit
agreements other than as referred to in paragraph (a); or
(c) concluding mortgage credit agreements with consumers on
behalf of a mortgage creditor;
“non-credit institution” has the meaning given in regulation 8(2);
“the Principal Act” means the Financial Services (Investment and
Fiduciary Services) Act;
“shared equity credit agreement” means a credit agreement where the
capital repayable is based on a contractually set percentage of the
value of the immovable property at the time of the capital
repayment or repayments;
“staff” means an individual–
(a) working for a mortgage creditor or mortgage credit
intermediary who is directly engaged in the activities covered
by these Regulations or who has contact with consumers in the
course of activities covered by these Regulations;
(b) working for an appointed representative who has contact with
consumers in the course of activities covered by these
Regulations;
(c) directly managing or supervising an individual to whom
paragraph (a) or (b) applies;
“tied credit intermediary” means a mortgage credit intermediary who acts
on behalf of and under the full and unconditional responsibility of–
(a) only one mortgage creditor;
(b) only one group; or
(c) a number of mortgage creditors or groups which does not
represent the majority of the market;
“total amount of credit” means the ceiling or the total sums made
available under a credit agreement;
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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“total amount payable by the consumer” means the sum of the total
amount of the credit and the total cost of the credit to the consumer;
“total cost of the credit to the consumer” means the total cost of the credit
to the consumer as defined in point (g) of Article 3 of the
Consumer Credit Directive, including the cost of any property
valuation which is necessary to obtain the credit but excluding–
(a) any registration fee for the transfer of ownership of the
immovable property; and
(b) any charge payable by the consumer for non-compliance with
the commitments laid down in the mortgage credit agreement;
Mortgage credit agreements.
3.(1) These Regulations apply to mortgage credit agreements.
(2) In these Regulations a “mortgage credit agreement” means a credit
agreement by which a mortgage creditor grants or promises to grant to a
consumer a credit in the form of a deferred payment, loan or other similar
financial accommodation and which–
(a) is secured by either–
(i) a mortgage (or other comparable security commonly used
within the EEA) on residential immovable property; or
(ii) a right related to residential immovable property; or
(b) is for the purpose of acquiring or retaining property rights in
land or in an existing or projected building.
(3) These Regulations do not apply to–
(a) equity release credit agreements where the mortgage creditor–
(i) contributes a lump sum, periodic payments or other forms
of credit disbursement in return for a sum deriving from the
future sale of a residential immovable property or a right
relating to residential immovable property; and
(ii) will not seek repayment of the credit until the consumer
dies or leaves the property to move into long-term care,
unless the consumer breaches a contractual obligation
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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1989-47 Subsidiary 2016/055
which allows the mortgage creditor to terminate the credit
agreement;
(b) credit agreements where the credit is granted by an employer to
its employees as a secondary activity where such a credit
agreement is offered free of interest or at an APRC lower than
those prevailing on the market and not offered to the public
generally;
(c) credit agreements where the credit is granted free of interest
and without any other charges except those that recover costs
directly related to the securing of the credit;
(d) credit agreements in the form of an overdraft facility and where
the credit has to be repaid within one month;
(e) credit agreements which are the outcome of a settlement
reached in court or before another statutory authority;
(f) credit agreements which relate to the deferred payment, free of
charge, of an existing debt and do not fall within the scope of
sub-regulation (2)(a).
Designation of competent authority.
4. The FSC is designated as the competent authority empowered to ensure
the application and enforcement of these Regulations and the Mortgage
Credit Directive.
Confidentiality.
5.(1) The FSC, its employees and former employees and any auditors and
experts instructed by the FSC are bound by the obligation of professional
secrecy.
(2) A person must not disclose any confidential information in
contravention of sub-regulation (1).
(3) Sub-regulation (1) is not contravened if confidential information is
disclosed–
(a) in summary or aggregate form;
(b) in accordance with–
(i) any other provision of these Regulations;
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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(ii) section 3 or 4 of the Financial Services (Information
Gathering and Co-operation) Act 2013; or
(iii) any law of Gibraltar concerning the disclosure of
information for the purpose of criminal proceedings; or
(c) for the purpose of the exchange or transmission of information
by the FSC in accordance with the law of Gibraltar or
European Union law.
PART 2
FINANCIAL EDUCATION
Financial education of consumers.
6.(1) The FSC must promote measures to support the education of
consumers in relation to responsible borrowing and debt management, in
particular in relation to mortgage credit agreements.
(2) Without limiting sub-regulation (1), the FSC must take steps to
encourage the provision of–
(a) clear and general information on the credit granting process in
order to guide consumers and, in particular, those obtaining
mortgage credit for the first time; and
(b) appropriate guidance on mortgage credit to consumers by
consumer organisations and relevant public bodies.
PART 3
CONTROLLED MORTGAGE CREDIT ACTIVITY
Restriction on mortgage credit activity.
7.(1) Mortgage credit activity is a controlled activity for the purposes of the
Principal Act and, subject to these Regulations, the Principal Act applies to
mortgage credit activity as it does to any other controlled activity.
(2) In these Regulations “mortgage credit activity” means–
(a) acting as a mortgage creditor;
(b) acting as a mortgage credit intermediary; or
(c) providing mortgage advisory services.
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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(3) A person must not carry on, or purport to carry any mortgage credit
activity in or from Gibraltar other than in accordance with–
(a) a licence granted under section 8 of the Principal Act (a “section
8 licence”); and
(b) these Regulations and any provision in or made under the
Principal Act.
(4) Sub-regulation (3)(a) does not apply to–
(a) a person who is authorised by the competent authority in an
EEA State to pursue mortgage credit activity and who is
pursuing that activity in Gibraltar either by the establishment of
a branch or under the freedom to provide services;
(b) an exclusively-tied credit intermediary when acting as such,
who is exempt from the need to be licensed by virtue of
regulation 10(3); or
(c) an appointed representative, when acting as such, who is
exempt from the need to be licensed by virtue of regulation
11(3);
(d) a credit institution which is licensed or authorised in
accordance with section 7 of the Financial Services (Banking)
Act, but only when acting as a mortgage creditor and not when
carrying on any other mortgage credit activity.
(5) A person to whom sub-regulation (4) applies must comply with sub-
regulation (3)(b) when undertaking any mortgage credit activity in or from
Gibraltar.
(6) Mortgage advisory services may only be provided by–
(a) a mortgage creditor;
(b) a mortgage credit intermediary; or
(c) an appointed representative.
(7) Schedule 1 makes consequential amendments to the Principal Act and
regulations made under it, and modifies the application to mortgage credit
activity of certain provisions made under that Act.
Non-credit institutions.
Financial Services (Investment and Fiduciary Services) FINANCIAL SERVICES (MORTGAGE CREDIT) REGULATIONS
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8.(1) A non-credit institution established in Gibraltar may only act as a
mortgage creditor in or from Gibraltar under a section 8 licence.
(2) In these Regulations “non-credit institution” means a mortgage
creditor that is not a credit institution.
(3) Without limiting the Principal Act, the FSC must not grant a section 8
licence to a non-credit institution unless the FSC is satisfied that–
(a) the applicant will at all times hold professional indemnity
insurance (or some other comparable guarantee against liability
arising from professional negligence) equal to not less than 5%
of its mortgage book, subject to minimum cover of £1,000,000
applying to each claim and in aggregate £1,500,000 per year
for all claims;
(b) the applicant will at all times be able to meet its liabilities as
they fall due and will–
(i) maintain adequate liquidity; and
(ii) meet the financial resource requirement;
(c) the applicant will at all times comply with–
(i) the large exposure requirement; and
(ii) any concentration risk direction given by the FSC under
sub-regulation (10); and
(d) the applicant and any relevant individual–
(i) is of good repute; and
(ii) possesses the appropriate level of knowledge and
competence in relation to mortgage credit agreements,
taking account of the principles set out in Schedule 4.
(4) In sub-regulation (3)–
“adequate liquidity” means liquidity of resources which is adequate, both
as to its amount and quality, to ensure that there is no significant
risk that the institution cannot meet its liabilities as they fall due;
“the financial resource requirement” means whichever is the higher of–
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(a) £100,000 plus a sum equal to any excess payable under its
professional indemnity insurance; or
(b) the sum of–
(i) its credit risk capital requirement;
(ii) 1% of its total assets, total undrawn commitments and total
unreleased amounts under mortgage credit agreements less
its intangible assets plus any loan entered into,
securitisation position originated or fund position entered
into by the institution; and
(iii) a sum equal to any excess payable under its professional
indemnity insurance; and
“relevant individual” means, in any case where the applicant is not an
individual–
(a) an individual who is a member of the board of a non-credit
institution established as a legal person; or
(b) an individual performing equivalent tasks within a non-credit
institution which is a legal person but does not have a board.
(5) For the purposes of sub-regulation (4)(b)(i), the credit risk capital
requirement of a non-credit institution is 8% of the total of its risk-weighted
exposure amount for exposures that–
(a) are within an exposure class in sub-regulation (6);
(b) are on its balance sheet;
(c) derive from a loan entered into, securitisation position
originated or fund position entered into by the institution on or
after 21 March 2016; and
(d) have not been deducted from its financial resources in
accordance with sub-regulation (8)
and for the purposes of this regulation–
“credit quality step” means the risk weights under the standardised
approach to credit risk set out Chapter 2 of Title II of Part 3 of
Regulation (EU) No 575/2013;
“exposures” has the same meaning as in Article 389 of that Regulation;
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“fund” means an alternative investment fund or collective investment
scheme;
“risk weighted exposure amount” means the amount of the on-balance
sheet exposure value multiplied by the risk weight associated with
the credit quality step with which the credit assessment of that
exposure value is associated; and
“securitisation” and “securitisation position” have the same the meaning
as in points (61) and (62) respectively of Article 4(1) of Regulation
(EU) No 575/2013.
(6) A non-credit institution must assign each of its exposures to one of the
following classes–
(a) loans or contingent loans secured on real property;
(b) other loans;
(c) securitisation positions;
(d) exposures in the form of funds; or
(e) past due items.
(7) The exposure value of an asset or liability held on the balance sheet of
a non-credit institution must be its balance sheet value.
(8) The following items must be deducted from a non-credit institution’s
financial resources–
(a) investments in own shares;
(b) intangible assets (being the full balance sheet value of
goodwill, capitalised development costs, brand names,
trademarks and similar rights and licences);
(c) interim net losses (but only in relation to the period following
the date on which the financial resources are computed); and
(d) any other items that the FSC may direct.
(9) In sub-regulation (3)(c)(i), the “large exposure requirement” means the
requirement that a non-credit institution must–
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(a) not be exposed to a large exposure or connected large
exposures which exceed 25% of its total asset book; and
(b) report any large exposure to the FSC in accordance with its
directions;
and for this purpose “large exposure” means any exposure of a non-credit
institution to a customer or group of connected customers the value of
which equals or exceeds 10% of the non-credit institution’s total asset book.
(10) In determining whether an applicant or relevant individual is of good
repute the matters which the FSC may take into account include whether the
applicant or relevant individual–
(a) has been convicted of any offence involving fraud or
dishonesty, or any indictable offence (and for this purpose
“offence” includes any act or omission which would have been
an offence if it had taken place in Gibraltar); or
(b) is an undischarged bankrupt.
(11) The FSC must publish any criteria that it adopts for the purpose of
determining whether the staff of non-credit institutions meet the
requirements in sub-regulation (3)(d).
(12) The Minister may, by regulations, amend sub-regulations (3) to (9).
(13) A non-credit institution which is granted a section 8 licence in respect
of mortgage credit activity must at all times comply with the requirements
set out in sub-regulations (3) to (9) and must submit to the FSC, in the form
and at the intervals that the FSC may direct–
(a) returns in respect of the non-credit institution’s financial
resourcing and liquidity; and
(b) such other information as the FSC may require.
(14) For the purpose of mitigating concentration risk, the FSC may direct
that a non-credit institution must not grant mortgage credit in respect of
more than a specified proportion of residential properties within the same
building, development or estate.
(15) A concentration risk direction under sub-regulation (14) may–
(a) apply to all non-credit institutions or one or more specified
non-credit institutions; and
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(b) specify the proportion by reference to a specified number or
percentage of residential properties within a building,
development or estate.
Licensing of mortgage credit intermediaries.
9.(1) Without limiting the Principal Act, the FSC must not grant a section 8
licence to a mortgage credit intermediary unless it is satisfied that–
(a) the applicant will at all times hold professional indemnity
insurance (or some other comparable guarantee against liability
arising from professional negligence) subject to minimum
cover of–
(i) £1,000,000 applying to each claim and in aggregate
£1,500,000 per year for all claims; or
(ii) £1,500,000 applying to each claim and in aggregate
£2,000,000 per year for all claims if the mortgage credit
intermediary provides mortgage advisory services
(b) the applicant will at all times be able to meet its liabilities as
they fall due and will maintain financial resources of not less
than–
(i) three months’ operating expenses or £15,000 (whichever is
the higher); and
(ii) a sum equal to any excess payable under its professional
indemnity insurance;
(c) the applicant and any relevant individual–
(i) is of good repute; and
(ii) possesses the appropriate level of knowledge and
competence in relation to mortgage credit agreements,
taking account of the principles set out in Schedule 4.
(2) In the case of a tied credit intermediary, the insurance (or comparable
guarantee) required under sub-regulation (1)(a) may be provided by the
mortgage creditor for which the mortgage credit intermediary is empowered
to act.
(3) In sub-regulation (1) a “relevant individual” means, in any case where
the applicant is not an individual–
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(a) an individual who is a member of the board of a mortgage
credit intermediary established as a legal person; or
(b) an individual performing equivalent tasks within a mortgage
credit intermediary which is a legal person but does not have a
board.
(4) In determining whether an applicant or relevant individual is of good
repute the matters which the FSC may take into account include whether the
applicant or relevant individual–
(a) has been convicted of any offence involving fraud or
dishonesty, or any indictable offence (and for this purpose
“offence” includes any act or omission which would have been
an offence if it had taken place in Gibraltar); or
(b) is an undischarged bankrupt.
(5) The FSC must publish any criteria that it adopts for the purpose of
determining whether the staff of mortgage credit intermediaries or mortgage
creditors meet the requirements in sub-regulation (1)(c).
(6) The FSC must ensure that a mortgage credit intermediary–
(a) which is a legal person has both its head office and registered
office (if any) in Gibraltar or the same EEA State; or
(b) which is not a legal person, or is a legal person but has no
registered office, both has its head office and carries on its main
business in Gibraltar or the same EEA State.
Exclusively-tied credit intermediaries.
10.(1) A mortgage creditor may appoint exclusively-tied credit
intermediaries.
(2) In these Regulations “exclusively-tied credit intermediary” means a
tied credit intermediary who acts on behalf of and under the full and
unconditional responsibility of only one mortgage creditor.
