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CMCOB 3.2 Financial promotions and communications – general standards

The fair, clear and not misleading rule

CMCOB 3.2.1R
  1. (1)

    1A firm must ensure that each of its communications and financial promotions is fair, clear and not misleading (the fair, clear and not misleading rule).

  2. (2)

    This rule applies in relation to all communications with customers, including:

    1. (a)

      communications intended to generate leads either for the firm or for another person;

    2. (b)

      pre-contract disclosures and other information which CMCOB 4 requires a firm to give to a customer; and

    3. (c)

      post-sales communications with customers, including:

      1. (i)

        communications intended to keep the customer up to date, in accordance with CMCOB 6.1;

      2. (ii)

        communications of or about fees, charges, invoices and payments; and

      3. (iii)

        communications about complaints relating to the firm.

  3. (3)

    This rule and the other rules in this chapter apply when a firm approves a financial promotion in the same way as when a firm communicates a financial promotion itself. Before a firm approves a financial promotion it must confirm that it complies with the rules in this chapter and if, at any time after the firm approves a financial promotion, it becomes aware that the financial promotion no longer complies with the rules in this chapter, it must withdraw its approval and notify any person it knows to be relying on its approval as soon as practicable.

CMCOB 3.2.1AG
  1. (1)

    2The effect of section 55NA of the Act is that4 a firm is unable to approve a financial promotion unless:

    1. (a)

      the firm is a permitted approver in relation to the financial promotion; or

    2. (b)

      an approver permission exemption applies.

  2. (2)

    SUP 6A contains guidance on applying for approver permission.

CMCOB 3.2.2G
  1. (1)

    1The fair, clear and not misleading rule means that firms should communicate with their customers in a way that is appropriate, taking into account the means of communication, the information the communication is intended to convey and the nature of the customer and of the claim.

  2. (2)

    In complying with that rule, firms should:

    1. (a)

      have regard to the average customer’s understanding of the services that the firm provides;

    2. (b)

      present information in a logical order;

    3. (c)

      use plain and intelligible language and, where the use of jargon or technical terms is unavoidable, explain the meaning of any jargon or technical terms;

    4. (d)

      make key information prominent and easy to identify, including by means of headings and the layout, display and font attributes of text, and by the use of design devices such as tables, bullet points and graphs; and

    5. (e)

      avoid unnecessary disclaimers.

CMCOB 3.2.2AG

3A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service.

CMCOB 3.2.3R

1If, in relation to a particular communication or financial promotion, a firm takes reasonable steps to ensure it complies with the fair, clear and not misleading rule, a contravention of that rule does not give rise to a right of action under section 138D of the Act.

CMCOB 3.2.4R

1A firm must ensure that each of its financial promotions and communications with a customer:

  1. (1)

    identifies the firm and that it is a claims management company;

  2. (2)

    does not offer a cash payment or any benefit in money or money’s worth (for example, a ‘free’ gift) as an inducement for entering into an agreement with the firm or making a claim;

  3. (3)

    does not promote the idea that it is appropriate that compensation be used in a way that is not consistent with the basis of the claim;

  4. (4)

    does not falsely imply that the business is approved by the Government or is connected with any government agency or any regulator.

[Note: CAPR CSR 6]

CMCOB 3.2.5G
  1. (1)

    1The firm may identify itself by using a trading name or shortened version of the legal name of the firm (provided the customer can identify the firm communicating the information) and that it is a claims management company.

  2. (2)

    The FCA would view a financial promotion or communication as promoting the idea that it is appropriate that compensation be used in a way that is not consistent with the basis of the claim if the financial promotion or communication states or implies that a claim is a means of making money, rather than being for the purpose of compensating the customer for damage, injury or loss.

CMCOB 3.2.6R
  1. (1)

    1Where a claim is one that falls within the province of a statutory ombudsman or statutory compensation scheme such as the Financial Ombudsman Scheme, the compensation scheme, the Criminal Injuries Compensation Authority, a housing complaint service or any other such body, the firm must not suggest that a customer will have a more favourable outcome if the customer uses the services of the firm.

