UK Financial Regulation
Certificate in Mortgage Advice and Practice (CeMAP™)
Module 1 – Syllabus
Learning Outcomes
Unit 1 Introduction to Financial Services Environment and Products
On completion of this part of the module, candidates will be expected to:
Demonstrate an understanding of:
1 the purpose and structure of the UK financial services industry
2 the main financial asset classes and their characteristics, covering past performance, risk and return
3 the main financial services product types and their functions
4 the main financial advice areas
5 the process of giving financial advice, including the importance of regular reviews of the consumer’s circumstances
6 the basic legal concepts relevant to financial advice
7 the UK taxation and social security systems and how they affect personal financial circumstances
8 the impact of inflation, interest rate volatility and other relevant socio-economic factors on personal financial plans
Unit 2 UK Financial Services and Regulation
On completion of this part of the module, candidates will be expected to:
Demonstrate a knowledge of:
1 the main aims and activities of the Financial Services Authority (FSA), and its approach to ethical conduct by firms and individuals
2 how other non-tax laws and regulations impact upon firms and the process of advising clients
Demonstrate an understanding of:
1 the FSA’s approach to regulating firms and individuals
2 how the FSA’s rules affect the control structures of firms and their relationship with the FSA
3 how the FSA’s Conduct of Business rules apply to the process of advising customers/clients
4 how the Anti-Money Laundering rules apply to dealings with private and intermediate customers
5 the main features of the rules for dealing with complaints and compensation
6 how The Data Protection Act 1998 affects the provision of financial advice and the conduct of firms generally.
Detailed Syllabus
Unit 1 Introduction to Financial Services Environment and Products
Attainment Level |
Outcome |
Indicative Content |
Approximate Weighting |
Demonstrate an understanding of: |
1 The purpose and structure of the UK financial services industry |
U1.1 The function of the financial services industry in the economy – transferring funds between individuals, businesses and government – risk management U1.2 The main institutions/organisations – markets, retail institutions, wholesale institutions U1.3 The role of the EU and of the UK government – regulation, taxation, economic and monetary policy, provision of welfare and benefits |
10% |
2 The main financial asset classes and their characteristics, covering past performance, risk and return |
U2.1 Cash deposits U2.2 Government securities and corporate bonds – fixed interest and index linked U2.3 Equities U2.4Property – residential and commercial |
10% |
|
3 The main financial services product types and their functions |
U3.1 Direct investment – cash, government securities and corporate bonds, equities and property U3.2 Collective investments – structure, tax and charges – OEICs/unit trusts, investment trusts and companies, life assurance contracts, offshore funds U3.3 Derivatives – their structure and purpose U3.4 Mortgages and other loans – personal and commercial U3.5 Pensions |
20% |
|
4 The main financial advice areas |
U4.1 Budgeting U4.2 Protection U4.3 Borrowing U4.4 Investment and saving U4.5 Retirement planning U4.6 Estate planning U4.7 Tax planning |
10% |
|
5 The process of giving financial advice, including the importance of regular reviews of the consumer’s circumstances |
U5.1 The nature of the client relationship, confidentiality, trust and consumer protection U5.2 The information required from consumers and methods of obtaining it U5.3 Factors determining how to match solutions with consumer needs and demands U5.4 How to assess affordability and suitability U5.5 The importance of communication skills in giving advice and how to adapt advice to customers with different capacities and needs U5.6 The importance of monitoring and review of consumers’ circumstances U5.7 Information for consumers and when it should be provided (outline only) |
10% |
|
6 The basic legal concepts relevant in financial advice |
U6.1 Legal persons – individuals, wills, intestacy, personal representatives (and administration of estates), trustees, companies, limited liabilities, partnerships U6.2 Contract, capacity U6.3 Agency U6.4 Real property, personal property and joint ownership U6.5 Powers of attorney and enduring powers of attorney U6.6 Insolvency and bankruptcy |
15% |
|
7 The UK taxation and social security systems and how they affect personal financial circumstances |