(3) An exclusively-tied credit intermediary is exempt from the
requirement to hold a section 8 licence if the exclusively-tied credit
intermediary is–
(a) only carrying on mortgage credit activity for a mortgage
creditor which has accepted, in writing, full and unconditional
responsibility for the exclusively-tied credit intermediary; and
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(b) registered as an exclusively-tied credit intermediary in
accordance with regulation 12.
(4) A mortgage creditor’s written acceptance of responsibility under sub-
regulation (3)(a) must be in the form that the FSC may direct.
(5) A mortgage creditor is fully and unconditionally responsible for any
act or omission on the part of an exclusively-tied credit intermediary that is
acting on the mortgage creditor’s behalf in relation to any matter covered by
these Regulations or a provision in or made under the Principal Act.
(6) An exclusively-tied credit intermediary must comply at all times with
the requirements set out in regulation 9(1) and a mortgage creditor must
ensure that its exclusively-tied credit intermediaries comply with those
requirements.
(7) Without limiting regulations 13, 16 and 17, a mortgage creditor must–
(a) monitor the activities of its exclusively-tied credit
intermediaries, in order to ensure that they comply fully with
these Regulations and any provision in or made under the
Principal Act; and
(b) in particular, monitor the compliance of its exclusively-tied
credit intermediaries with the knowledge and competence
requirements under these Regulations which apply to those
exclusively-tied credit intermediaries and their staff.
(8) In determining whether an exclusively-tied credit intermediary has
complied with these Regulations or any provision in or made under the
Principal Act, anything which an exclusively-tied credit intermediary has
done or omitted in respect of business for which a mortgage creditor (“the
principal”) has accepted responsibility is to be treated as having been done
or omitted by the principal.
(9) Nothing in sub-regulation (8) is to cause the knowledge or intention of
an exclusively-tied credit intermediary to be attributed to the principal for
the purpose of determining whether the principal has committed an offence,
unless in all the circumstances it is reasonable for them to be attributed to
the principal.
Appointed representatives.
11.(1) A mortgage credit intermediary may appoint appointed
representatives.
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(2) In these Regulations “appointed representative” means a person who
performs mortgage intermediation activities or mortgage advisory services
on behalf and under the full and unconditional responsibility of only one
mortgage credit intermediary.
(3) An appointed representative is exempt from the requirement to hold a
section 8 licence if the appointed representative is–
(a) only carrying on mortgage credit activity for a mortgage credit
intermediary which has accepted, in writing, full and
unconditional responsibility for the appointed representative;
and
(b) registered as an appointed representative in accordance with
regulation 12.
(4) A mortgage credit intermediary’s written acceptance of responsibility
under sub-regulation (3)(a) must be in the form that the FSC may direct.
(5) Subject to sub-regulation (6), a mortgage credit intermediary is fully
and unconditionally responsible for any act or omission on the part of an
appointed representative acting on behalf of the mortgage credit
intermediary in relation to any matter covered by these Regulations or a
provision in or made under the Principal Act.
(6) A mortgage creditor is fully and unconditionally responsible for any
act or omission on the part of an appointed representative who is–
(a) appointed by an exclusively-tied credit intermediary who only
acts on behalf of and under the full and unconditional
responsibility of the mortgage creditor; and
(b) acting on behalf of that exclusively-tied credit intermediary in
relation to any matter covered by these Regulations or a
provision in or made under the Principal Act.
(7) An appointed representative must comply at all times with the
requirements set out in regulation 9(1)(a) and (c) and a mortgage credit
intermediary must ensure that its appointed representatives comply with
those requirements, but the required professional indemnity insurance (or
comparable guarantee) may be provided by the mortgage credit
intermediary for which the appointed representative is empowered to act.
(8) Without limiting regulations 13, 16 and 17, a mortgage credit
intermediary must–
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(a) monitor the activities of its appointed representatives, in order
to ensure that they comply fully with these Regulations and
any provision in or made under the Principal Act; and
(b) in particular, monitor the compliance of its appointed
representatives with the knowledge and competence
requirements under these Regulations which apply to those
appointed representatives and their staff.
(9) In determining whether an appointed representative has complied with
these Regulations or any provision in or made under the Principal Act,
anything which an appointed representative has done or omitted in respect
of business for which a mortgage credit intermediary or mortgage creditor
(“the principal”) has accepted responsibility is to be treated as having been
done or omitted by the principal.
(10) Nothing in sub-regulation (9) is to cause the knowledge or intention
of an appointed representative to be attributed to the principal for the
purpose of determining whether the principal has committed an offence,
unless in all the circumstances it is reasonable for them to be attributed to
the principal.
(11) An appointed representative registered in Gibraltar may only perform
mortgage intermediation activities or provide mortgage advisory services in
Gibraltar and in those EEA States where appointed representatives are
permitted to operate.
Register of mortgage credit intermediaries and appointed
representatives.
12.(1) The FSC must establish and maintain a register of–
(a) mortgage credit intermediaries; and
(b) appointed representatives.
(2) The FSC must admit a person to the register if—
(a) the person holds a section 8 licence which permits that person
to act as a mortgage credit intermediary; or
(b) an application is made in accordance with sub-regulation (3),
and the FSC is satisfied that the person named in that
application–
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(i) will at all times meet the requirements set out in regulation
9(1) and meets the other requirements for registration as an
exclusively-tied credit intermediary; or
(ii) will at all times meet the requirements set out in regulation
9(1)(a) and (c) and meets the other requirements for
registration as an appointed representative.
(3) An application for registration under sub-regulation (2)(b)–
(a) may only be made by the mortgage creditor or mortgage credit
intermediary (“the principal”) that proposes to appoint the
person named in the application as–
(i) an exclusively-tied credit intermediary; or
(ii) an appointed representative; and
(b) must–
(i) be made in the form and manner that the FSC may direct;
and
(ii) contain or be supported by any information that the FSC
may require for the purpose of determining the application.
(4) If the FSC admits a person to the register under sub-regulation
(2)(b)(i) or (ii), it must give written notice of its decision to the principal
and that person.
(5) If the FSC refuses to admit a person to the register under sub-
regulation (2)(b)(i) or (ii), it must give written notice of that decision to the
principal and that person, and the principal may make representation to the
FSC or appeal against that decision under sections 44 and 45 of the
Principal Act as if a decision under this sub-regulation was a decision
specified in section 44(1) of that Act.
(6) The register must contain the following information in respect of each
mortgage credit intermediary–
(a) the names of the persons within the management who are
responsible for the mortgage intermediation activities or
mortgage advisory services;
(b) the names of the individuals who exercise a client-facing
function in respect of mortgage intermediation activities or
mortgage advisory services;
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(c) the EEA States in which the mortgage credit intermediary
conducts business under the rules on the freedom of
establishment or on the freedom to provide services and of
which the mortgage credit intermediary has informed the FSC
in accordance with regulation 15;
(d) whether or not the mortgage credit intermediary is tied; and
(e) the mortgage creditor on whose behalf the exclusively tied
credit intermediary acts.
(7) The register must contain the following information in respect of each
appointed representative–
(a) the names of the persons within the management who are
responsible for the mortgage intermediation activities or
mortgage advisory services;
(b) the names of the individuals who exercise a client-facing
function in respect of mortgage intermediation activities or
mortgage advisory services;
(c) the EEA States in which the appointed representative conducts
business;
(e) the mortgage credit intermediary or, in the case of an appointed
representative of a tied credit intermediary, the mortgage
creditor on whose behalf the appointed representative acts.
(8) The FSC must–
(a) ensure that the register is kept up to date and made available
online for consultation by the public; and
(b) act as the single information point for public access to the
information in the register.
(9) The requirement to be registered under this regulation does not apply
to a credit institution which is licensed or authorised in accordance with
section 7 of the Financial Services (Banking) Act.
Supervision of mortgage credit intermediaries and appointed
representatives.
13.(1) The FSC must supervise compliance with the Regulations and any
provisions of or made under the Principal Act by–
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(a) mortgage credit intermediaries which are licensed or registered
in Gibraltar; and
(b) appointed representatives which are registered in Gibraltar;
(2) Subject to sub-regulation (3), the FSC may supervise a tied credit
intermediary–
(a) directly; or
(b) as part of the supervision of the mortgage creditor for which the
tied credit intermediary acts, if the mortgage creditor is a credit
institution which is licensed or authorised in accordance with
section 7 of the Financial Services (Banking) Act.
(3) The FSC must supervise directly a tied credit intermediary which is
licensed or registered in Gibraltar but provides services in an EEA State.
(4) The FSC may supervise an appointed representative–
(a) directly; or
(b) as part of the supervision of the mortgage credit intermediary for
which the appointed representative acts.
Revocation of licence or registration.
14.(1) Without limiting the Principal Act, if any condition in sub-regulation
(2) is met the FSC may revoke–
(a) a mortgage credit intermediary’s licence or registration; or
(b) an appointed representative’s registration.
(2) The conditions are that the mortgage credit intermediary or appointed
representative–
(a) expressly renounces the licence or registration or has not
carried out mortgage intermediation activities or provided
mortgage advisory services in the preceding six months;
(b) has obtained the licence or registration through false or
misleading statements or any other irregular means;
(c) no longer fulfils the requirements under which the licence or
registration was granted;
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(d) falls within any of the cases specified in section 11(2) of the
principal Act;
(e) has seriously or systematically infringed any provision of these
Regulations or in or made under the principal Act governing
the operating conditions for mortgage credit intermediaries.
(3) Where a licence or registration is revoked by the FSC, it must–
(a) notify the host States’ competent authorities of such revocation
as soon as possible and at the latest within 14 days, by any
appropriate means; and
(b) ensure that the person’s entry is removed from the register
without undue delay.
Mortgage credit intermediaries: freedom of establishment and freedom
to provide services.
15.(1) Subject to sub-paragraphs (2) and (3), a licence or other
authorisation to act as a mortgage credit intermediary–
(a) granted by the FSC in accordance with these Regulations is
valid for all EEA States; or
(b) granted by the competent authority in an EEA State is valid in
Gibraltar.
(2) Sub-regulation (1) only applies were the activity which the mortgage
credit intermediary intends to carry out in the host State is covered by the
licence or other authorisation granted in the home State.
(3) A mortgage credit intermediary may only provide its services in
relation to mortgage credit agreements offered by non-credit institutions to
consumers in those EEA States where non-credit institutions are permitted
to offer such agreements to consumers.
(4) A mortgage credit intermediary whose home State is Gibraltar that
intends to carry out business for the first time in one or more EEA States
under the freedom to provide services or by establishing a branch must
inform the FSC.
(5) Within one month of being informed under sub-regulation (4) the FSC
must–
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(a) notify the competent authorities of the host States concerned
of–
(i) the mortgage credit intermediary’s intention;
(ii) the mortgage creditors to which the mortgage credit
intermediary is tied; and
(iii) whether those mortgage creditors take full and
unconditional responsibility for the mortgage credit
intermediary’s activities; and
(b) at the same time inform the mortgage credit intermediary
concerned of that notification.
(6) A mortgage credit intermediary may start business in an EEA State
one month after the date on which it is informed by the FSC of the
notification referred to in sub-regulation (5)(b).
(7) Where the FSC receives a notification under Article 32 of the
Mortgage Credit Directive in respect of a mortgage credit intermediary
whose home State is in an EEA State, the FSC must–
(a) prepare to supervise the mortgage credit intermediary in
accordance with regulations 13, 16 and 17; and,
(b) if necessary, inform the mortgage credit intermediary (either
before it commences activities in Gibraltar or within two
months of receiving the notification) of the conditions under
which, in respect of matters not harmonised in European
Union law, its activities are to be carried out in Gibraltar.
Supervision of EEA branches in Gibraltar.
16.(1) The FSC must ensure that any services provided by a branch in
Gibraltar of a mortgage credit intermediary authorised in an EEA State
complies with–
(a) regulations 18 and 19;
(b) regulations 21 to 23;
(c) regulations 25 to 29; and
(d) regulations 32, 34 and 43.
(2) The FSC may–
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(a) examine the arrangements of a branch to which sub-regulation
(1) applies; and
(b) request that changes are made to those arrangements in order to
ensure that–
(i) the branch fulfils its responsibilities under the provisions
specified in sub-regulation (1); and
(ii) the FSC is able to enforce the branch’s obligations under
regulation 20 with respect to the services provided by the
branch.
(3) Where the FSC ascertains that a mortgage credit intermediary to which
sub-regulation (1) applies is in breach of any provision referred to in that
sub-regulation, the FSC must direct the mortgage credit intermediary
concerned to cease and, where necessary, rectify that breach.
(4) If the mortgage credit intermediary concerned fails to comply with a
direction under sub-regulation (3), the FSC must–
(a) take appropriate steps to ensure that the mortgage credit
intermediary concerned ceases and, where necessary, rectifies
the breach concerned; and
(b) inform the competent authority in the mortgage credit
intermediary’s home State of the action which the FSC has
taken.
(5) If, despite the action taken by the FSC, the mortgage credit
intermediary concerned persists in breaching a provision referred to in sub-
regulation (1), the FSC, after informing the competent authority in the
mortgage credit intermediary’s home State may take appropriate action—
(a) to prevent or to penalise further irregularities; and
(b) in so far as necessary, to prevent the mortgage credit
intermediary from initiating any further transactions within
Gibraltar.
(6) If the FSC takes any action under sub-regulation (5), it must without
undue delay inform the European Commission.
(7) Where the home State competent authority disagrees with the action
taken by the FSC, it may refer the matter to EBA and request its assistance
in accordance with Article 19 of Regulation (EU) No 1093/2010.
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Reporting of breaches to home State authority.
17.(1) The FSC must notify the competent authority in a mortgage credit
intermediary’s home State (the “home State authority”) if the FSC has clear
and demonstrable grounds for concluding that–
(a) a mortgage credit intermediary acting in Gibraltar under the
freedom to provide services is in breach of any obligations
under these Regulations or the Mortgage Credit Directive; or
(b) a mortgage credit intermediary which has a branch in Gibraltar
is in breach of any obligation under these Regulations or the
Mortgage Credit Directive other than one specified in
regulation 16(1).
(2) The FSC may take the action under sub-regulation (3) if, after giving
the home State authority notice under sub-regulation (1) and, at the same,
providing that authority with the findings of the FSC in support of that
notice–
(a) the home State authority fails to take any action within one
month of receiving; or
(b) despite the action taken by the home State authority, a
mortgage credit intermediary persists in acting in a manner that
is prejudicial to the interests of consumers in Gibraltar or the
orderly functioning of the markets.
(3) The FSC, having informed the home State authority–
(a) may take all appropriate action needed to protect consumers
and ensure the proper functioning of the markets, including by
preventing the offending mortgage credit intermediary from
initiating any further transactions in Gibraltar;
(b) must, without undue delay inform the European Commission
and the EBA of any such action; and
(c) may refer the matter to the EBA and request its assistance in
accordance with Article 19 of Regulation (EU) No. 1093/2010.
