Regulation, conduct rules and consumer protection (FCA, MCOB, TCF, complaints and redress)
Domain 4 - Regulation, conduct rules and consumer protection
This domain tests the rulebook rather than the product: which sourcebook applies at each stage, how the Consumer Duty overlays the advice process, and how complaints and redress work.
The MCOB framework
MCOB 2 (conduct of business), MCOB 3 (financial promotions), MCOB 4 (advice and disclosure of scope and fees), MCOB 5 (pre-application disclosure via the ESIS), MCOB 6 (offer document), MCOB 7 (post-completion disclosure), MCOB 11 (responsible lending and affordability), MCOB 12 (charges) and MCOB 13 (arrears and repossessions, including a written arrears policy and forbearance). Financial promotions must be fair, clear and not misleading under COBS 4.
Consumer Duty
The Duty sits above the detail. Four outcomes - products and services, price and value, consumer understanding, consumer support - plus three cross-cutting rules: act in good faith, avoid foreseeable harm, and enable and support customers to pursue their financial objectives. It applies to retail mortgage customers, including those in arrears and those with vulnerable characteristics, and firms must evidence outcomes, not just intentions.
Complaints and redress
Under DISP 1, complaints must be handled promptly; a summary resolution communication is available where a complaint is resolved to the client's satisfaction within three business days; otherwise a final response is due within eight weeks. If the client remains dissatisfied, they have six months from the final response to refer to the Financial Ombudsman Service, which can award up to £430,000 (as at 2024). The Ombudsman decides on what is fair and reasonable, not merely what is legally compliant.
Worked example
A client complains on 3 March that a fixed-rate recommendation was unsuitable. Acknowledge promptly, investigate the fact-find and suitability rationale, and issue a final response by 3 May (eight weeks). If upheld, offer a remedy; if rejected, enclose the FOS leaflet and note the six-month referral window, expiring around 3 November.
Traps
Confusing the eight-week final-response deadline with the six-month FOS deadline; believing TCF checklists prove Consumer Duty compliance; forgetting MCOB 13 in arrears cases; and failing to keep the suitability rationale that would defend the complaint.