COB 5A.4 Providing basic advice on stakeholder products through scripted questions

1. (1)

   A firm which provides basic advice on a stakeholder product must do so through a sales process which incorporates pre-scripted questions put to the customer.

2. (2)

   Unless excluded at the preliminary stage, a customer must be sent or given, in a durable medium, a copy of the completed scripted questions and answers.

1. (1)

   A firm must only recommend that a customer acquire a stakeholder product if:

   1. (a)

      it has taken reasonable steps to assess:

      1. (i)

         the customer's answers to the scripted questions;

      2. (ii)

         any other facts, circumstances or information disclosed by the customer during the sales process.

   2. (b)

      it has, having due regard to the information in (a), reasonable grounds for believing that the stakeholder product is suitable for the customer:

   3. (c)

      the firm reasonably believes that the customer understands the advice he has been given and the basis on which it was provided.

2. (2)

   The requirements in (1)(b) do not apply in the case of a deposit-based stakeholder product.

A firm must not recommend or agree that a customer make contributions to an ISA in excess of the Inland Revenue's ISA limits.

A firm must not, in the course of providing basic advice, advise a customer on the contribution levels to a stakeholder pension needed to achieve a specific income in retirement.

On making a recommendation to acquire a stakeholder product a firm must, subject to COB 5A.4.7 R, COB 5A.4.8 R and COB 5A.4.9 R, take reasonable steps to ensure that prior to the conclusion of a contract with the customer the representative:

1. (1)

   explains to the customer, if necessary in summary form, the "aims", "risks" and "commitment" sections of the appropriate key features together with such other explanation of the product as will enable the customer to make an informed decision whether to accept the recommendation;

2. (2)

   provides the customer with a summary sheet, in a durable medium, setting out for each product recommended:

   1. (a)

      the specific amounts that the customer wishes to pay into each product;

   2. (b)

      the reasons for the recommendation, including any information provided by the customer on which the recommendation is based, including the customer's attitude to risk;

3. (3)

   informs the customer that in determining any subsequent complaint the Ombudsman may take into account the limited information on which the recommendation is based and that the recommendation is not tailored to take account of those aspects of a customer's financial needs and circumstances not covered by its sales process.

COB 5A.4.6R (1) does not apply to a recommendation to acquire a deposit-based stakeholder product.

A firm may provide the summary sheet required by COB 5A.4.6R (2) subsequent to the conclusion of the contract if requested to do so by the customer as long as it completes the steps in COB 5A.4.9R (1) and (2) prior to concluding a contract with the customer.

A firm which concludes the sale of a stakeholder product by telephone must take reasonable steps to ensure that its representatives:

1. (1)

   read through the summary sheet required by COB 5A.4.6R (2);

2. (2)

   inform the customer that in determining any subsequent complaint the Ombudsman may take into account the limited information on which the recommendation is based and that the recommendation is not tailored to take account of those aspects of a customer's financial needs and circumstances not covered by its sales process;

3. (3)

   send the customer as soon as possible after that a copy of the firm's summary sheet, and the completed answers and questions, in a durable medium.

A firm must keep in a durable medium a record of each recommendation to acquire a stakeholder product and the customer's summary sheet and such a record must be kept for not less than six years from the date of the recommendation.