(4) Where a mortgage credit intermediary authorised in an EEA State has
a branch in Gibraltar, the home State authority, in the exercise of its
responsibilities and after having informed the FSC, may carry out on-site
inspections in that branch.
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PART 4
CONDITIONS APPLICABLE TO MORTGAGE CREDITORS,
MORTGAGE CREDIT INTERMEDIARIES AND APPOINTED
REPRESENTATIVES
Conduct of business obligations.
18.(1) A mortgage creditor, mortgage credit intermediary or appointed
representative must act honestly, fairly, transparently and professionally,
taking account of the rights and interests of the consumer.
(2) The obligation under sub-regulation (1) applies when–
(a) manufacturing credit products;
(b) granting or intermediating on credit;
(c) providing mortgage advisory services;
(d) providing ancillary services; or
(e) executing a mortgage credit agreement.
(3) When the granting or intermediating on credit or providing of
mortgage advisory services and, where appropriate, providing ancillary
services the activities shall be based on–
(a) information about the consumer’s circumstances;
(b) any specific requirement made known by a consumer;
(c) reasonable assumptions about risks to the consumer’s situation
over the mortgage credit agreement’s term; and
(d) in the case of mortgage advisory services, the information
specified in regulation 34(4)(a).
Obligation to provide information without charge.
19. Any information that is provided to consumers in compliance with
these Regulations must be provided without charge to the consumer.
Remuneration arrangements.
20.(1) A mortgage creditor must not remunerate its staff or mortgage credit
intermediaries in a manner that impedes compliance with regulation 18.
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(2) A mortgage credit intermediary must not remunerate its staff or
appointed representatives in a manner that impedes compliance with
regulation 18.
(3) A mortgage creditor, when establishing and applying its remuneration
policy for staff who are responsible for the assessment of creditworthiness,
must ensure that the policy is–
(a) consistent with and promotes sound and effective risk
management and does not encourage risk-taking that exceeds
the level of tolerated risk of the mortgage creditor; and
(b) in line with the business strategy, objectives, values and long-
term interests of the mortgage creditor, and incorporates
measures to avoid conflicts of interest, in particular by
providing that remuneration is not contingent on the number or
proportion of applications accepted.
(4) A mortgage creditor must apply the principles in sub-regulation (3)(a)
and (b) in a manner and to the extent that is appropriate to its size, its
internal organisation and the nature, scope and complexity of its activities.
(5) A mortgage creditor, mortgage credit intermediary or appointed
representative must ensure that the remuneration structure for any of its staff
who are involved in providing mortgage advisory services does not
prejudice their ability to act in the consumer’s best interest and, in
particular, is not contingent on sales targets.
Knowledge and competence requirements.
21.(1) Mortgage creditors, mortgage credit intermediaries and appointed
representatives must ensure that their staff possess and maintain an
appropriate level of knowledge and competence in relation to–
(a) the manufacturing, offering or granting of mortgage credit
agreements;
(b) the carrying out of mortgage intermediation activities;
(c) the provision of mortgage advisory services; and
(d) ancillary services (where the conclusion of a mortgage credit
agreement includes any ancillary service).
(2) Subject to sub-regulation (3), the FSC must establish, in accordance
with the principles set out in Schedule 4, minimum knowledge and
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competence requirements for the staff of mortgage creditors, mortgage
credit intermediaries, and appointed representatives.
(3) Where a mortgage creditor or mortgage credit intermediary provides
its services in Gibraltar–
(a) through a branch, the FSC is responsible for establishing the
minimum knowledge and competence requirements applicable
to the staff of that branch;
(b) under the freedom to provide services–
(i) the home State is responsible for establishing the minimum
knowledge and competence requirements applicable to the
staff (in accordance with Annex III of the Mortgage Credit
Directive); but
(ii) the FSC may establish the minimum knowledge and
competence requirements which are applicable in respect of
paragraphs 1(b), (c), (e) and (f) of Schedule 4.
(4) For the purpose of supervising mortgage creditors’, mortgage credit
intermediaries’ and appointed representatives’ compliance with sub-
regulation (1), the FSC may require them to provide the FSC with any
evidence that the FSC considers necessary.
(5) The FSC, in order to ensure that the minimum knowledge and
competence requirements are effectively supervised and enforced in respect
of mortgage creditors and mortgage credit intermediaries providing their
services under the freedom to provide services–
(a) must cooperate closely with the competent authorities in EEA
States; and
(b) may delegate tasks and responsibilities to any of them or
perform on their behalf any tasks and responsibilities which
they delegate to the FSC.
PART 5
INFORMATION AND PRACTICES PRELIMINARY TO
CONCLUDING MORTGAGE CREDIT AGREEMENT
Advertising and marketing: general provisions.
22.(1) Any advertising and marketing communications concerning
mortgage credit agreements–
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(a) must be fair, clear and not misleading; and
(b) must not contain any wording that may create false
expectations for a consumer regarding the availability or cost
of credit.
(2) This regulation and regulation 23 apply without limiting Directive
2005/29/EC of the European Parliament and of the Council of 11 May 2005
concerning unfair business-to-consumer commercial practices in the internal
market and amending Council Directive 84/450/EEC, Directives 97/7/EC,
98/27/EC and 2002/65/EC of the European Parliament and of the Council
and Regulation (EC) No 2006/2004 of the European Parliament and of the
Council.
Advertising: standard information.
23.(1) Any advertising concerning mortgage credit agreements which
indicates an interest rate or any figures relating to the cost of the credit to
the consumer must include the standard information in sub-regulation (2).
(2) The standard information must specify, in a clear, concise and
prominent way–
(a) the identity of the mortgage creditor or, where applicable, the
mortgage credit intermediary or appointed representative;
(b) where applicable, that the mortgage credit agreement will be
secured by a mortgage (or other comparable security
commonly used within the EEA) on residential immovable
property or by a right related to residential immovable
property;
(c) the borrowing rate, indicating whether this is fixed, variable or
a combination of both, together with particulars of any charges
included in the total cost of the credit to the consumer;
(d) the total amount of credit;
(e) the APRC, which must be included in the advertisement at
least as prominently as any interest rate;
(f) where applicable–
(i) the duration of the mortgage credit agreement;
(ii) the number of instalments;
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(iii) the amount of the instalments;
(iv) the total amount payable by the consumer; and
(g) where applicable, a warning regarding the fact that possible
fluctuations of the exchange rate could affect the amount
payable by the consumer.
(3) The information in paragraphs (c) to (f) of sub-regulation (2),
including the APRC must be specified by means of a representative
example which is adhered to throughout and, for this purpose, an example is
not a representative example unless the mortgage creditor reasonably
expects that at least 51% of consumers who respond to and enter into a
mortgage credit agreement based upon the promotion to which the example
relates would be charged the APRC specified or less.
(4) Where in order to obtain the credit or to obtain it on the terms and
conditions marketed–
(a) the conclusion of a contract regarding an ancillary service (in
particular, insurance) is compulsory; and
(b) the cost of that service cannot be determined in advance,
the obligation to enter into that contract must be stated in a clear, concise
and prominent way together with the APRC.
(5) The information required by sub-regulations (2) and (4) must be easily
legible or clearly audible, depending upon the medium used for advertising.
Bundling and tying practices.
24.(1) In Gibraltar–
(a) bundling practice is permitted; but
(b) subject to sub-regulations (3) to (6), tying practice is
prohibited.
(2) In this regulation–
“bundling practice” means offering or selling a mortgage credit
agreement in a package with other distinct financial products or
services where the mortgage credit agreement is also made
available to consumers separately but not necessarily on the same
terms or conditions as when offered bundled with the ancillary
services; and
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“tying practice” means offering or selling a mortgage credit agreement in
a package with other distinct financial products or services where
the mortgage credit agreement is not made available to consumers
separately.
(3) A mortgage creditor may, in connection with a mortgage credit
agreement, require a consumer or a family member or close relation of the
consumer to–
(a) open or maintain a payment or a savings account, where the
only purpose of such an account is to accumulate capital to
repay the credit, to service the credit, to pool resources to
obtain the credit, or to provide additional security for the
mortgage creditor in the event of default;
(b) purchase or keep an investment product or private pension
product which primarily offers the investor an income in
retirement but serves also to provide additional security for the
mortgage creditor in the event of default or to accumulate
capital to repay the credit, to service the credit or to pool
resources to obtain the credit;
(c) conclude a separate mortgage credit agreement in conjunction
with a shared-equity mortgage credit agreement to obtain the
credit.
(4) A mortgage creditor may engage in tying practice if the mortgage
creditor can demonstrate to the FSC that the tied products or categories of
product offered, on terms and conditions similar to each other, which are not
made available separately, result in a clear benefit to the consumers taking
due account of the availability and prices of the relevant products offered on
the market.
(5) Sub-regulation (4) only applies to products which are marketed after
20 March 2014.
(6) A mortgage creditor may require a consumer to hold a relevant
insurance policy in relation to a mortgage credit agreement but only if the
mortgage creditor is willing to accept–
(a) a policy proposed by the mortgage creditor (which may or may
not also be from a supplier preferred by the mortgage creditor);
or
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(b) a policy provided by another supplier which has a level of
guarantee equivalent to the policy proposed by the mortgage
creditor.
General information.
25.(1) Clear and comprehensible general information about mortgage credit
agreements must be made available to consumers at all times on a durable
medium or in electronic form, by–
(a) mortgage creditors or, where applicable, their tied credit
intermediaries or appointed representatives; and
(b) mortgage credit intermediaries that are not tied credit
intermediaries.
(2) The general information provided must include at least the following–
(a) the identity and the geographical address of the issuer of the
information;
(b) the purposes for which the credit may be used;
(c) the forms of security, including, where applicable, the
possibility for it to be located in an EEA State;
(d) the possible duration of the mortgage credit agreements;
(e) the types of available borrowing rate, indicating whether they
are fixed, variable or both, with a short description of the
characteristics of a fixed and variable rate, including related
implications for the consumer;
(f) where foreign currency loans are available, an indication of the
foreign currency or currencies, including an explanation of the
implications for the consumer where the credit is denominated
in a foreign currency;
(g) a representative example of the total amount of credit, the total
cost of the credit to the consumer, the total amount payable by
the consumer and the APRC;
(h) an indication of possible further costs, not included in the total
cost of the credit to the consumer, to be paid in connection with
a mortgage credit agreement;
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(i) the range of different options available for reimbursing the
credit to the mortgage creditor, including the number,
frequency and amount of the regular repayment instalments;
(j) where applicable, a clear and concise statement that
compliance with the terms and conditions of the mortgage
credit agreement does not guarantee repayment of the total
amount of credit under the mortgage credit agreement;
(k) a description of the conditions directly relating to early
repayment;
(l) whether a valuation of the property is necessary and, where
applicable, who is responsible for ensuring that the valuation is
carried out, and whether any related costs arise for the
consumer;
(m) an indication of the ancillary services the consumer is obliged
to acquire in order to obtain the credit or to obtain it on the
terms and conditions marketed and, where applicable, a
clarification that the ancillary services may be purchased from
a provider that is not the mortgage creditor; and
(n) a general warning concerning the possible consequences of
non-compliance with the commitments linked to the mortgage
credit agreement.
(3) The FSC may, by direction, require mortgage creditors to include any
other warning which the FSC considers to be relevant in Gibraltar (and in
that event the FSC must comply with Article 13(2) of the Mortgage Credit
Directive).
Pre-contractual information.
26.(1) A mortgage creditor and, where applicable, any mortgage credit
intermediary or appointed representative, must provide a consumer with the
personalised information needed to compare the credits available on the
market, assess their implications and make an informed decision on whether
to conclude a mortgage credit agreement–
(a) without undue delay after the consumer has provided the
necessary information on the consumer’s needs, financial
situation and preferences in accordance with regulation 32; and
(b) in good time before the consumer is bound by any mortgage
credit agreement or offer.
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(2) The personalised information referred to in sub-regulation (1) must be
provided on a durable medium by means of the ESIS as set out in Schedule
3, before an offer binding on the mortgage creditor is provided to the
consumer.
(3) When an offer binding on a mortgage creditor is provided to a
consumer, it must be provided on a durable medium and accompanied by–
(a) a copy of the draft mortgage credit agreement; and
(b) an ESIS where the characteristics of the offer are different
from the information contained in any ESIS previously
provided.
(4) When an offer binding on a mortgage creditor is provided to a
consumer, the consumer has a reflection period of seven days from the date
on which the offer is received by the consumer in which to compare it to
other offers, assess their implications and make an informed decision on
whether to accept the offer and–
(a) the offer is binding on the mortgage creditor for the duration of
the reflection period; and
(b) the consumer may accept the offer at any time during the
reflection period.
(5) Where the borrowing rate or other costs applicable to an offer are
determined on the basis of the selling of underlying bonds or other long-
term funding instruments, the borrowing rate or other costs may vary from
that stated in the offer in accordance with the value of the underlying bond
or other long-term funding instrument.
(6) A mortgage creditor and, where applicable, a mortgage credit
intermediary or appointed representative who has provided an ESIS to a
consumer–
(a) is to be regarded as having satisfied the requirements of Article
3(1) of the Distance Marketing Directive (which requires
disclosure of information about a supplier); but
(b) is to be regarded as having satisfied the requirements of Article
5(1) of that Directive (which requires disclosure in good time
before a consumer is bound by an offer or contract) only if the
ESIS was provided to the consumer prior to the conclusion of
the contract to which it relates.
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(7) An ESIS must conform with Schedule 3 and any other information
which a mortgage creditor, mortgage credit intermediary or appointed
representative wishes to or must under any law provide to a consumer must
be provided in a separate document.
(8) In the case of voice telephony communications under Article 3(3) of
the Distance Marketing Directive, in order to comply with the requirement
in point (b) of that Article (the provision of a description of the main
characteristics of a financial service) the information provided must include
at least the items referred to under headings 3 to 6 in Part 1 of Schedule 3.
(9) In sub-regulations (6) and (8) the “Distance Marketing Directive”
means Directive 2002/65/EC of the European Parliament and of the Council
of 23 September 2002 concerning the distance marketing of consumer
financial services and amending Council Directive 90/619/EEC and
Directives 97/7/EC and 98/27/EC.
Information requirements: intermediaries and appointed
representatives.
27.(1) A mortgage credit intermediary or appointed representative must, in
good time before carrying out any mortgage intermediation activities,
provide the consumer with at least the following information on a durable
medium–
(a) the identity and the geographical address of the mortgage credit
intermediary;
(b) the register in which the mortgage credit intermediary or
appointed representative has been included, the registration
number, where applicable, and the means for verifying such
registration;
(c) whether the mortgage credit intermediary is tied to or works
exclusively for one or more mortgage creditors and, if so, the
names of the mortgage creditors for which it is acting (and the
mortgage credit intermediary may state that it is independent
where it meets the requirements of regulation 34(4)(e));
(d) whether the mortgage credit intermediary offers mortgage
advisory services;
(e) the fee, where applicable, payable by the consumer to the
mortgage credit intermediary for its services or where this is
not possible, the method for calculating the fee;
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(f) the procedures allowing consumers or other interested parties
to register complaints internally about mortgage credit
intermediaries and, where appropriate, the means by which
recourse to out-of-court complaint and redress procedures can
be sought;
(g) where applicable, the existence and where known the amount
of commissions or other inducements, payable by the mortgage
creditor or third parties to the mortgage credit intermediary for
their services in relation to the mortgage credit agreement.