U7.1 UK Income tax system – liability to income tax, allowances, reliefs, rates, grossing up interest and dividends, employed and self-employed income, priorities for taxing different classes of income, gift aid, Give As You Earn U7.2 Capital gains tax – liability to CGT, disposals, death, deductions, losses, main exemptions, indexation relief, taper relief, basic calculation of chargeable gains U7.3 Inheritance tax – liability to IHT, main exemptions, basic calculation of IHT liabilities U7.4 Stamp duty land tax and stamp duty reserve tax on securities U7.5 National insurance U7.6 VAT U7.7 Social security benefits |
20% |
|
8 The impact of inflation, interest rate volatility and other relevant socio-economic factors on personal financial plans |
U8.1 Definition of inflation U8.2 The difference between fixed and variable interest rates and how they affect the affordability, suitability and performance of financial products in both the long and short term |
5% |
Unit 2 UK Financial Services and Regulation
Attainment Level |
Outcome |
Indicative Content |
Approximate Weighting |
Demonstrate a knowledge of: |
1 The main aims and activities of the Financial Services Authority (FSA) and its approach to ethical conduct by firms and individuals |
K1.1 The Financial Services and Markets Act 2000 K1.2 The FSA’s main objectives, role and activities K1.3 The FSA’s principles for businesses and approved persons – how they reflect the need for ethical behaviour by firms and approved persons, FSA guidance (for example, Treating Customers Fairly) K1.4 Arrangements, systems and controls for senior managers K1.5 The fit and proper test for approved persons K1.6 The prevention of crime, including market abuse and insider dealing |
10% |
2 How other non-tax laws and regulations are relevant to firms and to the process of advising clients |
K2.1 The Office of Fair Trading and the Consumer Credit legislation K2.2 The Pensions Regulator K2.3 Unfair Contract Terms; Advertising Standards Authority; Banking Code K2.4 EU directives K2.5 CAT and stakeholder standards |
10% |
|
Demonstrate an understanding of: |
1 The FSA’s approach to regulating firms and individuals |
U1.1 Authorisation of firms, regulated activities & regulated investments, firms’ status (independent or other) U1.2 Capital adequacy U1.3 FSA supervision and the risk based approach U1.4 Discipline and enforcement including notification requirements |
10% |
2 How the FSA’s rules affect the control structures of firms and their relationship with the FSA |
U2.1 Approved persons and controlled functions U2.2 Advertising and financial promotion rules U2.3 Reporting and record keeping U2.4 Training and competence rules U2.5 Specific rules for independent financial advisers and whole of market advisers |
20% |
|
3 How the FSA’s Conduct of Business Rules apply to the process of advising customers/clients |
U3.1 Types of customer U3.2 Terms of business, client agreements and initial disclosure documents U3.3 Status of advisers and status disclosure to customers U3.4 Advice and know your customer rules U3.5 Suitability of advice U3.6 Execution-only sales U3.7 Charges and commissions U3.8 Cooling off and cancellation U3.9 Product disclosure U3.10 Simplified advice on the stakeholder suite of products U3.11 Regulatory rules for mortgage advice – MCOB U3.12 Future regulatory rules for general insurance advice – ICOB |
30% |
|
Demonstrate an understanding of: |
4 How the Anti-Money Laundering rules apply to dealings with private and intermediate customers |
U4.1 Proceeds of Crime Act 2002 U4.2 Proceeds of crime – definition U4.3 Money laundering offences U4.4 Client identification procedures U4.5 Record keeping requirements U4.6 Reporting procedures U4.7 Training requirements U4.8 Enforcement |
10% |
5 The main features of the rules for dealing with complaints and compensation |
U5.1 Firms’ internal complaints procedures U5.2 The Financial Ombudsman Service (FOS) U5.3 The Financial Services Compensation Scheme (FSCS) |
5% |
|
6 How the Data Protection Act 1998 affects the provision of financial advice and the conduct of firms generally |
U6.1 Definitions in the Data Protection Act U6.2 The data protection principles U6.3 Enforcement of the Data Protection Act |
5% |
Mortgages
Certificate in Mortgage Advice and Practice (CeMAP™)
Module 2 – Syllabus
Learning Outcomes
Unit 3 Mortgage Law, Policy Practice and Markets
On completion of the module, candidates will be expected to
Demonstrate a knowledge of:
1 the definition of a mortgage.
2 the house-buying process, the key parties involved and their roles.
3 the principal types of property defect that surveys can identify and understand their implications when seeking a mortgage, including the options available to consumers.
4 the process and implications of buying property at auction
5 the common types of borrower and how their main mortgage related requirements may differ and what factors may disqualify people from borrowing
Demonstrate an understanding of\:
1 the main requirements of the Mortgage Conduct of Business Rules and the legislation affecting mortgages.
