Need clarity on Conduct of Business rules? If you’re preparing for CeMAP Unit 1, understanding the FCA’s COBS (Conduct of Business Sourcebook) is essential. These rules form a core part of the UK’s financial regulatory framework and regularly feature in Unit 1 exam questions.
This guide covers what you need to know about COBS for CeMAP 1, including the most relevant principles, how they apply to the day-to-day work of a mortgage adviser, and common areas learners struggle with in the exam.
Overview of COBS in CeMAP Unit 1
COBS is part of the Financial Conduct Authority’s (FCA) regulatory framework. It lays out how firms must behave when dealing with clients in various areas of financial advice. While not mortgage-specific—that’s covered under MCOB (Mortgage Conduct of Business)—COBS still plays a key role in CeMAP Unit 1.
In the CeMAP syllabus, you’ll be expected to understand the purpose of COBS, key requirements for client communication and advice, and how these principles protect consumers and maintain trust in financial services.
What Does “Conduct of Business” Mean?
COBS sets out how regulated firms must treat clients. The goal is to ensure advice is suitable, fair, and well-communicated. For mortgage advisers, this means taking the time to understand clients’ needs and making sure they understand the advice they’re given.
Why COBS Matters in the CeMAP Exam
COBS appears in the first unit of the CeMAP qualification, which covers UK Financial Regulation. Questions often test your ability to recognise whether advice or documentation meets the standards expected under COBS.
Tutor Tip:
Expect scenario-based questions. These may ask whether a particular recommendation or disclosure complies with FCA rules.
Key COBS Principles You Must Know
Understanding the five core principles below will help you identify and answer typical COBS-related questions in your CeMAP exam.
Principle 1 – Client Categorisation & Fair Treatment
Advisers must identify whether a client is retail or professional. Most mortgage clients will fall under the retail category, meaning they are owed the highest level of protection under FCA rules. This includes clear communication and detailed documentation.
Principle 2 – Suitability & Appropriateness
Advice must be suitable for the client’s needs. This is based on information gathered during a fact-find, including financial situation, objectives, and risk tolerance. Advisers must keep a written record of how the recommendation meets these needs.
Principle 3 – Clear Communication & Disclosure
Firms must provide information that is fair, clear and not misleading. This includes pre-sale disclosures such as the Initial Disclosure Document (IDD) and adequate explanations of product features, charges and risks.
Principle 4 – Managing Conflicts of Interest
Advisers must take steps to identify and, where possible, remove conflicts between their firm’s interests and those of the client. This could include conflicts related to commission payments, incentives, or tied product offerings.
Principle 5 – Ongoing Review & After-Sales Service
Though mortgage advice is often transactional, clients must still be given information on how to raise complaints or receive ongoing service if relevant. This includes access to complaint procedures and the Financial Ombudsman Service.
Practical Applications for Mortgage Advisers
Although COBS may seem theoretical, it’s highly relevant to how advisers operate in practice. Many of the daily tasks mortgage advisers complete are influenced by COBS.
For example, completing a fact-find involves gathering information to assess suitability. Providing a Key Facts Illustration (KFI) helps meet disclosure requirements. Recording how a product meets a client’s needs is essential for compliance.
Here’s a quick checklist of five tasks you should understand from both a compliance and exam perspective:
- Categorising clients correctly.
- Carrying out a full fact-find.
- Providing appropriate disclosures.
- Making suitable recommendations.
- Handling post-sale queries or complaints.
Top Exam Tips & Common Pitfalls
COBS Exam Tips for CeMAP 1
- Learn the definitions and terminology used by the FCA.
- Pay attention to wording in multiple-choice questions—phrases like “suitable advice” or “client disclosure” often signal COBS topics.
- Watch for client categorisation differences in scenario questions.
Common Mistakes
- Confusing COBS with MCOB—remember, MCOB is mortgage-specific; COBS is broader.
- Not reading questions carefully—some options may sound right but are not compliant under COBS.
- Overlooking the importance of documentation and client records.
Frequently Asked Questions
What’s the difference between COBS and MCOB?
COBS applies to general conduct of business for financial firms, while MCOB specifically governs mortgage sales and advice. CeMAP Unit 1 focuses mainly on COBS, but you’ll cover MCOB in later units.How many marks is COBS worth in Unit 1?
There’s no fixed mark allocation, but questions on COBS appear regularly across multiple sections. It’s a core concept in the regulation part of the syllabus.Can I use FCA guidance in the exam?
No. CeMAP is a closed-book exam. You’ll need to understand and remember the FCA principles and how they apply.Where can I find sample COBS questions?
Our full CeMAP study programme includes mock exams and practice questions tailored to the COBS section of Unit 1.
Conclusion & Next Steps
COBS forms a vital part of the FCA’s regulatory approach and is something every mortgage adviser must understand. From client categorisation to suitability and disclosure, these principles protect both firms and their clients.
For CeMAP Unit 1, it’s important to be confident with the key rules, understand how they apply in practice, and be ready for scenario-based questions that test real-world understanding.
To access full coverage of CeMAP topics, including tutor-led explanations, practical tools, and mock exams, you can enrol on one of our structured CeMAP study programmes.
Ready to advance your mortgage expertise? Explore our CeMAP mortgage modules and gain the confidence to advise clients on tracker mortgages and beyond.
Ready for more exam-style examples?
Book our CeMAP Home Study course or visit our website for full training resources:
https://cemap123.co.uk/home-study-training/