(2) Where the amount of any commission or other inducement is not
known when a disclosure is made under sub-regulation (1)(g), the mortgage
credit intermediary must inform the consumer that the actual amount will be
disclosed at a later stage in the ESIS.
(3) Mortgage credit intermediaries who are not tied but who receive
commission from one or more mortgage creditors must–
(a) inform a consumer of the right to request information on the
variation in levels of commission payable by the different
mortgage creditors providing the mortgage credit agreements
being offered to the consumer; and
(b) at the consumer’s request, provide that information.
(4) Where a mortgage credit intermediary charges a fee to the consumer
and additionally receives commission from the mortgage creditor or a third
party, the mortgage credit intermediary must explain to the consumer
whether or not the commission will be offset against the fee, either in part or
in full.
(5) Any fee payable by a consumer to a mortgage credit intermediary for
its services must be communicated to the mortgage creditor by the mortgage
credit intermediary for the purpose of calculating of the APRC.
(6) In addition to the other disclosures required by this regulation, a
mortgage credit intermediary must ensure that its appointed representative,
when contacting or before dealing with any consumer, disclose to the
consumer–
(a) the capacity in which the appointed representative is acting;
(b) the mortgage credit intermediary that the appointed
representative is representing.
Adequate explanations.
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28.(1) Mortgage creditors and, where applicable, mortgage credit
intermediaries or appointed representatives must provide adequate
explanations to consumers in respect of proposed mortgage credit
agreements and any ancillary services, in order to enable the consumer to
assess whether the proposed mortgage credit agreements and ancillary
services are adapted to the consumer’s needs and financial situation.
(2) The explanations must, where applicable, include in particular–
(a) the pre-contractual information to be provided in accordance
with–
(i) regulation 26, in the case of mortgage creditors;
(ii) regulations 26 and 27, in the case of mortgage credit
intermediaries or appointed representatives;
(b) the essential characteristics of the products proposed;
(c) the specific effects the products proposed may have on the
consumer, including the consequences of default in payment by
the consumer; and
(d) where ancillary services are bundled with a mortgage credit
agreement, whether each component of the bundle can be
terminated separately and the implications for the consumer of
doing so.
(3) A mortgage creditor or (with the consent of the mortgage creditor) a
mortgage credit intermediary or appointed representative may adapt the
extent of any explanation provided under this regulation and the manner in
which it is provided, to take account of the circumstances of–
(a) the situation in which the mortgage credit agreement is offered;
(b) the consumer to whom it is offered; and
(c) the nature of the credit offered.
PART 6
ANNUAL PERCENTAGE RATE OF CHARGE
Calculation of the APRC.
29.(1) The APRC must be calculated–
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(a) in accordance with the mathematical formula set out in
Schedule 2; and
(b) where applicable, using the additional assumptions set out in
that Schedule.
(2) Where the opening or maintaining of an account is obligatory in order
to obtain credit or to obtain it on the terms and conditions marketed, the
total cost of credit to the consumer must include–
(a) the costs of opening and maintaining an account of that type;
(b) the cost of using any means of payment for transactions and
drawdowns on that account; and
(c) any other costs relating to payment transactions in respect of
that account.
(3) The calculation of the APRC must be based on the assumptions that–
(a) the mortgage credit agreement is to remain valid for the period
agreed; and
(b) the mortgage creditor and the consumer will fulfil their
obligations under the terms and by the dates specified in the
mortgage credit agreement.
(4) In the case of mortgage credit agreements containing provisions
allowing variations in the borrowing rate and, where applicable, in the
charges contained in the APRC but unquantifiable at the time of calculation,
the APRC must be calculated on the assumption that the borrowing rate and
other charges will remain fixed in relation to the level set at the conclusion
of the contract.
(5) For mortgage credit agreements for which a fixed borrowing rate is
agreed in relation to an initial period of at least five years, at the end of
which a negotiation on the borrowing rate takes place to agree on a new
fixed rate for a further material period, the calculation of the additional,
illustrative APRC disclosed in the ESIS must cover only the initial fixed
rate period and must be based on the assumption that, at the end of the fixed
borrowing rate period, the capital outstanding is repaid.
(6) Where a mortgage credit agreement allows for variations in the
borrowing rate, the consumer must be informed of the possible impacts of
variations on the amounts payable and on the APRC by means of—
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(a) an ESIS which contains an additional APRC illustrating the
possible risks linked to a significant increase in the borrowing
rate; and
(b) where the borrowing rate is not capped, an accompanying
warning which highlights that the total cost of the credit to the
consumer, shown by the APRC, may change.
(7) Sub-regulation (6) does not apply to mortgage credit agreements
where–
(a) the borrowing rate is fixed for an initial period of at least five
years;
(b) at the end of the initial period a negotiation on the borrowing
rate will take place in order to agree on a new fixed rate for a
further material period; and
(c) in respect of that new fixed rate an additional, illustrative
APRC is provided for in the ESIS relating to that mortgage
credit agreement.
PART 7
CREDITWORTHINESS ASSESSMENT
Obligation to assess creditworthiness.
30.(1) Before concluding a mortgage credit agreement, a mortgage creditor
must make a thorough assessment of the consumer’s creditworthiness,
which must take appropriate account of factors relevant to verifying the
consumer’s prospects of meeting obligations under the mortgage credit
agreement.
(2) Mortgage creditors must establish appropriate procedures for–
(a) conducting creditworthiness assessments under sub-regulation
(1); and
(b) recording and maintaining a record of the outcome of each
creditworthiness assessment it conducts and the information on
which it is based.
(3) A creditworthiness assessment must not rely predominantly on–
(a) the value of the residential immovable property exceeding the
amount of the credit; or
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(b) except where the purpose of the mortgage credit agreement is
to construct or renovate the property, the assumption that the
residential immovable property will increase in value.
(4) Subject to sub-regulation (5), a mortgage creditor who concludes a
mortgage credit agreement with a consumer must not cancel or alter that
agreement to the detriment of the consumer on the grounds that the
assessment of creditworthiness was incorrectly conducted.
(5) Sub-regulation (4) does not apply in any case where it is shown that,
contrary to regulation 32, the consumer knowingly withheld or falsified
information of material relevance to the assessment of the consumer’s
creditworthiness.
(6) A mortgage creditor must–
(a) only make credit available to a consumer where the result of a
creditworthiness assessment indicates that the consumer is
likely to meet the obligations resulting from the mortgage
credit agreement and in the manner required under that
agreement; and
(b) only grant a significant increase in the total amount of credit
under the mortgage credit agreement after re-assessing the
consumer’s creditworthiness based upon updated information,
unless that additional credit was envisaged and included in the
original creditworthiness assessment.
(7) A mortgage creditor must–
(a) inform a consumer in advance, in accordance with section 10
of the Data Protection Act 2004, that a database is to be
consulted for the purposes of assessing the consumer’s
creditworthiness;
(b) inform the consumer without delay if the consumer’s credit
application is rejected; and
(c) where the rejection is based upon the result of a database
consultation, inform the consumer–
(i) that the decision is based upon the automated processing
of data;
(ii) of the particulars of the database consulted; and
(iii) of the result of that consultation.
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(8) This regulation applies without limiting the Data Protection Act 2004.
Property valuation.
31.(1) The valuation of residential immovable property for mortgage
lending purposes in Gibraltar must be undertaken in accordance with–
(a) the professional standards for valuation published from time to
time by the Royal Institution of Chartered Surveyors; or
(b) any other valuation standards that the FSC may direct.
(2) A mortgage creditor must–
(a) ensure that the standards specified in or under sub-regulation
(1) are applied when the mortgage creditor conducts a property
valuation; and
(b) take reasonable steps to ensure that those standards are applied
by any third party who conducts a property valuation on behalf
of the mortgage creditor.
(3) A mortgage creditor must ensure that any person conducting property
valuation for mortgage lending purposes is able to provide an impartial and
objective valuation by being–
(a) professionally competent; and
(b) sufficiently independent from the credit underwriting process.
(4) Any property valuation for mortgage lending purposes must be
documented on a durable medium, a copy of which must be kept by the
mortgage creditor.
Disclosure and verification of consumer information.
32.(1) The assessment of creditworthiness under regulation 30 must be
carried out on the basis of information on a consumer’s income and
expenses and other financial and economic circumstances which is–
(a) necessary, sufficient and proportionate;
(b) obtained by the mortgage creditor from relevant internal or
external sources, including–
(i) the consumer; and
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(ii) information provided to any mortgage credit intermediary
or appointed representative during the credit application
process; and
(c) appropriately verified including, when necessary, by reference
to independently verifiable documentation.
(2) A mortgage credit intermediary or appointed representative must
accurately submit the necessary information obtained from a consumer to
the relevant mortgage creditor to enable a creditworthiness assessment to be
carried out.
(3) A mortgage creditor must specify at the pre-contractual phase, in a
clear and straightforward way–
(a) the information and independently verifiable evidence that a
consumer must provide; and
(b) the timeframe in which the consumer must provide it.
(4) The information and evidence specified by a mortgage creditor under
sub-regulation (3) must be proportionate and limited to what is necessary to
conduct a proper creditworthiness assessment, but a mortgage creditor may
seek clarification of any information or evidence received in accordance
with that sub-regulation where doing so is necessary to enable the
consumer’s creditworthiness to be assessed.
(5) A mortgage creditor may not terminate a mortgage credit agreement
on the grounds that the information provided by the consumer before the
conclusion of the mortgage credit agreement was incomplete, except where
it can be demonstrated that the consumer knowingly withheld or falsified
the information.
(6) A mortgage creditor, mortgage credit intermediary or appointed
representative must warn a consumer (and that warning may be provided in
a standardised format)–
(a) about the need for the consumer, in response to a request made
under sub-regulation (3) and (4), to provide complete and
correct information and evidence to enable the mortgage
creditor to conduct a proper creditworthiness assessment; and
(b) that credit cannot be granted if the mortgage creditor is unable
to assess the consumer’s creditworthiness because the
consumer has not provided the information and evidence
required.
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(7) This regulation applies without limiting the Data Protection Act 2004
and, in particular, section 6 of that Act.
PART 8
DATABASE ACCESS
Database access.
33.(1) The owner or operator of a database in Gibraltar used for assessing
the creditworthiness of consumers and for the sole purpose of monitoring
consumers’ compliance with the credit obligations over the life of the
mortgage credit agreement must allow access to that database, on a non-
discriminatory basis, to mortgage creditors from Gibraltar or any EEA State.
(2) Sub-regulation (1) applies to databases which are operated by private
credit bureaux or credit reference agencies and to public registers.
(3) This regulation applies without limiting the Data Protection Act 2004.
PART 9
MORTGAGE ADVISORY SERVICES
Standards for mortgage advisory services.
34.(1) A mortgage creditor, mortgage credit intermediary or appointed
representative must inform a consumer explicitly whether mortgage
advisory services are being or can be provided to the consumer in respect of
a specified transaction.
(2) A mortgage creditor, mortgage credit intermediary or appointed
representative, before providing or contracting to provide any mortgage
advisory services, must provide the consumer with the following
information on a durable medium–
(a) so that the consumer can understand the basis on which it is
made, whether the recommendation will be based upon
considering–
(i) only their own product range in accordance with sub-
regulation (4)(b); or
(ii) a wide range of products from across the market in
accordance with sub-regulation (4)(c); and
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(b) where applicable, the fee payable by the consumer for the
mortgage advisory services or, where the amount cannot be
ascertained at the time of disclosure, the method used for its
calculation.
(3) The information in sub-regulation (2) may be provided to the
consumer in the form of additional pre-contractual information.
(4) In addition to the requirements of regulations 18 and 21, where
mortgage advisory services are provided to consumers–
(a) a mortgage creditor, mortgage credit intermediary or appointed
representative must–
(i) obtain the necessary information regarding a consumer’s
personal and financial situation, preferences and objectives
so as to enable the recommendation of suitable mortgage
credit agreements;
(ii) ensure that any information obtained under paragraph (i) is
up to date at the time it is assessed for the purpose of
making a recommendation; and
(iii) take into account reasonable assumptions as to risks to the
consumer’s situation over the term of the proposed
mortgage credit agreement;
(b) a mortgage creditor, tied credit intermediary or appointed
representative of a tied credit intermediary must–
(i) consider a sufficiently large number of mortgage credit
agreements in their product range; and
(ii) from among those mortgage credit agreements recommend
one or more which are suitable for the consumer’s needs,
financial situation and personal circumstances;
(c) a mortgage credit intermediary which is not a tied credit
intermediary or an appointed representative of such a mortgage
credit intermediary must–
(i) consider a sufficiently large number of mortgage credit
agreements which are available on the market; and
(ii) from among those mortgage credit agreements recommend
one or more which are suitable for the consumer’s needs,
financial situation and personal circumstances;
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(d) a mortgage creditor, mortgage credit intermediary or appointed
representative must act in the best interests of the consumer
by–
(i) informing themselves about the consumer’s needs and
circumstances; and
(ii) recommending suitable mortgage credit agreements in
accordance with paragraphs (a), (b) and (c); and
(iii) providing the consumer with a record on a durable medium
of any recommendation provided; and
(e) a mortgage creditor, mortgage credit intermediary or appointed
representative must not use the description “independent
advice” or “independent advisor” in connection with providing
mortgage advisory services unless the mortgage creditor,
mortgage credit intermediary or appointed representative–
(i) considers a sufficiently large number of mortgage credit
agreements available on the market; and
(ii) where the number of mortgage creditors considered under
sub-paragraph (i) is less than a majority of the market, is
not remunerated for those mortgage advisory services by
one or more of those mortgage creditors.
(5) Mortgage creditors, mortgage credit intermediaries and appointed
representatives must warn a consumer when, considering the consumer’s
financial situation, a mortgage credit agreement may induce a specific risk
for the consumer.
(6) This regulation applies without limiting any obligation of a mortgage
creditor, mortgage credit intermediary or appointed representative under
regulation 28 to provide an adequate explanation to a consumer about a
mortgage credit agreement or ancillary service.
PART 10
FOREIGN CURRENCY AND VARIABLE RATE LOANS
Foreign currency loans.
35.(1) Where a mortgage credit agreement relates to a foreign currency
loan, at the time the mortgage credit agreement is concluded the mortgage
creditor must warn the consumer of the exchange rate risks to which the
consumer is exposed by borrowing in a foreign currency.
