COB 12.1 Application
This chapter applies to a firm when it carries on any of the following activities:
- (1)
advising on syndicate participation at Lloyd's or agreeing to carry on that regulated activity;
- (2)
managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's or agreeing to carry on that regulated activity;
- (3)
carrying on designated investment business in relation to funds at Lloyd's;
- (4)
communicating or approving a financial promotion in relation to:
- (a)
- (b)
- (c)
effecting or carrying out life policies written at Lloyd's; or3
- (d)
any of the activities specified in (1) or (3).
Underwriting agents should be aware that the Society's regulatory requirements remain applicable to them even if these requirements cover similar matters to the applicable COB provisions.
This chapter does not affect the application of COB to a firm when carrying on activities other than those specified in COB 12.1.1 R.
The Society is itself also required to comply with the requirements of INSPRU which contains rules and guidance in respect of areas where COB provisions also have relevance. In particular INSPRU 8.4.3 R4 places a requirement on the Society to make appropriate byelaws governing conduct in the capacity transfer market. LLD also imposes at LLD 9.2.3 R a requirement on the Society to comply with the standards of due care and diligence set out in CASS in relation to the custody of assets that constitute members' funds.
4Purpose
The purpose of this chapter is to protect the interests of members or potential members and policyholders or potential policyholders.
This chapter provides rules that apply to firms when carrying on the activities in COB 12.1.1 R. Rules from other chapters are modified for this purpose. These COB provisions will apply to the activities of members' agents, members' advisers, the Society, managing agents (in some circumstances) and to any other authorised person undertaking any of the activities specified in COB 12.1.1 R.
Rules of general application
- (1)
When a firm is carrying on any of the activities specified in COB 12.1.1 R (1), COB applies in full, except to the extent disapplied under COB 12.1.14 R.
- (2)
COB does not apply to a firm when carrying on the activity specified in COB 12.1.1 R (2), except as specified in COB 12.1.15 R.
- (3)
COB 3 applies to a firm when carrying on the activity specified in COB 12.1.1 R (4).
Firms subject to the financial promotion rules under COB 12 are also reminded that syndicate business plans may be used in ways that bring them within the definition of a financial promotion. In such cases the financial promotion rules will apply, in particular COB 3.6 (Confirmation of compliance), COB 3.7 (Records) and COB 3.8 (Form and content of financial promotions).
A firm which provides advice to a person on a transaction in the capacity transfer market will be carrying on the activity specified in COB 12.1.1 R (1) and will be subject to COB, as specified in COB 12.1.7 R (1) in respect of that activity.
COB does not apply to a firm when carrying on the regulated activity of arranging(bringing about)deals ininvestments that relate to the underwriting capacity of a Lloyd's syndicate or membership of a Lloyd's syndicate.
A firm carrying on the activity specified at COB 12.1.1 R (1) must, in addition to meeting the requirements of COB 5, take reasonable steps to ensure that it does not advise a potential member who is a private customer to become a member of a syndicate unless membership of the Society itself is suitable for the private customer having regard to the facts disclosed by him and other relevant facts about the private customer of which the firm is or reasonably should be aware.
Definitions and modifications
When a firm is carrying on activities to which this chapter applies, any reference in COB to the term:
- (1)
"designated investment" is to be taken to include the following specified investments:
- (a)
- (b)
- (c)
rights to or interests in the specified investments in (a) or (b);
- (2)
"designated investment business" is to be taken to include the following regulated activities:
- (a)
- (b)
managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's; and
- (c)
agreeing to carry on the regulated activities in (a) or (b).
When a firm is carrying on activities to which this chapter applies, any reference in COB to the term customer is to be taken to refer to a member or potential member except in the case of COB 6.7 (Cancellation and withdrawal) to COB 6.8 (Insurance Contracts: life and general) where it refers to a policyholder or potential policyholder.
This table disapplies parts of COB to a firm when carrying on the activities to which COB 12.1.7 R (1) relates.
Chapter |
Description |
Disapplication |
4.2 |
Terms of business and client agreements with customers |
COB 4.2.11 E and COB 4.2.12 R are disapplied. |
6 |
Product disclosure and the customer's right to cancel or withdraw |
COB 6 is disapplied. |
8.2 |
Periodic statements |
COB 8.2 is disapplied to a firmadvising on syndicate participation at Lloyd's. |
[deleted] |
[deleted] |
[deleted].1 |
11 |
Trustee and depositary activities |
COB 11 is disapplied. |
This table applies COB to firms when carrying on the activity to which COB 12.1.7 R (2) relates except where ICOB applies in relation to non-investment insurance contracts.
Chapter |
Description |
Application |
1 |
Application and general provisions |
Applied |
2 |
Rules which apply to all firms conducting designated investment business |
Applied |
4.1 |
Client classification |
Applied |
6.7 |
Cancellation and withdrawal |
Applied |
6.8 |
Insurance contracts - life policies3 |
Applied |
8A2 |
Claims handling2 |
Applied2 |
2
The tables at COB 12.1.17 G to COB 12.1.21 G are provided to help firms when carrying on those activities to which this chapter applies locate those rules that are particularly relevant to their activities. Firms should be aware that these tables may not include all rules which apply to an individual firm as these will vary depending on the firm's particular circumstances and that there may be other rules that apply.3
Location of rules of general application to firms when carrying on activities to which this chapter applies.
This table forms part of COB 12.1.16 G.
Chapter |
Description |
Application and general provisions |
|
Rules which apply to all firms conducting designated investment business |
|
Client classification |
Location of rules of particular relevance to a firm when advising on syndicate participation at Lloyd's.
This table forms part of COB 12.1.16 G.
Chapter |
Description |
COB 4.2.1 R to COB 4.2.10 R (inclusive), COB 4.2.13 R to COB 4.2.14 R |
Terms of business and customer agreements |
Advising and selling |
|
Conflict of interest and material interest |
Location of rules of particular relevance to a firm when carrying on designated investment business in relation to funds at Lloyd's.
This table forms part of COB 12.1.16 G.
Chapter |
Description |
COB 4.2.1 R to COB 4.2.10 R (inclusive), COB 4.2.13 R and COB 4.2.14 R |
Terms of business and customer agreements |
Dealing and managing |
|
Confirmation of transactions |
|
Periodic statements |
Location of rules of particular relevance to a firm managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's.
This table forms part of COB 12.1.16 G.
Chapter |
Description |
COB 6.7 |
Cancellation and withdrawal |
COB 6.8 |
Insurance contracts - life policies |
Insurance: Conduct of Business Sourcebook |
Location of rules of particular relevance to a firm when communicating or approving financial promotions in relation to the investments and activities specified at COB 12.1.1 R (4).
This table forms part of COB 12.1.16 G.
Chapter |
Description |
Financial promotion |