MCOB suitability: the seven things advisers consistently get wrong

MCOB 4.7 sets out the suitability requirements for mortgage advice — and it is specific. Advisers must document why a recommended mortgage is suitable, why alternatives were not recommended, and how the product meets the customer's needs and circumstances. Most advisers understand this in principle. In practice, the same shortfalls appear repeatedly in case file reviews.

The most common include: suitability letters that repeat product features rather than explaining why those features are right for this customer; affordability calculations that use current income without acknowledging the customer's stated expectation of income change; term recommendations that are not justified relative to the customer's age and intended retirement date; and rate type selections — fixed versus variable — that are not explicitly linked to the customer's stated attitude to payment risk.

Two others stand out in cases involving vulnerability: files where a vulnerability indicator was noted in conversation but not captured in the written record; and cases where the recommendation was modified in response to customer preference, but the file does not show that the compliance implications of that modification were discussed. Identifying these patterns systematically — across all cases, not a sample — is what separates networks with confident compliance postures from those perpetually reacting to individual file failures.