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(2) A mortgage creditor must warn a consumer who has a foreign
currency loan on a regular basis (on a durable medium) if, as a result of a
change in the exchange rate between Sterling and the currency of the
mortgage credit agreement since it was concluded, the regular instalments
payable by the consumer or the value of the total amount which remains
outstanding varies by more than 20%.
(3) A warning under sub-regulation (2) must inform the consumer of any
increase in the total amount payable by the consumer under the mortgage
credit agreement.
(4) The arrangements which apply to a consumer under this regulation
must be disclosed to the consumer in–
(a) the mortgage credit agreement; and
(b) the ESIS which relates to that agreement;
and, if the agreement contains no provision limiting the risk to which the
consumer is exposed by an exchange rate fluctuation of less than 20%, the
ESIS must include an illustrative example of the impact of a 20%
fluctuation in the exchange rate.
Variable rate credit.
36. A mortgage creditor must ensure that, where any mortgage credit
agreement is a variable rate credit–
(a) any indices or reference rates used to calculate the borrowing
rate are clear, accessible, objective and verifiable by the parties
to the mortgage credit agreement (and are made available upon
request to the FSC); and
(b) historical records of indices for calculating the borrowing rates
are maintained either by the providers of those indices or the
mortgage creditor.
PART 11
SOUND EXECUTION OF MORTGAGE CREDIT AGREEMENTS
AND RELATED RIGHTS
Early repayment.
37.(1) Subject to sub-regulation (2), a consumer has a right to discharge the
consumer’s obligations under a mortgage credit agreement (either fully or
partially) prior to its expiry and, in that event, the consumer is entitled to a
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reduction in the total cost of the credit to the consumer, such reduction
consisting of the interest and the costs for the remaining duration of the
contract.
(2) If early repayment would occur during a period for which the
borrowing rate under a mortgage credit agreement is fixed, a consumer may
only exercise the right under sub-regulation (1) where the mortgage creditor
is satisfied that the consumer’s circumstances have been adversely affected
by an event (such as bereavement, divorce, or loss of employment) which
was reasonably unforeseeable when the consumer entered into the mortgage
credit agreement.
(3) Where a consumer discharges obligations under a mortgage credit
agreement in accordance with sub-regulation (1), the mortgage creditor is
entitled to fair and objective compensation for the costs directly linked to
early repayment but any such compensation–
(a) must be justified;
(b) must not exceed the financial loss incurred by the mortgage
creditor; and
(c) must not amount to the imposition of a sanction on the
consumer.
(4) Where a mortgage creditor receives a request from a consumer to
discharge the consumer’s obligations under a mortgage credit agreement
prior to its expiry, the mortgage creditor must without delay provide the
consumer (on a durable medium) with the information necessary to consider
whether to pursue that request and the information must, at the least–
(a) quantify the implications for the consumer of discharging those
obligations prior to the expiry of the mortgage credit
agreement; and
(b) clearly set out any the assumptions used (which must be
reasonable and justifiable) in quantifying those implications.
Flexible and reliable markets.
38.(1) A mortgage creditor must keep appropriate records concerning–
(a) the types of immovable property accepted by the mortgage
creditor as security; and
(b) the related mortgage underwriting policies used by the
mortgage creditor.
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(2) The FSC must undertake appropriate statistical monitoring of the
residential property market in Gibraltar, including for market surveillance
purposes.
Information about borrowing rate changes.
39.(1) A mortgage creditor must inform a consumer, on a durable medium,
of any change in the borrowing rate under a mortgage credit agreement
before the change takes effect and the information provided must at least
state–
(a) the amount of the payments to be made after the new
borrowing rate takes effect; and,
(b) where the number or frequency of the payments is to change,
particulars of those changes.
(2) The parties to a mortgage credit agreement may agree in that
agreement that the information referred to in sub-regulation (1) is to be
given to the consumer periodically where–
(a) the change in the borrowing rate is correlated with a change in
a reference rate;
(b) the new reference rate is made publicly available by
appropriate means;
(c) information concerning the new reference rate is kept available
in the premises of the mortgage creditor; and
(d) the new reference rate is communicated personally to the
consumer together with the amount of new periodic
instalments.
(3) Where changes in the borrowing rate are determined by way of auction
on the capital markets, the mortgage creditor must, in good time before the
auction, inform the consumer on a durable medium of the upcoming
procedure and provide an indication of how the borrowing rate could be
affected.
Arrears and repossession or foreclosure.
40.(1) A mortgage creditor must exercise reasonable forbearance before
commencing possession or foreclosure proceedings in respect of any
residential immoveable property which is the security for a mortgage credit
agreement.
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(2) Any charges which a mortgage creditor may be permitted to impose on
a consumer arising from the consumers’ default under a mortgage credit
agreement must be no greater than is necessary to compensate the mortgage
creditor for costs it has incurred as a result of the default.
(3) Nothing in the sub-regulation (2) prohibits the parties to a mortgage
credit agreement from expressly agreeing that return or transfer to the
mortgage creditor of the security or proceeds from the sale of the security is
sufficient to repay the credit.
(4) Where the court grants a mortgage creditor possession of any
residential immoveable property, unless the court directs otherwise the
mortgage creditor must–
(a) sell the property as soon as possible; and
(b) obtain the best price that might reasonably be paid, taking
account of factors such as market conditions and the continuing
increase in the amount owed by the consumer.
(5) As soon as practicable after the sale, the mortgage creditor must take
reasonable steps–
(a) where the proceeds of sale are less than the amount due under
the mortgage credit agreement, to inform the consumer on a
durable medium–
(i) of the amount of the shortfall; and
(ii) whether and, if so, how the mortgage creditor intends to
seek to recover the shortfall; or
(b) where the proceeds of sale are more than the amount due under
the mortgage credit agreement–
(i) to inform the consumer on a durable medium of the amount
of the surplus; and
(ii) to pay it to the consumer (but subject to the rights of the
holder of any other mortgage or charge on the property).
PART 12
COOPERATION WITH OTHER COMPETENT AUTHORITIES
Obligation to cooperate.
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41.(1) The FSC must–
(a) cooperate with the competent authorities in EEA States
whenever doing so is necessary for the purpose of–
(i) carrying out their respective duties under the Mortgage
Credit Directive, or
(ii) making use of their respective powers under that Directive
or the law of Gibraltar;
(b) render assistance to the competent authorities in EEA States, in
particular, by exchanging information and cooperating in any
investigation or supervisory activities.
(2) The FSC–
(a) may request from the competent authority in an EEA State any
information which the FSC needs for the purposes of carrying
out its duties under these Regulations or the Mortgage Credit
Directive; and
(b) must without undue delay supply to the competent authority in
an EEA State any information it requests for the purposes of
carrying out its duties under that Directive.
(3) When the FSC exchanges any information with another competent
authority under these Regulations, either of them may indicate at the time
that the information must not be disclosed without their express agreement
and, in that event–
(a) the information is to be exchanged solely for the purposes
which they have agreed; and
(b) the information may only be transmitted to another person or
body (and solely for the agreed purposes) by the competent
authority which received it–
(i) with the express agreement of the competent authority
which disclosed it; or
(ii) in duly justified circumstances of which the disclosing
competent authority must be informed immediately.
(4) The FSC may refuse to act upon a request made to it under sub-
regulation (1) or (2) where–
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(a) it has received information to the effect that acting upon the
request may adversely affect the sovereignty, security or public
policy of Gibraltar;
(b) judicial proceedings have already been initiated in Gibraltar in
respect of the same actions and persons; or
(c) final judgement has already been delivered in in Gibraltar in
respect of the same actions and persons;
and in the event of such a refusal, the competent authority shall notify the
requesting competent authority accordingly, providing as detailed
information as possible.
(5) Where a request for cooperation or the exchange of information made
by the FSC to another competent authority has been rejected or not been
acted upon within a reasonable time, the FSC may refer the matter to the
EBA, requesting its assistance in accordance with Article 19 of Regulation
(EU) No 1093/2010.
PART 13
FINAL PROVISIONS
Offences and penalty fees.
42.(1) A person who carries on, or purports to carry any mortgage credit
activity in contravention of regulation 7(3) is guilty of an offence.
(2) Sections 49 to 52 of the Principal Act apply to an offence under sub-
regulation (1) as they apply to an offence under that Act.
(3) A person who contravenes any provision of these Regulations is liable
to a penalty fee under the Financial Services (Penalty Fees) Regulations
1993.
Enforcement and sanctions.
43.(1) The FSC’s powers under or by virtue of the Principal Act extend to
enforcing the provisions of these Regulations; and this sub-regulation
applies without limiting those powers or any provision of these
Regulations.
(2) Without limiting any other power, where the FSC is satisfied that a
contravention of these Regulations has occurred, it may be take the actions
specified in sub-regulations (3) to (5).
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(3) The FSC may publish a statement specifying–
(a) the nature of the contravention; and
(b) the identity of the person who has committed it.
(4) Publication under sub-regulation (3) may take any form, or
combination of forms, that the FSC thinks appropriate.
(5) The FSC may vary the terms and conditions of a person's section 8
licence by imposing limitations or restrictions upon it for a specified period,
which must not exceed 12 months.
(6) Sections 44 and 45 of the Principal Act apply to any action taken by
the FSC under sub-regulations (3) to (5) as if it was a decision specified in
section 44(1) of that Act.
(7) The FSC may disclose to the public any measure that is taken in
respect of a contravention of these Regulations, unless doing so would–
(a) seriously jeopardise the financial markets; or
(b) cause disproportionate damage to the parties involved.
Dispute resolution.
44. The Financial Services Ombudsman Act 2016 applies to disputes
arising under these Regulations as it applies to a financial service dispute
arising under a relevant Act.
Imperative nature of rights.
45.(1) A consumer may not waive any right conferred upon the consumer
by these Regulations.
(2) A term contained in any mortgage credit agreement or other contract is
void if, and to the extent that–
(a) it is inconsistent with a provision for the protection of the
consumer contained in these Regulations; or
(b) it purports in certain circumstances to impose a duty or liability
on the consumer which differs from or is in addition to any
duty or liability of the consumer which is specified by these
Regulations to apply in those circumstances.
Transitional provisions.
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46.(1) These Regulations do not apply to a mortgage credit agreement
which was entered into before 21 March 2016.
(2) A person who was performing mortgage intermediation activities in
Gibraltar before 20 March 2016 but who has not been authorised as a
mortgage credit intermediary in accordance with these Regulations may
continue to perform those activities in Gibraltar in accordance with
regulation 7(3)(b) until 21 March 2017.
(3) Sub-regulation (2) only authorises a mortgage credit intermediary to
perform mortgage intermediation activities in Gibraltar.
(4) A mortgage creditor, mortgage credit intermediary or appointed
representative who was performing mortgage credit activities before 20
March 2014 must comply with the requirements of regulation 21 by 21
March 2017.
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SCHEDULE 1
CONSEQUENTIAL AMENDMENTS AND MODIFICATIONS
Financial Services (Investment and Fiduciary Services) Act.
1.(1) The Principal Act is amended as follows.
(2) In Schedule 3, at the end of that Schedule, insert–
“7. Mortgage credit activity.
Carrying on by way of business, in or from Gibraltar, any of the
following activities, which constitute mortgage credit activity within
the meaning of the Financial Services (Mortgage Credit) Regulations
2016–
(a) acting as a mortgage creditor;
(b) acting as a mortgage credit intermediary; or
(c) providing mortgage advisory services.”.
(3) In Schedule 4, at the end of Part I, insert–
“(i) a person who, in respect of mortgage credit activity within the
meaning of the Financial Services (Mortgage Credit)
Regulations 2016, is by virtue of regulation 7(4) of those
regulations exempt from the need to hold a licence granted
under section 8.”.
Financial Services (Licensing) Regulations, 1991.
2.(1) The Financial Services (Licensing) Regulations, 1991 are amended as
follows.
(2) In Schedule 1, at the end of that Schedule, insert–
“Mortgage
credit activity
(Paragraph 7,
Schedule 3 to
the Act).
XV(a) Mortgage Creditor
XV(b) Mortgage Credit Intermediary
XV(c) Mortgage Advisory Services
Provider”.
Financial Services (Penalty Fees) Regulations, 1993.
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3.(1) The Financial Services (Penalty Fees) Regulations, 1993 are amended
as follows.
(2) In the Schedule, at the end of that Schedule insert–
“Financial Services (Mortgage Credit) Regulations 2016
All
regulations,
other than
regulation 5
Failure to comply with the
provisions of the regulations
Level 5”.
Financial Services (Consumer Credit) Act 2011.
4.(1) The Financial Services (Consumer Credit) Act 2011 is amended as
follows.
(2) In section 4, after subsection (4) insert–
“(5) Despite subsection (2)(c) this Act applies to unsecured credit
agreements the purpose of which is the renovation of a residential
immovable property involving a total amount of credit above Euro
75 000.”.
Financial Services (Capital Requirements Directive IV) Regulations
2013.
5.(1) The Financial Services (Capital Requirements Directive IV)
Regulations 2013 are amended as follows.
(2) After regulation 56 insert–
“Investigations by European Parliament.
56A. Regulations 55 and 56 are without prejudice to the powers of
investigation conferred upon the European Parliament under Article
226 of the Treaty on the Functioning of the European Union.”.
Disapplication of Regulations.
6.(1) The following Regulations made under the Principal Act do not apply
to mortgage credit activity–
(a) the Financial Services (Advertisements) Regulations, 1991;
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(b) the Financial Services (Conduct of Business) Regulations,
1991; and
(c) the Financial Services (Unsolicited Calls) Regulations, 1991.
(2) The Minister may, by regulations, amend the list in subparagraph (1)
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SCHEDULE 2
CALCULATION OF THE ANNUAL PERCENTAGE RATE OF
CHARGE (APRC)
I. Basic equation expressing the equivalence of drawdowns on the one
hand and repayments and charges on the other.
The basic equation, which establishes the annual percentage rate of charge
(APRC), equates, on an annual basis, the total present value of drawdowns
on the one hand and the total present value of repayments and payments of
charges on the other hand, i.e.—
where–
X is the APRC;
m is the number of the last drawdown
k is the number of a drawdown, thus l ≤ k≤ m;
Ck is the amount of drawdown k;
tk is the interval, expressed in years and fractions of a year, between the date
of the first drawdown and the date of each subsequent drawdown, thus t1 =
0;
m′ is the number of the last repayment or payment of charges;
l is the number of a repayment or payment of charges;
Dl is the amount of a repayment or payment of charges;
Sl is the interval, expressed in years and fractions of a year, between the date
of the first drawdown and the date of each repayment or payment of
charges.
Remarks:
(a) The amounts paid by both parties at different times shall not
necessarily be equal and shall not necessarily be paid at equal
intervals.
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(b) The starting date shall be that of the first drawdown.