2 the economic and regulatory context for giving mortgage advice
Unit 4 Mortgage Applications
On completion of the module, candidates will be expected to
Demonstrate an understanding of:
1 the role of a Mortgage Adviser and the importance and principles of providing advice, including the key factors affecting the advice given
2 the implications for consumers of 'gazumping' and 'gazundering'
3 the purpose of additional security, including the role of guarantors
4 the fees and charges involved in arranging a mortgage, identify where these apply, the services they cover, when they become due, which are refundable and how the opportunity for refunds diminishes as the process nears completion.
U5 the principal factors affecting the value of property, including their implications for consumers seeking mortgages and when consumers should be referred for specialist advice.
U6 the different forms of valuation and survey and which might be appropriate for different properties and/or the borrower's circumstances.
U7 the need to obtain Local Authority planning consent for house development/extensions.
Unit 5 Mortgage Payment Methods and Products
On completion of the module, candidates will be expected to
Demonstrate an understanding of:
1 the key features of the different types of mortgage repayment options and their advantages and disadvantages for different types of borrower
2 the key features of the common types of mortgage product and interest rate options
3 the structure and features of other types of mortgage
4 the main features and functions of different forms of life assurance and other insurances (eg mortgage payment protection insurance (MPPI), life, accident and sickness insurance (ASU), building insurance, contents insurance) associated with arranging a mortgage
Unit 6 Mortgage Arrears and Post-Completion
On completion of the module, candidates will be expected to
Demonstrate an understanding of:
1 the principles and procedures associated with raising additional money and the circumstances when further borrowing might be appropriate.
2 the principles, procedures and costs associated with transferring mortgages.
3 the principles of using mortgages within debt consolidation arrangements.
4 the implications for the borrower of the non-payment of mortgages, other breaches of the Mortgage Deed, non-payment of building insurance and the options available.
5 the legal rights/remedies available in respect of non-payment from borrowers.
6 the main provisions made by the State to assist consumers in difficulties over the repayment of mortgages.
Detailed Syllabus
Unit 3 Mortgage Law, Policy Practice and Markets
Attainment Levels |
Outcome |
Indicative Content |
Approximate Weighting |
Demonstrate a knowledge of: |
1 the definition of a mortgage. |
K1.1 definition as given in the FSA Handbook |
5% |
2 the house-buying process, the key parties involved and their roles |
England/Wales K2.1a role of estate agent/valuer/conveyancer/legal adviser; K2.2a process to contract exchange/completion and when a contract becomes binding; K2.3a proposed use of home information packs (as published in the Housing Act 2004). OR Scotland K2.1b role of estate agent/valuer/legal adviser; K2.2b conditional/unconditional offer; K2.3b private bargain/private treaty; K2.4 acceptance/completion/conclusion of missives; see separate ' Mortgage Conduct of Business Rules' requirements' |
15% |
|
3 the principal types of property defect that surveys can identify and understand their implications when seeking a mortgage, including the options available to consumers |
K3.1 main property defects; K3.2 how property defects may affect the lending decision and/or require immediate remedial works. |
10% |
|
4 the process and implications of buying property at auction. |
K4.1 requirement for funding (ie cash/mortgage commitment) to be in place up front; K4.2 contracts exchanged, with associated deposit, on the day |
10% |
|
5 the common types of borrower and how their main mortgage related requirements may differ and what factors may disqualify people from borrowing |
K5.1 private/residential borrowers; K5.2 intermediary/business/commercial borrowers (outline only); K5.3 those who cannot borrow:
|
10%
|
|
Demonstrate an understanding of: |
1 the main requirements of the Mortgage Conduct of Business Rules and the legislation affecting mortgages |
