CeMAP MRT1 Additional Security, Fees, Charges & Purchase Taxes question: broker charges Edwin

CeMAP MRT1Additional Security, Fees, Charges & Purchase Taxes

A broker charges Edwin £4,000 to arrange a simple £100,000 remortgage, several times what similar firms charge. The fee was shown only in small print. Which statement is correct?

A The fee may be excessive under MCOB 12.5.2R, judged against market fees, abuse of trust and disclosure
B Broker fees are a commercial matter outside MCOB, so any fee Edwin agreed to is allowed
C The fee is acceptable because it appeared in the initial disclosure, however small the print
D The fee is excessive only if it is more than 1% of the loan amount, which is the MCOB maximum

Show the answer and explanation

Answer: A. The fee may be excessive under MCOB 12.5.2R, judged against market fees, abuse of trust and disclosure

MCOB 12.5.2R requires firms to ensure their charges for arranging or advising on a regulated mortgage contract are not excessive. MCOB 12.5.3G says to consider the charge against those for similar services, the degree to which it abuses the customer's trust, and how clearly it was disclosed. Disclosure alone does not make a fee fair, and MCOB sets no 1% maximum. The Consumer Duty's price and value outcome (PRIN 2A) points the same way.

Common mistake

Thinking any disclosed fee is automatically acceptable.

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