(c) Intervals between dates used in the calculations shall be
expressed in years or in fractions of a year. A year is presumed
to have 365 days (or 366 days for leap years), 52 weeks or 12
equal months. An equal month is presumed to have 30,41666
days (i.e. 365/12) regardless of whether or not it is a leap year.
Where intervals between dates used in the calculations cannot be
expressed as a whole number of weeks, months or years, the
intervals shall be expressed as a whole number of one of those
periods in combination with a number of days. Where using
days–
(i) every day shall be counted, including weekends and
holidays;
(ii) equal periods and then days shall be counted backwards
to the date of the initial drawdown;
(iii) the length of the period of days shall be obtained
excluding the first day and including the last day and
shall be expressed in years by dividing this period by the
number of days (365 or 366 days) of the complete year
counted backwards from the last day to the same day of
the previous year.
(d) The result of the calculation shall be expressed with an
accuracy of at least one decimal place. If the figure at the
following decimal place is greater than or equal to 5, the figure
at the preceding decimal place shall be increased by one.
(e) The equation can be rewritten using a single sum and the
concept of flows (Ak), which will be positive or negative, in
other words either paid or received during periods 1 to n,
expressed in years, i.e.:
S being the present balance of flows. If the aim is to maintain the
equivalence of flows, the value will be zero.
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II. Additional assumptions for the calculation of the APRC.
(a) If a credit agreement gives the consumer freedom of
drawdown, the total amount of credit shall be deemed to be
drawn down immediately and in full.
(b) If a credit agreement provides different ways of drawdown
with different charges or borrowing rates, the total amount of
credit shall be deemed to be drawn down at the highest charge
and borrowing rate applied to the most common drawdown
mechanism for this type of credit agreement.
(c) If a credit agreement gives the consumer freedom of drawdown
in general but imposes, amongst the different ways of
drawdown, a limitation with regard to the amount of credit and
period of time, the amount of credit shall be deemed to be
drawn down on the earliest date provided for in the credit
agreement and in accordance with those drawdown limits.
(d) If different borrowing rates and charges are offered for a
limited period or amount, the highest borrowing rate and
charges shall be deemed to be the borrowing rate and charges
for the whole duration of the credit agreement.
(e) For credit agreements for which a fixed borrowing rate is
agreed in relation to the initial period, at the end of which a
new borrowing rate is determined and subsequently
periodically adjusted according to an agreed indicator or
internal reference rate the calculation of the APRC shall be
based on the assumption that, at the end of the fixed borrowing
rate period, the borrowing rate is the same as at the time of
calculation of the APRC, based on the value of the agreed
indicator or internal reference rate at that time, but is not less
than the fixed borrowing rate.
(f) If the ceiling applicable to the credit has not yet been agreed,
that ceiling is assumed to be EUR 170,000. In the case of credit
agreements - other than contingent liabilities or guarantees -
the purpose of which is not to acquire or retain a right in
immovable property or land, overdrafts, deferred debit cards or
credit cards this ceiling is assumed to be EUR 1,500.
(g) In the case of credit agreements other than overdrafts, bridging
loans, shared equity credit agreements, contingent liabilities or
guarantees and open-ended credit agreements as referred to in
the assumptions set out in points (i), (j), (k), (l) and (m)–
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(i) if the date or amount of a repayment of capital to be
made by the consumer cannot be ascertained, it shall be
assumed that the repayment is made at the earliest date
provided for in the credit agreement and is for the lowest
amount for which the credit agreement provides;
(ii) if the interval between the date of initial drawdown and
the date of the first payment to be made by the consumer
cannot be ascertained, it shall be assumed to be the
shortest interval.
(h) Where the date or amount of a payment to be made by the
consumer cannot be ascertained on the basis of the credit
agreement or the assumptions set out in points (g), (i), (j), (k),
(l) and (m) it shall be assumed that the payment is made in
accordance with the dates and conditions required by the
creditor and, when these are unknown–
(i) interest charges are paid together with the repayments of
the capital;
(ii) non-interest charges expressed as a single sum are paid
at the date of the conclusion of the credit agreement;
(iii) non-interest charges expressed as several payments are
paid at regular intervals, commencing with the date of
the first repayment of capital, and if the amount of such
payments is not known they shall be assumed to be equal
amounts;
(iv) the final payment clears the balance of capital, interest
and other charges, if any.
(i) In the case of an overdraft facility, the total amount of credit
shall be deemed to be drawn down in full and for the whole
duration of the credit agreement. If the duration of the
overdraft facility is not known, the APRC shall be calculated
on the assumption that the duration of the credit is three
months.
(j) In the case of a bridging loan, the total amount of credit shall
be deemed to be drawn down in full and for the whole duration
of the credit agreement. If the duration of the credit agreement
is not known the APRC shall be calculated on the assumption
that the duration of the credit is 12 months.
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(k) In the case of an open ended credit agreement, other than an
overdraft facility and bridging loan, it shall be assumed that–
(i) for credit agreements, the purpose of which is to acquire
or retain rights in immovable property the credit is
provided for a period of 20 years starting from the date
of the initial drawdown, and that the final payment made
by the consumer clears the balance of capital, interest
and other charges, if any; in the case of credit
agreements the purpose of which is not to acquire or
retain rights in immovable property or which are drawn
down by deferred debit cards or credit cards, this period
shall be of one year;
(ii) the capital is repaid by the consumer in equal monthly
payments, commencing one month after the date of the
initial drawdown. However, in cases where the capital
must be repaid only in full, in a single payment, within
each payment period, successive drawdowns and
repayments of the entire capital by the consumer shall be
assumed to occur over the period of one year. Interest
and other charges shall be applied in accordance with
those drawdowns and repayments of capital and as
provided for in the credit agreement.
For the purposes of this point, an open-ended credit agreement is a
credit agreement without fixed duration and includes credits which must
be repaid in full within or after a period but, once repaid, become
available to be drawn down again.
(l) In the case of contingent liabilities or guarantees, the total
amount of credit shall be deemed to be drawn down in full as a
single amount at the earlier of–
(i) the latest draw down date permitted under the credit
agreement being the potential source of the contingent
liability or guarantee; or
(ii) in the case of a rolling credit agreement at the end of the
initial period prior to the rollover of the agreement.
(m) In the case of shared equity credit agreements–
(i) the payments by consumers shall be deemed to occur at
the latest date or dates permitted under the credit
agreement;
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(ii) percentage increases in value of the immovable property
which secures the shared equity credit agreement, and
the rate of any inflation index referred to in the
agreement, shall be assumed to be a percentage equal to
the higher of the current central bank target inflation rate
or the level of inflation in the Member State where the
immovable property is located at the time of conclusion
of the credit agreement or 0% if those percentages are
negative.
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SCHEDULE 3
EUROPEAN STANDARDISED INFORMATION SHEET (ESIS)
PART 1
(Introductory text)
This document was produced for [name of consumer] on
[current date].
This document was produced on the basis of the information
that you have provided so far and on the current financial
market conditions.
The information below remains valid until [validity date],
(where applicable) apart from the interest rate and other costs.
After that date, it may change in line with market conditions.
(Where applicable) This document does not constitute an
obligation for [name of mortgage creditor] to grant you a loan.
1. Lender
[Name]
[Telephone number]
[Geographical address]
(Optional) [E-mail address]
(Optional) [Fax number]
(Optional) [Web address]
(Optional) [Contact person/point]
(Where applicable information as to whether mortgage
advisory services are being provided:)
[We recommend, having assessed your needs and
circumstances, that you take out this mortgage.][We are not
recommending a particular mortgage for you. However, based
on your answers to some questions, we are giving you
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information about this mortgage so that you can make your
own choice.]
2. (Where applicable) Mortgage credit intermediary
[Name]
[Telephone number]
[Geographical address]
[E-mail address] (Optional)
[Fax number] (Optional)
[Web address] (Optional)
[Contact person/point] (Optional)
(Where applicable [information as to whether mortgage
advisory services are being provided]) [(We recommend,
having assessed your needs and circumstances, that you take
out this mortgage./We are not recommending a particular
mortgage for you. However, based on your answers to some
questions, we are giving you information about this mortgage
so that you can make your own choice.)]
[Remuneration]
3. Main features of the loan
Amount and currency of the loan to be granted:
[value][currency]
(Where applicable) This loan is not in [national currency of the
borrower].
(Where applicable) The value of your loan in [national
currency of the borrower] could change.
(Where applicable) For example, if the value of [national
currency of the borrower] fell by 20 % relative to [credit
currency], the value of your loan would increase to [insert
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amount in national currency of the borrower]. However, it
could be more than this if the value of [national currency of
the borrower] falls by more than 20%.
(Where applicable) The maximum value of your loan will be
[insert amount in national currency of the borrower]. (Where
applicable) You will receive a warning if the credit amount
reaches [insert amount in national currency of the borrower].
(Where applicable) You will have the opportunity to [insert
right to renegotiate foreign currency loan or right to convert
loan into [relevant currency] and conditions].
Duration of the loan: [duration]
[Type of loan]
[Type of applicable interest rate]
Total amount to be reimbursed (repaid):
This means that you will pay back [amount] for every [unit of
the currency] borrowed.
(Where applicable) [This/Part of this] is an interest-only loan.
You will still owe [insert amount of loan on an interest- only
basis] at the end of the mortgage term.
(Where applicable) Value of the property assumed to prepare
this information sheet: [insert amount]
(Where applicable) Maximum available loan amount relative
to the value of the property [insert ratio] or Minimum value of
the property required to borrow the illustrated amount [insert
amount]
(Where applicable) [Security]
4. Interest rate and other costs
The annual percentage rate of charge (APRC) is the total cost
of the loan expressed as an annual percentage. The APRC is
provided to help you to compare different offers.
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The APRC applicable to your loan is [APRC].
It comprises:
Interest rate [value in percentage or, where applicable,
indication of a reference rate and percentage value of
mortgage creditor’s spread]
[Other components of the APRC]
Costs to be paid on a one-off basis
(Where applicable) You will need to pay a fee to register the
mortgage. [Insert amount of fee where known or basis for
calculation.]
Costs to be paid regularly
(Where applicable) This APRC is calculated using
assumptions regarding the interest rate.
(Where applicable) Because [part of] your loan is a variable
interest rate loan, the actual APRC could be different from this
APRC if the interest rate for your loan changes. For example,
if the interest rate rose to [scenario as described in Part 2], the
APRC could increase to [insert illustrative APRC
corresponding to the scenario].
(Where applicable) Please note that this APRC is calculated on
the basis that the interest rate remains at the level fixed for the
initial period throughout the duration of the contract.
(Where applicable) The following costs are not known to the
lender and are therefore not included in the APRC: [Costs]
(Where applicable) You will need to pay a fee to register the
mortgage.
Please make sure that you are aware of all other taxes and
costs associated with your loan.
5. Frequency and number of payments
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Repayment frequency: [frequency]
Number of payments: [number]
6. Amount of each instalment
[Amount] [currency]
Your income may change. Please consider whether you will
still be able to afford your [frequency] repayment instalments
if your income falls.
(Where applicable) Because [this/part of this] is an interest-
only loan you will need to make separate arrangements to
repay the [insert amount of loan on an interest-only basis] you
will owe at the end of the mortgage term. Remember to add
any extra payments you will need to make to the instalment
amount shown here.
(Where applicable) The interest rate on [part of] this loan can
change. This means the amount of your instalments could
increase or decrease. For example, if the interest rate rose to
[scenario as described in Part 2] your payments could increase
to [insert instalment amount corresponding to the scenario].
(Where applicable) The value of the amount you have to pay
in [national currency of the borrower] each [frequency of
instalment] could change. (Where applicable) Your payments
could increase to [insert maximum amount in national
currency of the borrower] each [insert period]. (Where
applicable) For example, if the value of [national currency of
the borrower] fell by 20 % relative to [credit currency] you
would have to pay an extra [insert amount in national currency
of the borrower] each [insert period]. Your payments could
increase by more than this.
(Where applicable) The exchange rate used for converting
your repayment in [credit currency] to [national currency of
the borrower] will be the rate published by [name of institution
publishing exchange rate] on [date] or will be calculated on
[date] using [insert name of benchmark or method of
calculation].
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(Where applicable) [Details on tied savings products, deferred-
interest loans]
7. (Where applicable) Illustrative repayment table
This table shows the amount to be paid every [frequency].
The instalments (column [relevant no.]) are the sum of interest
to be paid (column [relevant no.]), where applicable, capital
paid (column [relevant no.]) and, where applicable, other costs
(column [relevant no.]). (Where applicable) The costs in the
other costs column relate to [list of costs]. Outstanding capital
(column [relevant no.]) is the amount of the loan that remains
to be reimbursed (repaid) after each instalment.
[Table]
8. Additional obligations
The borrower must comply with the following obligations in
order to benefit from the lending conditions described in this
document.
[Obligations]
(Where applicable) Please note that the lending conditions
described in this document (including the interest rate) may
change if these obligations are not complied with.
(Where applicable) Please note the possible consequences of
terminating at a later stage any of the ancillary services
relating to the loan:
[Consequences]
9. Early repayment
You have the possibility to (the right to) repay this loan early,
either fully or partially.
(Where applicable) [Conditions]
(Where applicable) Exit charge (Early repayment charge):
[insert amount or, where not possible, the method of
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calculation]
(Where applicable) Should you decide to repay this loan early,
please contact us to ascertain the exact level of the exit charge
(early repayment charge) at that moment.
10. Flexible features
(Where applicable) [Information on portability/subrogation]
You have the possibility to (the right to) transfer this loan to
another [lender][or] [property]. [Insert conditions]
(Where applicable) You do not have the possibility to (the
right to) transfer this loan to another [lender] [or] [property].
(Where applicable) Additional features: [insert explanation of
additional features listed in Part 2 and, optionally, any other
features offered by the lender as part of the mortgage credit
agreement not referred to in previous sections].
11. Other rights of the borrower
You have [length of reflection period] after [point in time
when the reflection period begins] to reflect before committing
yourself to taking out this loan.
12. Complaints
If you have a complaint please contact [insert internal contact
point and source of information on procedure].
(Where applicable) Maximum time for handling the complaint
[period of time]
(Where applicable) [If we do not resolve the complaint to your
satisfaction internally,] you can also contact: [insert name of
external body for out-of-court complaints and redress] (Where
applicable) or you can contact FIN-NET for details of the
equivalent body in your own country.
13. Non-compliance with the commitments linked to the
loan: consequences for the borrower
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[Types of non-compliance]
[Financial and/or legal consequences]
Should you encounter difficulties in making your [frequency]
payments, please contact us straight away to explore possible
solutions.
(Where applicable) As a last resort, your home may be
repossessed if you do not keep up with payments.
(Where applicable)
14. Additional information
(Where applicable) [Indication of the law applicable to the
credit contract].
(Where the lender intends to use a language different from the
language of the ESIS) Information and contractual terms will
be supplied in [language]. With your consent, we intend to
communicate in [language/s] during the duration of the
mortgage credit agreement.