Requirements of the Mortgage Conduct of Business Rules U1.1 National House-Building Council guarantees U1.2 Property Misdescriptions Act U1.3 Contract Law U1.4 Principles of Agency U1.5 Consumer credit law U1.6 Principles of testacy and intestacy, including grants of probate and letters of administration U1.7 Legal obligations and guarantors U1.8 Lenders Rights and Borrowers Covenant U1.9 Financial Services and Markets Act 2000 (including the Mortgage Conduct of Business Rules) England/Wales/Northern Ireland: U1.10 Property Law (Law of Property Act 1925, Leasehold Reform Act 1967, Leasehold Reform, Housing and Urban Development Act 1993) OR Scotland: U1.11 policies, as determined by the Scottish Executive, affecting the mortgage process and property market in Scotland; U1.12 Matrimonial Homes Act (e.g. single borrowers require an affidavit); U1.13 Tenancy Act; U1.14 Mortgage Rights Act; U1.15 Statutory Repair Act; U1.16 Bankruptcy Act (refers to 'sequestration' in Scotland); U1.17 Land Tenure Reform Act (note – new legislation due 2003); U1.18 legislation regarding intestacy – impact upon partner where mortgagee dies intestate; U1.19 Feu disposition (reference Land Certificate in England/Wales); U1.20 Court decree (reference County Court Judgment in England/Wales). |
40% |
2 the economic and regulatory context for giving mortgage advice |
U2.1 the property market and the main conditions that affect it U2.2 interest rates and their drivers U2.3 the UK mortgage lending sector U2.4 mortgage regulation: MCOB and its implications for the mortgage adviser |
10% |
Unit 4 Mortgage Applications
Attainment Levels |
Outcome |
Indicative Content |
Approximate Weighting |
Demonstrate an understanding of: |
1 the role of a Mortgage Adviser and the importance and principles of providing advice, including the key factors affecting the advice given. |
U1.1 affordability; U1.2 suitability; U1.3 risk; U1.4 term of mortgage U1.5 principles of ethical advice, including FSA guidance (for example, Treating Customers Fairly) U1.6 methods of verifying information supplied by consumers U1.7 methods of checking that mortgage solutions match consumer immediate and long term needs and circumstances U1.8 ways of advising clients in arrears who have differing attitudes to risk and indebtedness |
30% |
2 the implications for consumers of 'gazumping' and 'gazundering' |
U2.1 gazumping U2.2 gazundering |
5% |
|
3 the purpose of additional security, including the role of guarantors |
U3.1 the requirement for guarantors to be advised to seek independent legal advice U3.2 MIGs and other types of security (life policies and collateral) |
10% |
|
4 the fees and charges involved in arranging a mortgage, identify where these apply, the services they cover, when they become due, which are refundable and how the opportunity for refunds diminishes as the process nears completion |
Commonly applicable charges and fees: U4.1 reservation fees; U4.2 application fees; U4.3 arrangement fees; U4.4 lenders reference fees; U4.5 Land Registry fees; U4.6 valuation fees; U4.7 estate agent fees; U4.8 legal/solicitors fees; U4.9 Stamp Duty Land Tax; U4.10 Local Authority searches; U4.11 bankruptcy searches; U4.12 telegraphic transfer costs; U4.13 environmental searches, eg flooding, mining Less common/other party charges (outline only): U4.14 survey fees and fees for other specialist reports; U4.15 booking fees; U4.16 title indemnity fees; U4.17 higher lending charge U4.18 brokers fees |
20% |
|
Demonstrate an understanding of |
5 the principal factors affecting the value of property, including their implications for consumers seeking mortgages and when consumers should be referred for specialist advice |
U5.1 type of property; U5.2 location; U5.3 building materials and any restrictions; U5.4 age of property; U5.5 freehold/commonhold/leasehold (England & Wales); U5.6 tenure (Scotland – note: new legislation from 2003); U5.7 multiple use; U5.8 vacant possession; U5.9 reinstatement value; U5.10 whether it is insurable; including but not limited to risk of flooding/subsidence/heave U5.11 planning permission; U5.12 building regulations; U5.13 contract guarantees; U5.14 listed/heritage; U5.15 easements, including but not limited to rights of way; U5.16 due diligence enquiries, including but not limited to outstanding disputes; U5.17 covenants. |
15% |
6 the different forms of valuation and survey and which might be appropriate for different properties and/or the borrower's circumstances |
U6.1 forms of valuation and or survey (basic valuations, homebuyer's report, building survey, full structural survey); U6.2 requirements of lenders; U6.3 rights of the consumer |
15% |
|
7 the need to obtain Local Authority planning consent for house development/extensions |
5% |
Unit 5 Mortgage Payment Methods and Products
Attainment Levels |
Outcome |
Indicative Content |
Approximate Weighting |
Demonstrate and understanding of: |
1 the key features of the different types of mortgage repayment options and their benefits and dis-benefits for different types of borrower |