[Note: CAPR CSR 12]

  1. (2)

    Where (1) does not apply, a firm must not state or imply in any financial promotion or communication with a customer that a claim will be resolved more quickly, or with a better prospect of success, or with a better outcome for the customer, than if the customer were to make the claim themselves, unless the statement or implication is true and the firm can provide evidence to substantiate the statement or implication.

CMCOB 3.2.7R

1If a claim to which a financial promotion relates is of a sort that may be made by a customer to a statutory ombudsman or statutory compensation scheme, without using the services of the firm and without incurring a fee, the firm must ensure that the financial promotion contains a prominent statement to the effect that:

  1. (1)

    the customer is not required to use the services of a firm which carries on regulated claims management activity to pursue their claim; and

  2. (2)

    it is possible for the customer to present the claim themselves for free, either to the person against whom they wish to complain or to the relevant statutory ombudsman or the statutory compensation scheme.

CMCOB 3.2.8G
  1. (1)

    1Where a claim can be made to a statutory ombudsman or statutory compensation scheme, CMCOB 3.2.7R requires firms to name the relevant ombudsman or compensation scheme.

  2. (2)

    The relevant statutory ombudsmen or statutory compensation schemes that the firm should name should include those specified in the following table. If there are other statutory ombudsmen or compensation schemes relevant to the nature of claims to which the financial promotion relates, the firm should name them in addition.

    Claim

    Ombudsman or compensation scheme

    criminal injury claim

    the Criminal Injuries Compensation Authority

    employment-related claim

    none specified

    financial services or financial product claim

    the Financial Ombudsman Service: for any financial promotion which is generic in nature or where the firm would expect those to whom the financial promotion is addressed to be eligible to pursue their claim with the Financial Ombudsman Service

    the compensation scheme: for any financial promotion addressed to persons who may have a claim against a person which is no longer in business, where the firm would expect those to whom the financial promotion is addressed to be eligible to pursue their claim with compensation scheme

    the Pensions Ombudsman: for any financial promotion addressed to persons who may to be eligible to pursue their claim with the Pensions Ombudsman, for example where the financial promotion relates to claims against an occupational pension provider

    housing disrepair claim

    a housing complaint service

    personal injury claim

    none specified

    claim for a specified benefit

    none specified
  3. (3)

    Firms should also indicate whether claims may be made direct to the ombudsman or compensation scheme, or whether it is necessary for the customer first to pursue their claim directly with the person to whom it relates.

  4. (4)

    For example, where the financial promotion that relates to claims in respect of packaged bank accounts, a firm could comply with CMCOB 3.2.7R by indicating: “You do not need to use a claims management company to make your complaint to your bank, and if your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free”.

‘No-win, no-fee’

CMCOB 3.2.9R
  1. (1)

    1This rule applies if a firm uses the term “no win, no fee” or a term having a similar meaning in a financial promotion.

  2. (2)

    In the case of a firm which charges or may charge a fee for services to which the financial promotion relates, the firm must include prominently in the financial promotion:

    1. (a)

      the fees that the firm charges in respect of claims of the sort to which the financial promotion relates;

    2. (b)

      where those fees are not fixed or ascertainable in advance, the method by which the fees would be calculated; and

  3. (3)

    In the case of a firm which charges a termination fee in respect of an agreement with a customer for services to which the financial promotion relates (see CMCOB 2.1.12R(2)(b) and CMCOB 2.1.12R (4)), the firm must ensure that the financial promotion indicates:

    1. (a)

      that the firm may charge a termination fee in the event that the customer terminates the agreement other than during the cancellation period (see CMCOB 2.1.12R(2)(a)); and

    2. (b)

      what that termination fee is or, where it is not fixed or ascertainable in advance, the method by which it would be calculated.

  4. (4)

    Subject to (5), where a firm (F) passes customers, or details of a customer or of a claim, to a third party (T), or gives details about the third party (also T) to a customer, F must include prominently in the financial promotion:

    1. (a)

      the fees that T charges in respect of claims of the sort to which the financial promotion relates; or

    2. (b)

      where those fees are not fixed or ascertainable in advance, the method by which the fees would be calculated.