[Insert statement on right to be provided with or offered, as
applicable, a draft mortgage credit agreement]
15. Supervisor
This lender is supervised by [Name(s), and web address(es) of
supervisory authority/ies]
(Where applicable) This mortgage credit intermediary is
supervised by [Name and web address of supervisory
authority].
PART 2
INSTRUCTIONS TO COMPLETE THE ESIS
In completing the ESIS, at least the following instructions must be followed.
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Where a mortgage credit agreement is divided into more than one part, the
mortgage creditor must set out the required ESIS content in respect of each
part.
The sections referred to are sections in the ESIS.
Where the form includes the following words and phrases in round brackets,
the mortgage creditor may use that word or phrase instead of the one
immediately before it–
(a) “repaid” (in sections 3 and 7, and in section 3 of this Part 2);
(b) “right to” (in sections 9 and 10);
(c) “early repayment charge” (in section 9);
Introductory text.
(1) The validity date must be properly highlighted. For the purpose of this
section, the ‘validity date’ means the length of time the information, e.g. the
borrowing rate, contained in the ESIS will remain unchanged and will apply
should the mortgage creditor decide to grant the credit within this period of
time. Where the determination of the applicable borrowing rate and other
costs depends on the results of the selling of underlying bonds, the eventual
borrowing rate and other costs may be different from those stated. In those
circumstances only, it must be stipulated that the validity date does not
apply to the borrowing rate and other costs by adding the words: ‘apart from
the interest rate and other costs’.
1. Lender.
(1) Name, telephone number, and geographical address of the mortgage
creditor must refer to the contact information that the consumer may use for
future correspondence.
(2) Information on the e-mail address, fax number, web address and contact
person/point is optional.
(3) In line with Article 3 of Directive 2002/65/EC, where the transaction is
being offered at a distance, the mortgage creditor must indicate, where
applicable, the name and geographical address of its representative in the
Member State of residence of the consumer. Indication of the telephone
number, e-mail address and web address of the representative of the credit
provider is optional.
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(4) Where Section 2 is not applicable, the mortgage creditor must inform
the consumer whether mortgage advisory services are being provided and
on what basis using the wording in Part 1.
2. Mortgage credit intermediary (where applicable).
Where the product information is being provided to the consumer by a
mortgage credit intermediary, that intermediary must include the following
information:
(1) Name, telephone number and geographical address of the mortgage
credit intermediary must refer to the contact information that the consumer
may use for future correspondence.
(2) Information on the e-mail address, fax number, web address and contact
person/point is optional.
(3) The mortgage credit intermediary must inform the consumer whether
mortgage advisory services are being provided and on what basis using the
wording in Part 1.
(4) An explanation of how the mortgage credit intermediary is being
remunerated. Where it is receiving commission from a mortgage creditor,
the amount and, where different from the name in Section 1, the name of the
mortgage creditor must be provided. Where the amount of remuneration is
not known at the time when the ESIS is provided, the mortgage credit
intermediary must provide a range of representative examples.
(5) In the event that a mortgage creditor provides a consumer with a
binding offer and the characteristics of the offer are different from the
information in the ESIS previously provided by the mortgage credit
intermediary, if the mortgage credit intermediary confirms to the mortgage
creditor that the revised transaction can proceed, the mortgage creditor may
complete section 2 and update the wording to say “[Name of mortgage
credit intermediary] recommends…/ [Name of mortgage credit
intermediary] is not recommending…” instead of “We recommend…/ We
are not recommending”.
3. Main features of the loan.
(1) This section must clearly explain the main characteristics of the credit,
including the value and currency and the potential risks associated with the
borrowing rate, including the ones referred to in point (8), and amortisation
structure.
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(2) Where the credit currency is different from the national currency of the
consumer, the mortgage creditor must indicate that the consumer will
receive a regular warning at least when the exchange rate fluctuates by more
than 20 %, where applicable the right to convert the currency of the
mortgage credit agreement or to the possibility to renegotiate the conditions
and any other arrangements available to the consumer to limit their
exposure to exchange rate risk. Where there is a provision in the mortgage
credit agreement to limit the exchange rate risk, the mortgage creditor must
indicate the maximum amount the consumer could have to pay back. Where
there is no provision in the mortgage credit agreement to limit the exchange
rate risk to which the consumer is exposed to a fluctuation in the exchange
rate of less than 20 %, the mortgage creditor must indicate an illustration of
the effect of a 20 % fall in the value of consumer’s national currency
relative to the credit currency on the value of the credit.
(3) The duration of the credit must be expressed in years or months,
whichever is the most relevant. Where the duration of the credit can vary
during the lifetime of the contract, the mortgage creditor must explain when
and under which conditions this can occur. Where the credit is open-ended,
for example, for a secured credit card, the mortgage creditor must clearly
state that fact.
(4) The type of credit must be clearly indicated (e.g. mortgage credit, home
loan, secured credit card). The description of the type of credit must clearly
indicate how the capital and the interest must be reimbursed during the life
of the credit (i.e. the amortisation structure), specifying clearly whether the
mortgage credit agreement is on capital repayment or interest-only basis, or
a mixture of the two.
(5) Where all or part of the credit is an interest-only credit, a statement
clearly indicating that fact must be inserted prominently at the end of this
section using the wording in Part 1.
(6) This section must explain whether the borrowing rate is fixed or
variable and, where applicable, the periods during which it will remain
fixed; the frequency of subsequent revisions and the existence of limits to
the borrowing rate variability, such as caps or floors.
The formula used to revise the borrowing rate and its different components
(e.g. reference rate, interest rate spread) must be explained. The mortgage
creditor must indicate, e.g. by means of a web address, where further
information on the indices or rates used in the formula can be found, e.g.
Euribor or central bank reference rate.
(7) If different borrowing rates apply in different circumstances, the
information must be provided on all applicable rates.
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(8) The ‘total amount to be reimbursed (repaid)’ corresponds to the total
amount payable by the consumer. It must be shown as the sum of the credit
amount and the total cost of the credit to the consumer. Where the
borrowing rate is not fixed for the duration of the contract, it must be
highlighted that this amount is illustrative and may vary in particular in
relation with the variation in the borrowing rate.
(9) Where the credit will be secured by a mortgage on the immovable
property or another comparable security or by a right related to immovable
property, the mortgage creditor must draw the consumer’s attention to this.
Where applicable the mortgage creditor must indicate the assumed value of
the immovable property or other security used for the purpose of preparing
this information sheet.
In order for the mortgage creditor to comply with the principle of ‘clear, fair
and not misleading’, where the assumed value is not a value provided by the
consumer, the valuation must be a reasonable assessment based on all the
facts available at the time.
(10) The mortgage creditor must indicate, where applicable, either–
(a) ‘maximum available loan amount relative to the value of the
property’, indicating the loan-to-value ratio. This ratio is to be
accompanied by an example in absolute terms of the maximum
amount that can be borrowed for a given property value; or
(b) the ‘minimum value of the property required by the mortgage
creditor to lend the illustrated amount’.
(11) Where credits are multi-part credits (e.g. concurrently part fixed rate,
part variable rate), this must be reflected in the indication of the type of
credit and the required information must be given for each part of the credit.
(12) The amount of loan to be granted is–
(a) in cases where, on the basis of the information obtained from
the consumer, before providing the ESIS it is clear that the
consumer would not be eligible to borrow the amount he
requested, an estimate of the amount that the consumer could
borrow based on the information obtained from the consumer.
This does not require information to be obtained from the
consumer before providing an ESIS to ascertain the amount the
consumer is eligible to borrow, instead, this means that the
mortgage creditor does not have to provide the consumer with
an ESIS for an amount he knows the consumer would not be
eligible for, based on whatever information it has obtained
from the consumer before providing the ESIS; or
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(b) where it is known that the loan will be released in instalments,
for example, in the case of a self-build mortgage–
(i) where the lender has made a binding offer for the full
amount, the total amount of the loan required and not the
amount of the initial instalment;
(ii) where the lender has made a binding offer for an initial
amount, the initial amount; and
(iii) where the lender’s binding offer for an initial amount has
been replaced by a binding offer for a larger amount, the
larger amount.
4. Interest rate and other costs.
(1) The reference to ‘interest rate’ corresponds to the borrowing rate or
rates.
(2) The borrowing rate must be mentioned as a percentage value. Where the
borrowing rate is variable and based on a reference rate the mortgage
creditor may indicate the borrowing rate by stating a reference rate and a
percentage value of mortgage creditor’s spread. The mortgage creditor must
however indicate the value of the reference rate valid on the day of issuing
the ESIS.
Where the borrowing rate is variable the information must include: (a) the
assumptions used to calculate the APRC; (b) where relevant, the applicable
caps and floors and (c) a warning that the variability could affect the actual
level of the APRC. In order to attract the consumer’s attention the font size
used for the warning must be bigger and must figure prominently in the
main body of the ESIS. The warning must be accompanied by an illustrative
example on the APRC.
Where there is a cap on the borrowing rate, the example must assume that
the borrowing rate rises at the earliest possible opportunity to the highest
level foreseen in the mortgage credit agreement. Where there is no cap the
example must illustrate the APRC at the highest borrowing rate in at least
the last 20 years, or where the underlying data for the calculation of the
borrowing rate is available for a period of less than 20 years the longest
period for which such data is available, based on the highest value of any
external reference rate used in calculating the borrowing rate where
applicable or the highest value of a benchmark rate specified by a competent
authority or EBA where the mortgage creditor does not use an external
reference rate. Such requirement must not apply to mortgage credit
agreements where the borrowing rate is fixed for a material initial period of
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several years and may then be fixed for a further period following
negotiation between the mortgage creditor and the consumer.
For mortgage credit agreements where the borrowing rate is fixed for a
material initial period of several years and may then be fixed for a further
period following negotiation between the mortgage creditor and the
consumer, the information must include a warning that the APRC is
calculated on the basis of the borrowing rate for the initial period. The
warning must be accompanied by an additional, illustrative APRC
calculated in accordance with Article 17(5). Where credits are multi-part
credits (e.g. concurrently part fixed rate, part variable rate), the information
must be given for each part of the credit. Where credits are multi-part
credits, the mortgage creditor must calculate and provide the additional
illustrative APRC once in respect of the entire mortgage credit agreement.
(3) The benchmark rate is the difference in percentage points between the
Bank of England’s base rate on the date the ESIS is issued and the highest
value of the Bank of England’s base rate over at least the last 20 years,
added to the borrowing rate shown in the ESIS.
When more than one interest rate applies during the term of the mortgage
credit agreement, for example, because there is an initial fixed or discounted
interest rate period, the mortgage creditor must calculate the benchmark rate
by reference to the reversionary borrowing rate shown in the ESIS.
When calculating the benchmark rate, the mortgage creditor may–
(a) calculate the last 20 years from up to three months prior to the
date the ESIS is issued; and
(b) extend the period for calculating the benchmark rate beyond
the last 20 years to any period longer than 20 years.
In the event of a scenario in column (1) in the table immediately below, the
mortgage creditor must calculate the illustrative example of the APRC (the
additional APRC) in accordance with column (2) of the table.
(1) Scenario (2) Calculation of additional
APRC
NB: A mortgage creditor’s
standard variable rate is not
to be used as an external
reference rate (ERR)
Mortgage with an interest-
rate cap
Calculate the APRC based on
the borrowing rate rising at the
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earliest possible opportunity to
the level of the cap.
Where the product is not
linked to an ERR
Use the benchmark rate.
Mortgage creditor uses an
ERR and has 20 years of
data relating to the margin
applied by the mortgage
creditor
Use the highest ERR in the
previous 20 years, and apply
the highest margin over that or
lowest margin under it, to
produce the highest additional
APRC.
Mortgage creditor uses an
ERR and has less than 20
years of data relating to the
margin applied by the
mortgage creditor
Use the highest ERR in the
previous 20 years, and apply
the highest margin over that or
lowest margin under it, used in
the period of data available, to
produce the highest additional
APRC.
Mortgage creditor
comprises a group which
contains separate legal
entities or comprises distinct
product brands and has 20
years of data relating to the
margin applied by that legal
entity or product brand. It
may have similar products
across entities or brands
within the same group or
company with different
margins above or below the
ERR
Use the highest ERR in the
previous 20 years with respect
to the pricing approach for the
specific legal entity or product
brand and apply the highest
margin over that or lowest
margin under it to produce the
highest additional APRC.
Mortgage creditor
comprises a group which
contains separate legal
entities or comprises distinct
product brands and has less
than 20 years of data
relating to the margin
applied by that legal entity
or product brand. It may
have similar products across
entities or brands within the
same group or company
with different margins
above or below the ERR.
Use the highest ERR in the
previous 20 years with respect
to the pricing approach for the
specific legal entity or product
brand and apply the highest
margin over that or lowest
margin under it used in the
period of data available to
produce the highest additional
APRC.
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Mortgage creditor has
previously purchased a
brand that uses an ERR and
has 20 years of data relating
to the margin applied by the
mortgage creditor for the
same product
Where the purchaser is
carrying on new lending under
the purchased brand - same as
above, using previous
mortgage creditor’s data
where relevant and where it
may be reasonably obtained.
Mortgage creditor has
previously purchased a
brand that uses an ERR and
has less than 20 years of
data relating to the margin
applied by the mortgage
creditor for the same
product
Where the purchaser is
carrying on new lending under
the purchased brand - same as
above, using previous
mortgage creditor’s data,
where relevant and where it
may be reasonably obtained.
Otherwise, use the benchmark
rate.
Mortgage creditor has
different ERR calculation
methods that apply over
time (e.g., 0.5% over Bank
of England rate for the first
two years and then 2% over
Bank of England rate for the
rest of the mortgage
lifetime).
Calculate using the method
which produces the highest
additional APRC.
Mortgage creditor has
different methods that apply
to different proportions of
the principal (e.g., ERR +
x% applies to 50% principal
and SVR applies to the
other 50%)
Calculate using the ERR
where applicable and the
benchmark rate, where
applicable, and use both to
calculate the additional APRC.
Mortgage creditor uses an
ERR where its basis has
changed in the past 20 years
Consider whether there was an
equivalent predecessor ERR
and use the ERR (and its
equivalent predecessor(s), if
any) provided that it (or they)
have existed at least 20 years,
otherwise use the benchmark
rate.
Mortgage creditor has an
ERR calculation method
that applies for a fixed
period of time after which
the lender’s standard
variable rate applies (e.g.,
Calculate using the method
which produces the highest
additional APRC.
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0.5% over Bank of England
rate for the first two years
and then the lender’s
standard variable rate
applies for the rest of the
mortgage lifetime).
(4) In the section on ‘other components of the APRC’ all the other costs
contained in the APRC must be listed, including one-off costs such as
administration fees, and regular costs, such as annual administration fees.
The mortgage creditor must list each of the costs by category (costs to be
paid on a one-off basis, costs to be paid regularly and included in the
instalments, costs to be paid regularly but not included in the instalments),
indicating their amount, to whom they are to be paid and when. This does
not have to include costs incurred for breaches of contractual obligations.
