1. (1)

   A firm must take reasonable steps to ensure that its representatives, on first making contact with a customer with a view to providing basic advice on a stakeholder product, provide, in a durable medium, an initial disclosure document that complies with COB 4.3.9R (1).

2. (2)

   A firm must take reasonable steps to ensure that its representatives explain the contents of the initial disclosure document at the time it is provided to the customer.

3. (3)

   The requirements in (1) and (2) do not apply:

   1. (a)

      to the extent that the information has already been given to the customer on a previous occasion and it is still likely to be accurate and appropriate for the customer; or

   2. (b)

      if COB 5A.2.6 R (initial contact by telephone) applies.

4. (4)

   A firm which is required by this rule to provide an initial disclosure document to a private customer may instead provide the customer with a combined initial disclosure document, that complies with COB 4.3.9R (2), if it has reasonable grounds to be satisfied that the services which it is likely to provide to the customer will, in addition to stakeholder products, relate to one or more of the following:

   1. (a)

      regulated mortgage contracts other than lifetime mortgages1;

   2. (aA)

      1home purchase plans;1

   3. (b)

      equity release transactions1;

      1
   4. (c)

      non-investment insurance contracts.

5. (5)

   A firm must, if requested to do by a customer, provide an explanation of the basis on which it has chosen to market the particular stakeholder products within the range on which basic advice will be given to a customer, including an explanation of why the firm has selected particular product providers.

A firm must not provide basic advice on smoothed linked long term products.

A firm must take reasonable steps to ensure that its representatives provide a copy of the appropriate range of stakeholder products on the request of a customer having regard to the services it is providing or may provide to the customer.

1. (1)

   A firm that, pursuant to COB 5A.2.1 R, provides a customer with an initial disclosure document containing information that a corresponding rule in COB 4.2 says must be included in terms of business, will satisfy the corresponding rule by providing that information in the initial disclosure document.

2. (2)

   Any information required by COB 4.2 which is not included in an initial disclosure document provided to a customer in compliance with COB 5A.2.1 R can be included at the end of the initial disclosure document provided to the customer or, if provided at the same time, by way of separate items of information.

1. (1)

   Where a firm's initial contact with a customer (for a purpose set out in COB 5A.2.1 R) is by telephone, then the firm must provide the following information and satisfy the following requirements before proceeding further:

   1. (a)

      the name of the firm and, if the call is initiated by or on behalf of a firm, the commercial purpose of the call;

   2. (b)

      whether the firm will select from or deal with stakeholder products from a limited number of companies or from a single company;

   3. (c)

      that the firm will provide the customer with only basic advice on stakeholder products and without full assessment of his needs and circumstances;

   4. (d)

      that the information given under (a) to (c) will subsequently be confirmed in writing.

2. (2)

   A firm which complies with (1) will, subject to (3), satisfy the condition set out in item (1) of COB 4 Annex 1 R.

3. (3)

   If during the course of a telephone call a firm is to conclude a contract (for example for the provision of a mediation services or for the purchase or sale of a stakeholder product), it must satisfy the requirements in COB 4.2.5 R and COB 4 Annex 1 as well as comply with (1) and (2) above.

If the first contact a firm has with a private customer with a view to providing basic advice on stakeholder products, is by telephone then the firm must send the customer an initial disclosure document as soon as is reasonably practicable following the conclusion of the call.

1. (1)

   A firm which provides a private customer with basic advice on a stakeholder product must take reasonable steps to ensure that the scope of the basic advice given to a private customer is based upon a selection of one of the following:

   1. (a)

      a limited number of providers of stakeholder products; or

   2. (b)

      a single provider of a stakeholder product.

2. (2)

   A firm which provides a customer with basic advice on a stakeholder product must do so only on the basis of a range of stakeholder products which includes no more than one of each of:

   1. (a)

      a CIS stakeholder product or a linked-life stakeholder product; or

   2. (b)

      a stakeholder pension; or

   3. (c)

      a stakeholder CTF.

3. (3)

   A firm must take reasonable steps to ensure that any of its representatives which give basic advice on stakeholder products that offer a choice of funds, do not give advice on, or recommend, a particular fund for the customer.

4. (4)

   A firm must take reasonable steps to ensure that its representatives do not, while they are engaged in providing basic advice on stakeholder products, provide advice on products other than those within the range offered by the firm.

5. (5)

   A firm which has commenced the sales process for stakeholder products in respect of a particular customer may only depart from that process if:

   1. (a)

      it has taken reasonable steps to ensure its representatives advise the customer that basic advice on stakeholder products within the range offered by the firm will not be provided during the period of departure; and

   2. (b)

      it has taken reasonable steps to ensure its representatives do not provide basic advice during the period of departure.

6. (6)

   A firm must take reasonable steps to ensure that if its representatives return to the sales process for stakeholder products after the period of departure referred to in COB 5A.3.1R (5), they first advise the customer that the period of departure has ended and the sales process for stakeholder products has recommenced.

1. (1)

   A firm must maintain in writing and keep up to date a statement of:

   1. (a)

      the scope of basic advice (within the meaning of COB 5A.3.1R (1)) which each of its appointed representatives is, through its contract with the firm, permitted to give; and including

   2. (b)

      the range (or ranges) of stakeholder products on which each appointed representative advises.

2. (2)

   In applying the rules in COB to a firm in respect of its appointed representatives, references to a firm's scope or range of stakeholder products are to be taken as references to the scope (or scopes) and to the range (or ranges) of its appointed representatives.

1. (1)

   A firm must make, and keep up to date, a record of its scope and range (or ranges) of stakeholder products.

2. (2)

   The record in (1) must be retained for six years from the date on which it was superseded by a more up-to-date record.

3. (3)

   The record for distribution to a customer must be the particular range of stakeholder products which is appropriate for the services provided to that customer and include details of:

   1. (a)

      the identity of the firms within the range whose stakeholder products the firm may sell; and

   2. (b)

      a list of the products the firm may sell.

4. (4)

   A firm must maintain a record of the particular range of stakeholder products on which its basic advice to each private customer is based and such a record must be kept for six years from the date on which the basic advice is given.

If a firmprovides basic advice on a stakeholder product produced by another person, it must not:

1. (1)

   hold itself out as the stakeholder product's producer;

2. (2)

   do or say anything which might reasonably lead a customer to be mistaken as to the identity of the product's producer.

1. (1)

   A firm must take reasonable steps to ensure that neither it nor any of its representatives provides basic advice on a stakeholder product unless the product is:

   1. (a)

      within the firm's range (or ranges) of stakeholder products; and

   2. (b)

      is within the particular range of stakeholder products on which the firm has indicated it will give basic advice to that customer.

1. (1)

   A firm must not in providing basic advice on stakeholder products hold itself out as giving such basic advice on an independent basis.

2. (2)

   Notwithstanding (1) a firm may use its facilities and stationery which it may use for other business in respect of which it does hold itself out as acting or advising independently.

A firm must take reasonable steps to ensure that none of its representatives:

1. (1)

   is likely to be influenced by the structure of his or her remuneration to give unsuitable basic advice on stakeholder products to a customer; and

2. (2)

   refers customers to another firm in circumstances which would amount to the provision of an inducement under COB 2.2.3 R (Prohibition of inducements).

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.