MMR Quiz

1. MMR Quiz Based on CP11/31 and answers remain unchanged

2. Question 1 • Which of the following is NOT regarded as a vulnerable customer? • SRB • RTB • Equity Release • FTB

3. Question 2 • What can a vulnerable customer not do?

4. Question 3 • Which of the following types of customer cannot buy mortgages through a non-interactive online or postal service? • Debt Consolidation • Lending into retirement • Equity Release • FTB

5. Question 4 • Which of the following vulnerable customers is not allowed to reject advice and proceed on an execution only basis? • SRB • RTB • Equity Release • Debt Consolidation

6. Question 5 • How long must a customer have worked in the home finance sector in a professional capacity to qualify as being described as a professional? • 6 months • 12 months • 24 months • 30 months

7. Question 6 • What is MMR an acronym for? • Mortgage Market Review • Mortgage Market Regulation • Mortgage Marketing Regulations • Mortgage Marketing Requirements

8. Question 7 • The ultimate responsibility for assessing affordability rests with; • The adviser or intermediary • The lender • It is a joint responsibility

9. Question 8 • The FSA states that the intermediary should have no role in assessing affordability TRUE or FALSE?

10. Question 9 • Which of the following sales processes with be permitted under the proposals • Advised • Non- Advised • Execution Only

11. Question 10 Sales involving an interactive dialogue between the intermediary and consumer (not HNW/Professional) conducted through social media will be classified as • Execution Only • Advised Sales

12. Question 11 • For execution only business what are the 7 key things a consumer should be able to provide an intermediary?

13. Question 12 • For execution only business firms must have a policy in place which sets out • The amount of business the firm expects to carry out on an execution only basis • Its processes and procedures for ensuring compliance with the rules surrounding the sale of products on an execution-only basis • The arrangements for regularly monitoring and auditing compliance with its own processes and procedures TRUE OR FALSE

14. Question 13 • Under existing rules intermediaries are obliged to recommend the ‘most suitable’ product from all those available to them. Under the proposals what is this to be replaced with?

15. Question 14 • Which two categories of customer can opt out of receiving advice an proceed on an execution only basis?

16. Question 15 • At what QCF level has the FSA set the qualification for mortgage sellers and designers of scripted questions • Level 2 • Level 3 • Level 4 • Level 6

17. Question 16 • Existing sellers will be given how long to complete a relevant qualification from the date the rules come into force • 12 months • 18 months • 24 months • 30 months

18. Question 17 • New sellers will be given how long to reach the new qualification standard • 24 months • 30 months • 36 months • No time limit applies

19. Question 18 • When will a code of Ethics be introduced for the mortgage market? • It was considered but dismissed • June 2012 having been delayed from 2011 • 31/12/12 to tie in with the RDR requirements • As a condition of the extension of the approved persons regime

20. Question 19 • In an execution only sale what essential piece of information must be kept along with • The product information provided by the consumer • The relevant disclosures around the protections the consumer will lose and, where the sale involves human interaction, the positive election to proceed • The intermediary’s execution only policy

21. Question 20 • The requirement to provide an IDD in every case has changed. In future this will only be mandatory when dealing with vulnerable customers • TRUE OR FALSE

22. Question 21 • IDD is being replaced with the requirement to disclose key information about the intermediary’s service- the basis of their remuneration and scope of their service – in a clear and prominent manner. When dealing with face to face sales it is acceptable to provide these disclosures in written form only. • TRUE or FALSE?

23. Question 22 • To comply with the oral disclosure requirement which of the following have the FSA included in their guidance? • Intermediaries record every conversation they have with consumers • Requirements are built into staff training • Every consumers signs a declaration that they have received the messages • Training & compliance manuals detail requirements • Prompts inserted in paper based or automated sales systems • Procedures in place to monitor staff compliance with the rules

24. Question 23 • Mortgage advisers with have to describe their services as independent or restricted to mirror the requirements of the RDR • TRUE OR FALSE?

25. Question 24 • For a mortgage adviser to hold themselves up as ‘independent’ they must always offer an option to the consumer to pay by fees • TRUE or FALSE?

26. Question 25 • Where an intermediary have limitations in their product range what is the alternative option to telling the consumer the name of each lender as part of their disclosure?

27. Question 26 • Joe Bloggs, Independent Mortgage Adviser does not offer advice from an unlimited range from across the relevant market. Is this okay?

28. Question 27 • Intermediaries should reiterate the scope of service when presenting the consumer with specific information about a product, following an assessment of their needs and circumstances. Is there an exception to the requirement? If so when?

29. Question 28 • Currently for pre application KFIs consumers must receive a KFI each time they get information about a product from an intermediary that is specific to the amount they wish to borrow. How is it proposed this will change?

30. Question 29 • Under the proposals how many trigger points will there be for when a consumer will be given a pre-application KFI • 2 • 3 • 4 • 5For bonus points please name them

31. Question 30 • Why do the proposed changes under MMR spell the end for Self Cert Mortgages and Fast Track Mortgages?

32. Question 31 • Over what period of time must lenders consider interest rate forecasts in applying the interest rate stress test under the affordability proposals? • 2 years • 3 years • 4 years • 5 years

33. Question 32 • What is the minimum interest rate tolerance that must be used when applying the stress test? • 0.50% • 0.75% • 1.00% • 1.50%

34. Question 33 • For interest only mortgages affordability if there is a credible repayment strategy there is no need to assess affordability on a capital and interest basis. • TRUE or FALSE?

35. Question 34 • Affordability calculations must always be based on a maximum repayment term of 25 years • TRUE or FALSE?

36. Question 35 • What adjustments might a lender be permitted to make to a consumer looking to consolidate debt to ensure that they get the best possible loan amount? • Ignore non secured lending repayments when determining affordability • Ignore the level of existing debts when calculating the amount that can be borrowed • Assume that the debts to be consolidated are- and take reasonable steps to do so • Increase the repayment period to age 75

37. Question 36 • New borrowers, after the MMR rules become effective will no longer be able to choose a repayment term that takes them beyond their 65th birthday • TRUE or FALSE?

38. Question 37 • In addition to considering committed expenditure lenders will also have to take into account basic essential expenditure AND basic quality of living costs when determining affordability • TRUE or FALSE?

39. Question 38 • For interest only mortgages it is not permissible to offer a speculative repayment strategy, such as reliance on increased property prices • TRUE or FALSE?