Where the amount is not known, the mortgage creditor must provide an
indication of the amount if possible, or if not possible, how the amount will
be calculated and specify that the amount provided is indicative only. Where
certain costs are not included in the APRC because they are unknown to the
mortgage creditor, this must be highlighted.
Where the consumer has informed the mortgage creditor of one or more
components of his preferred credit, such as the duration of the mortgage
credit agreement and the total amount of credit, the mortgage creditor must,
where possible, use those components; if a mortgage credit agreement
provides different ways of drawdown with different charges or borrowing
rates and the mortgage creditor uses the assumptions set out in Schedule 2
to these Regulations, it must indicate that other drawdown mechanisms for
this type of mortgage credit agreement may result in a higher APRC. Where
the conditions for drawdown are used for calculating the APRC, the
mortgage creditor must highlight the charges associated with other
drawdown mechanisms that are not necessarily the ones used in calculating
the APRC.
(5) Where a fee is payable for registration of the mortgage or comparable
security that must be disclosed in this section with the amount, where
known, or where this is not possible the basis for determining the amount.
Where the fees are known and included in the APRC the existence and
amount of the fee must be listed under ‘Costs to be paid on a one-off basis’.
Where the fees are not known to the mortgage creditor and therefore not
included in the APRC the existence of the fee must be clearly mentioned in
the list of costs which are not known to the mortgage creditor. In either case
the standardised wording in Part 1 must be used under the appropriate
heading.
5. Frequency and number of payments.
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(1) Where payments are to be made on a regular basis, the frequency of
payments must be indicated (e.g. monthly). Where the frequency of
payments will be irregular, this must be clearly explained to the consumer.
(2) The number of payments indicated must cover the whole duration of the
credit.
6. Amount of each instalment
(1) The credit currency and currency and amount of the instalments must be
clearly indicated.
(2) Where the amount of the instalments may change during the life of the
credit, the mortgage creditor must specify the period during which that
initial instalment amount will remain unchanged and when and how
frequently afterwards it will change.
(3) Where all or part of the credit is an interest-only credit, a statement
clearly indicating that fact, must be inserted prominently at the end of this
section using the wording in Part 1.
If there is a requirement for the consumer to take out a tied savings product
as a condition for being granted an interest-only credit secured by a
mortgage or another comparable security, the amount and frequency of any
payments for this product must be provided.
(4) Where the borrowing rate is variable the information must include a
statement indicating that fact, using the wording in Part 1 and an illustration
of a maximum instalment amount. Where there is a cap, the illustration must
show the amount of the instalments if the borrowing rate rises to the level of
the cap. Where there is no cap, the worst case scenario must illustrate the
level of instalments at the highest borrowing rate in the last 20 years, or
where the underlying data for the calculation of the borrowing rate is
available for a period of less than 20 years the longest period for which such
data is available, based on the highest value of any external reference rate
used in calculating the borrowing rate where applicable, or the highest value
of a benchmark rate specified by–
(i) point 3 of section 4 in this Part 2;
(ii) another competent authority; or
(iii) the European Banking Authority,
where the mortgage creditor does not use an external reference rate.
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The requirement to provide an illustrative example must not apply to
mortgage credit agreements where the borrowing rate is fixed for a material
initial period of several years and may then be fixed for a further period
following negotiation between the mortgage creditor and the consumer.
Where credits are multi-part credits (e.g. concurrently part fixed rate, part
variable rate), the information must be given for each part of the credit, and
in total.
(5) (Where applicable) Where the credit currency is different from the
consumer’s national currency or where the credit is indexed to a currency
which is different from the consumer’s national currency, the mortgage
creditor must include a numerical example clearly showing how changes to
the relevant exchange rate may affect the amount of the instalments using
the wording in Part 1. That example must be based on a 20 % reduction in
the value of the consumer’s national currency together with a prominent
statement that the instalments could increase by more than the amount
assumed in that example. Where there is a cap which limits that increase to
less than 20 %, the maximum value of the payments in the consumer’s
currency must be given instead and the statement on the possibility of
further increases omitted.
(6) Where the credit is fully or partly a variable rate credit and point 3
applies, the illustration in point 5 must be given on the basis of the
instalment amount referred to in point 1.
(7) Where the currency used for the payment of instalments is different
from the credit currency or where the amount of each instalment expressed
in the consumer’s national currency depends on the corresponding amount
in a different currency, this section must indicate the date at which the
applicable exchange rate is calculated and either the exchange rate or the
basis on which it will be calculated and the frequency of their adjustment.
Where applicable such indication must include the name of institution
publishing the exchange rate.
(8) Where the credit is a deferred-interest credit under which interest due is
not fully repaid by the instalments and is added to the total amount of credit
outstanding, there must be an explanation of: how and when deferred
interest is added to the credit as a cash amount; and what the implications
are for the consumer in terms of their remaining debt.
7. Illustrative repayment table.
(1) This section must be included where the credit is a deferred interest
credit under which interest due is not fully repaid by the instalments and is
added to the total amount of credit outstanding or where the borrowing rate
is fixed for the duration of the mortgage credit agreement.
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Where the consumer has the right to receive a revised amortisation table,
this must be indicated along with the conditions under which the consumer
has that right.
(2) The table to be included in this section must contain the following
columns: ‘repayment schedule’ (e.g. month 1, month 2, month 3), ‘amount
of the instalment’, ‘interest to be paid per instalment’, ‘other costs included
in the instalment’ (where relevant), ‘capital repaid per instalment’ and
‘outstanding capital after each instalment’.
(3) For the first repayment year the information must be given for each
instalment and a subtotal must be indicated for each of the columns at the
end of that first year. For the following years, the detail can be provided on
an annual basis. An overall total row must be added at the end of the table
and must provide the total amounts for each column. The total cost of the
credit paid by the consumer (i.e. the overall sum of the ‘amount of the
instalment’ column) must be clearly highlighted and presented as such.
(4) Where the borrowing rate is subject to revision and the amount of the
instalment after each revision is unknown, the mortgage creditor may
indicate in the amortisation table the same instalment amount for the whole
credit duration. In such a case, the mortgage creditor must draw that fact to
the attention of the consumer by visually differentiating the amounts which
are known from the hypothetical ones (e.g. using a different font, borders or
shading). In addition, a clearly legible text must explain for which periods
the amounts represented in the table may vary and why.
8. Additional obligations.
(1) The mortgage creditor must refer in this section to obligations such as
the obligation to insure the immovable property, to purchase life insurance,
to have a salary paid into an account with the mortgage creditor or to buy
any other product or service. For each obligation, the mortgage creditor
must specify towards whom and by when the obligation needs to be
fulfilled.
(2) The mortgage creditor must specify the duration of the obligation, e.g.
until the end of the mortgage credit agreement. The mortgage creditor must
specify for each obligation any costs to be paid by the consumer, which are
not included in the APRC.
(3) The mortgage creditor must state whether it is compulsory for the
consumer to hold any ancillary services to obtain the credit on the stated
terms, and if so whether the consumer is obliged to purchase them from the
mortgage creditor’s preferred supplier or whether they may be purchased
from a provider of consumer’s choice. Where such possibility is conditional
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on the ancillary services meeting certain minimum characteristics, such
characteristics must be described in this section.
Where the mortgage credit agreement is bundled with other products the
mortgage creditor must state the key features of those other products and
clearly state whether the consumer has a right to terminate the mortgage
credit agreement or the bundled products separately, the conditions for and
implications of doing so, and, where applicable, of the possible
consequences of terminating the ancillary services required in connection
with the mortgage credit agreement.
9. Early repayment.
(1) The mortgage creditor must indicate under what conditions the
consumer can repay the credit early, either fully or partially.
(2) In the section on exit charges the mortgage creditor must draw the
consumer’s attention to any exit charge or other costs payable on early
repayment in order to compensate the mortgage creditor and where possible
indicate their amount. In cases where the amount of compensation would
depend on different factors, such as the amount repaid or the prevailing
interest rate at the moment of the early repayment, the mortgage creditor
must indicate how the compensation will be calculated and provide the
maximum amount that the charge might be, or where this is not possible, an
illustrative example in order to demonstrate to the consumer the level of
compensation under different possible scenarios.
(3) The mortgage creditor may make the following changes to the wording
in this section–
(a) replace the word “possibility” with “right” (shown in round
brackets) i.e. “You have the right to repay this loan early,
either fully or partially”;
(b) replace the words “Exit charge” and “exit charge” with “Early
repayment charge” or “early repayment charge” (shown in
round brackets).
10. Flexible features.
(1) Where applicable, the mortgage creditor must explain the possibility to
and conditions for transferring the credit to another mortgage creditor or
immovable property.
The mortgage creditor may replace “possibility to” with the “the right to”
(shown in round brackets).
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(2) (Where appropriate) Additional features: Where the product contains
any of the features listed in point 5, this section must list these features and
provide a brief explanation of: the circumstances in which the consumer can
use the feature; any conditions attached to the feature; if the feature being
part of the credit secured by a mortgage or comparable security means that
the consumer loses any statutory or other protections usually associated with
the feature; and the firm providing the feature (if not the mortgage creditor).
(3) If the feature contains any additional credit, then this section must
explain to the consumer: the total amount of credit (including the credit
secured by the mortgage or comparable security); whether the additional
credit is secured or not; the relevant borrowing rates; and whether it is
regulated or not. Such additional credit amount must either be included in
the original creditworthiness assessment or, if it is not, this section must
make clear that the availability of the additional amount is dependent on a
further assessment of the consumer’s ability to repay.
(4) If the feature involves a savings vehicle, the relevant interest rate must
be explained.
(5) The possible additional features are: ‘Overpayments/Underpayments’
[paying more or less than the instalment ordinarily required by the
amortisation structure]; ‘Payment holidays’ [periods where the consumer is
not required to make payments]; ‘Borrow back’ [ability for the consumer to
borrow again funds already drawn down and repaid]; ‘Additional borrowing
available without further approval’; ‘Additional secured or unsecured
borrowing’ [in accordance with point 3 above]; ‘Credit card’; ‘Linked
current account’; and ‘Linked savings account’.
(6) The mortgage creditor may include any other features offered by the
mortgage creditor as part of the mortgage credit agreement not mentioned in
previous sections.
11. Other rights of the borrower.
(1) The mortgage creditor must clearly specify the consumer’s reflection
period and where applicable other rights such as, portability (including
subrogation) that exist, specify the conditions to which this/these right(s) is
subject, the procedure that the consumer will need to follow in order to
exercise this/these right(s), inter alia, the address to which the notification of
withdrawal must be sent, and the corresponding fees (where applicable).
(2) In line with Article 3 of Directive 2002/65/EC, where the transaction is
being offered at a distance, the consumer must be informed of the existence
or absence of a right of withdrawal.
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12. Complaints.
(1) This Section must indicate the internal contact point [name of the
relevant department] and a means of contacting them to complain
[Geographical address] or [Telephone number] or [Contact person:] [contact
details] and a link to the complaints procedure on the relevant page of a
website or similar information source.
(2) It must indicate the name of the relevant external body for out-of-court
complaints and redress (i.e. Financial Services Ombudsman) and that
customers should seek to resolve a complaint using the firm’s internal
complaint procedure before referring a complaint to the Financial Services
Ombudsman, using the wording in Part 1.
(3) In the case of mortgage credit agreements with a consumer who is
resident in another Member State, the mortgage creditor must refer to the
existence of FIN-NET (http://ec.europa.eu/internal_market/fin-net/).
13. Non-compliance with the commitments linked to the credit:
consequences for the borrower.
(1) Where non-observance of any of the consumer’s obligations linked to
the credit may have financial or legal consequences for the consumer, the
mortgage creditor must describe in this section the different main cases (e.g.
late payments/ default, failure to respect the obligations set out in Section 8
‘Additional obligations’) and indicate where further information could be
obtained.
(2) For each of those cases, the mortgage creditor must specify, in clear,
easy comprehensible terms, the sanctions or consequences to which they
may give rise. Reference to serious consequences must be highlighted.
The disclosure required by (1) relates to “main cases”, rather than every
case.
The mortgage creditor may provide detail relating to the (2) in the terms and
conditions of the mortgage credit agreement.
(3) Where the immovable property used to secure the credit may be
returned or transferred to the mortgage creditor, if the consumer does not
comply with the obligations, this section must include a statement indicating
that fact, using the wording in Part 1.
14. Additional information.
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(1) In the case of distance marketing, this section will include any clause
stipulating the law applicable to the mortgage credit agreement or the
competent court.
(2) Where the mortgage creditor intends to communicate with the consumer
during the life of the contract in a language different from the language of
the ESIS that fact must be included and the language of communication
named. This is without prejudice to point (g) of point 3 of paragraph 1 of
Article 3 of Directive 2002/65/EC.
(3) The mortgage creditor or mortgage credit intermediary must state the
consumer’s right to be provided with or offered, as applicable, a copy of the
draft mortgage credit agreement at least once an offer binding on the
mortgage creditor has been made.
15. Supervisor.
(1) The relevant authority or authorities for the supervision of the pre-
contractual stage of lending must be indicated.
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SCHEDULE 4
MINIMUM KNOWLEDGE AND COMPETENCE REQUIREMENTS
1. The minimum knowledge and competence requirements for mortgage
creditors’, mortgage credit intermediaries’ and appointed representatives’
staff referred to in regulation 21 and for persons involved in the
management of mortgage credit intermediaries or appointed representatives
referred to in regulations 9(1)(c)(ii), 10(7)(b) and 11(8)(b) need to include at
least–
(a) appropriate knowledge of credit products within the scope of
regulation 3 and the ancillary services typically offered with
them;
(b) appropriate knowledge of the laws related to the mortgage
credit agreements for consumers, in particular consumer
protection;
(c) appropriate knowledge and understanding of the immovable
property purchasing process;
(d) appropriate knowledge of security valuation;
(e) appropriate knowledge of organisation and functioning of land
registers;
(f) appropriate knowledge of the market in Gibraltar;
(g) appropriate knowledge of business ethics standards;
(h) appropriate knowledge of the consumer’s creditworthiness
assessment process or where applicable, competence in
assessing consumers’ creditworthiness;
(i) appropriate level of financial and economic competency.
2. When establishing minimum knowledge and competence requirements,
the FSC may differentiate between the levels and types of requirements
applicable to the staff of mortgage creditors, the staff of mortgage credit
intermediaries or appointed representatives and the management of
mortgage credit intermediaries or appointed representatives.
3. Subject to paragraph 4, the FSC may determine the appropriate level of
knowledge and competence on the basis of—
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(a) professional qualifications; or
(b) relevant professional experience (which may be defined as a
minimum number of years working in areas related to the
origination, distribution or intermediation of credit products).
4. After 21 March 2019, any determination of appropriate level of
knowledge and competence must not be based solely on relevant
professional experience.