U1.1 capital and interest repayment (repayment mortgages); U1.2 interest payment (interest only mortgages); U1.3 implications for the consumer of the under-performance of repayment options U1.4 Repayment vehicles used in conjunction with interest only mortgages – endowment policies; personal pension plans; ISAs; OEICs; Unit Trusts |
20% |
2 the key features of the common types of mortgage product and interest rate options |
U2.1 standard variable rate mortgages; U2.2 straight repayment tracker mortgages (variable rate/LIBOR/base rate tracker mortgages); U2.3 interest only tracker mortgages; U2.4 fixed rate mortgages; U2.5 capped rate (including capped and collared) mortgages; discounted rate (including cash back/gift) mortgages; deferred rate low start mortgages; U2.6 equity release mortgages (links to mortgage/home reversion schemes); U2.7 flexible mortgages; U2.8 all in one/current account mortgages/offset mortgages, including drawdown facilities; U2.9 CAT marked mortgages; U2.10 hybrid arrangement products, for example – 'part and part' mortgages U2.11 the performance and volatility of fixed and variable interest rates for different types of borrower |
35% |
|
3 the structure and features of other types of mortgage |
U3.1 commercial mortgages; U3.2 lifetime mortgages (defined term for 'equity release' mortgages for older consumers); U3.3 low start/deferred interest mortgages; U3.4 self build mortgages; U3.5 100%/125% mortgages; U3.6 foreign currency mortgages; U3.7 new build mortgages; U3.8 buy to let mortgages (including types of tenancy); U3.9 'right to buy' Council property mortgages; U3.10 shared appreciation mortgages; U3.11 shared ownership mortgages (Housing Association); U3.12 equity share mortgages; U3.13 adverse credit/sub-prime mortgages (for 'non-conforming' or 'non-status' borrowers, with, e.g. CCJs/arrears/discharged bankruptcy); U3.14 Sharia–compliant mortgages (also known as Islamic mortgages |
25% |
|
4 the main features and functions of different forms of life assurance and other insurances (eg mortgage payment protection insurance (MPPI), life, accident and sickness insurance (ASU), building insurance, contents insurance) associated with arranging a mortgage |
U4.1 life assurance; Pension term assurance U4.2 accident/sickness/critical illness/unemployment/ redundancy insurance; U4.3 permanent health insurance; U4.4 buildings and contents insurance; U4.5 waiver of premium benefit; U4.6 mortgage indemnity insurance |
20% |
Unit 6 Mortgage Arrears and Post-Completion
Attainment Levels |
Outcome |
Indicative Content |
Approximate Weighting |
Demonstrate an understanding of |
1 the principles and procedures associated with raising additional money and the circumstances when further borrowing might be appropriate |
U1.1 homeowners reversionary income plans; U1.2 home income plans; U1.3 further advances; U1.4 draw down facilities; U1.5 release of part security (equity release products, home income schemes, home reversion plans U1.6 remortgages, second mortgages); U1.7 bridging loans; U1.8 charging structures; U1.9 legal implications |
25% |
2 the principles, procedures and costs of transferring mortgages. |
U2.1 transfer of mortgage to a new lender; U2.2 implications of property moves; U2.3 converting one mortgage to another; U2.4 removing one party from a joint mortgage; U2.5 redeeming a mortgage before/at the end of its term; U2.6 making additional/lump sum capital repayments on a mortgage, during its term |
25% |
|
3 the principles of using mortgages within debt consolidation arrangements |
U3.1 relationship between costs/penalties/repayments/term; U3.2 risk to the consumer associated with consolidation; U3.3 risks associated with moving loans from unsecured to secured status; U3.4 draw down facilities |
15% |
|
4 the implications for the borrower of the non-payment of mortgages, other breaches of the Mortgage Deed, non-payment of building insurance and the options available |
U4.1 when to provide a mortgage warning, ensuring that this is understood; U4.2 possible courses of action available (eg Scotland mortgage to rent scheme); U4.3 FSA requirements regarding the treatment of those in arrears; U4.4 Mortgage Rights Act (Scotland); |
15% |
|
5 the legal rights and remedies available to lenders in respect of non-payment from borrowers |
U5.1 role of Citizens Advice and other agencies; U5.2 rights of subrogation of insurers to pursue borrowers; U5.3 legal remedies for the lender on default |
15% |
|
6 the main provisions made by the State to assist consumers in difficulties over the repayment of mortgages |
U6.1 Income Support for Mortgage Interest (ISMI) U6.2 52 week linking rule |
5% |