  5. (5)

    Where F does not know the information required by (4), F must include prominently in the financial promotion an indication of the fee that may be charged for services to which the financial promotion relates.

  6. (6)

    Subject to (7), where T charges a termination fee in respect of an agreement with a customer for services to which the financial promotion relates (see CMCOB 2.1.12R(2)(b) and CMCOB 2.1.12R(4)), F must ensure that the financial promotion indicates:

    1. (a)

      that T may charge a termination fee in the event that the customer terminates the agreement other than during the cancellation period (see CMCOB 2.1.12R(2)(a)); and

    2. (b)

      what that termination fee is or, where it is not fixed or ascertainable in advance, the method by which it would be calculated.

  7. (7)

    Where F does not know the information required by (6), F must still inform the customer that they may be required to pay a termination fee.

  8. (8)

    Where a firm is required, under this rule, to include information about fees or termination fees in a financial promotion, that information must be no less prominent than the term referred to in (1).

CMCOB 3.2.10G
  1. (1)

    1As a consequence of CMCOB 3.2.9R(4) and CMCOB 3.2.9R(5) if a firm is unaware of the charging basis of the third parties, to whom they pass the customer or details of the customer, or of a claim , or whose details they give to a customer, they should not advertise a no-win, no-fee service.

  2. (2)

    When providing an indication of the fee for the purposes of CMCOB 3.2.9R(5), the FCA expects firms to provide a reasonable indication of the fee the customer is likely to pay bearing in mind the fair, clear and not misleading rule.

  3. (3)

    In particular, the FCA expects firms to provide:

    1. (a)

      an indication of a typical fee; or

    2. (b)

      a range of the fees;

    that may become payable by the customers:

    1. (c)

      whom the firm passes to third parties or whose details the firm passes to third parties;

    2. (d)

      whose claims the firm passes to third parties; or

    3. (e)

      to whom the firm gives the details of third parties.

  4. (4)

    A firm could provide an indication of a typical fee where a significant majority of such customers all pay the same fee (e.g. where the fee inclusive of VAT is 25% of the compensation amount).

  5. (5)

    Where the firm provides an indication of a typical fee, it should make clear that that figure is only an indication of the amount which customers may be required to pay and that the actual fee may be higher. For example, the firm could state:

    “Typically customers pay 25% of the amount recovered, although this will be subject to your individual circumstances and the actual fee may be more or less than this”.

  6. (6)

    Where the firm provides a range of fees:

    1. (a)

      subject to (c), the range should represent all of the third parties to whom the firm passes customers or details of customers, or of claims, or whose details the firm gives to customers,

    2. (b)

      the range should include the highest and the lowest fee that may become payable by such customers;

    3. (c)

      the firm should not include a fee as the lowest fee unless that fee is charged to a reasonable proportion of such customers.

Restriction on advertising in certain buildings

CMCOB 3.2.11R

1A firm must not make a financial promotion, or a communication intended to generate a lead, in a medical facility, a care facility or a public building without the approval in writing of the management of the facility or building.

[Note: in part, CAPR CSR 5]

CMCOB 3.2.12G
  1. (1)

    1The purpose of CMCOB 3.2.11R is to prohibit the marketing of regulated claims management activity, and lead generation for regulated claims management activity, in medical facilities and public buildings without permission. Permission should be obtained from the management of the organisation which occupies the facility or building, rather than from junior members of staff.

  2. (2)

    In CMCOB 3.2.11R:

    1. (a)

      a “medical facility” should be taken to include hospitals, GP surgeries, walk-in clinics and any other medical establishment in which people who have suffered an accident or other incident that might give rise to a claim may go to seek treatment;

    2. (b)

      a “care facility” includes any sort of establishment in which children or adults receive social care, either as residents or as outpatients; and

    3. (c)

      a “public building” should be taken to include any building to which the public has access, such as police stations and court buildings.