COB 6.1 to COB 6.5 apply to a firm:

1. (1)

   which sells, personally recommends or arranges (brings about) for the sale of a packaged product to a private customer or to the trustees of an occupational pension scheme or to the trustee or operator of a stakeholder pension scheme; or

2. (2)

   which manages, sells or personally recommends a cash deposit ISA or cash deposit CTF for or to a private customer; or6

3. (3)

   which effects, personally recommends or arranges for a variation of a life policy for or to a private customer; or

4. (4)

   which effects, personally recommends or arranges income withdrawals for or to a private customer; or

5. (5)

   which is a long-term insurer and receives:

   1. (a)

      a request from a private customer for a quotation for the surrender value of a life policy; or

   2. (b)

      any other indication that a private customer wishes to surrender a life policy: or1

6. (6)

   which receives a request from a private customer for a retirement quotation in respect of any of the following contracts provided by it:

   1. (a)

      a personal pension scheme;

   2. (b)

      a stakeholder pension scheme;

   3. (c)

      a free-standing additional voluntary contribution contract;

   4. (d)

      (where an open-market option is available under the contract terms) a retirement annuity contract; or

   5. (e)

      (where an open-market option is available under the contract terms) a pension buy-out contract; or14

7. (7)

   which enters into a distance contract with a retail customer to accept deposits.43

4In COB 6.1 to COB 6.5, references to a private customer include, in relation to the conclusion of a distance contract, a retail customer.53

COB 6.2.26 R applies to a firm when it sells, personally recommends or arranges for the sale of a UCITS scheme which is a recognised scheme under section 264 of the Act (Schemes constituted in other EEA States) to a client.

1. (1)

   A product provider or stakeholder pension scheme operator must, for each packaged product which it offers produce key features which, as to design and content, comply with the requirements of COB 6.1, COB 6.2 and COB 6.5.

2. (2)

   A firm to which COB 6.4.13 (1) applies must, for each cash deposit ISA or cash deposit CTF it offers, produce the information document required by COB 6.5.42 R or COB 6.5.42A instead of key features. That information document must comply with COB 6.1, COB 6.2 and COB 6.5 as to design and content.46

3. (3)

   (1) does not apply in relation to a simplified prospectus scheme.7

A firm must ensure that any key features or information document it produces in relation to a packaged product, cash deposit ISA or cash deposit CTF is in writing, whether in printed hard copy or in electronic format, and:56

1. (1)

   is produced and presented to at least the same quality and standard as the associated sales or marketing material being used by the firm to promote the packaged product, cash deposit ISA or cash deposit CTF to customers; and6

2. (2)

   is separate from any other material given to the customer, unless it is produced for a collective investment scheme, investment trust savings scheme or stakeholder pension scheme; in that case it may be included as part of another item of sales or marketing material, but only if the key features or information document appears with due prominence.2

COB 6.2 applies to a firm in accordance with COB 6.1.1 R.

The key features or information which the rules in COB 6.2, COB 6.2 and COB 6.4 require a firm to provide to a private customer in relation to a packaged product, cash deposit ISA or cash deposit CTF must be provided by the firm in a durable medium.356

When a firm sells, personally recommends or arranges the sale of a life policy to a private customer, the private customer must be provided with appropriate key features before the private customer completes an application for the policy, subject to COB 6.2.9 R (Sales through intermediaries) and COB 6.4.27 R to COB 6.4.31 R5 (telephone sales3 and other exemptions).5

COB 6.2.7 R does not apply to a product provider when its life policy is sold on the personal recommendation of, or arranged to be sold by, another person, provided that other person:3

1. (1)

   is a firm (or appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or3

2. (2)

   is operating from an establishment in an EEA State whose law imposes an obligation on the person to provide information about the life policy in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive.37

1. (1)

   Where key features have already been provided by a firm to a private customer in accordance with COB 6.2.7 and the terms for the proposed life policy are subsequently altered before the private customer completes an application form, the firm must ensure that the private customer is provided with revised key features, unless the alteration is one or more of the following:3

   1. (a)

      the amount of the premium is changed;3

   2. (b)

      the amount of any commission or remuneration payable is reduced;3

   3. (c)

      a rider benefit is added, removed or amended.3

2. (2)

   If (1)(a) to (c) apply, then, subject to COB 6.4.27 to COB 6.4.31 (telephone sales and other exemptions), if the contract is to be a distance contract with a retail customer, the retail customer must be provided with details of such changes in a durable medium in good time before the contract is concluded.35

Where key features have already been provided to a private customer by a firm, and the terms of the proposed life policy are materially altered after the private customer completes an application form, the private customer must be provided with details of the change in a durable medium as soon as practicable and offered revised key features.3

When a policyholder applies to vary a life policy issued on or after 1 January 1995 (or is recommended to do so) and the variation of the policy gives rise to a right to cancel under COB 6.7.7 R, the policy holder must be provided with:3

1. (1)

   the information required by COB 6.5.15 R to COB 6.5.19 R, COB 6.5.23 R to COB 6.5.25 R, COB 6.5.27 R to COB 6.5.28 R and COB 6.5.38 R; and3

2. (2)

   in the case of a variation which results in a new distance contract, all the contractual terms and conditions and the information in COB App 1;3

in a durable medium by the firm personally recommending, arranging or effecting the variation in good time before it is put into effect, unless COB 6.2.19 R (sales through intermediaries) or COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.35

1. (1)

   4When a long-term care insurance contract which is

   1. (a)

      not a pure protection contract and which was issued on or after 1 January 1995; or

   2. (b)

      a pure protection contract and which was issued on or after 31 October 2004;

   is varied so as to bring into effect provisions for long-term care benefits, the firm must provide the private customer with appropriate key features in good time sufficient to enable the private customer to consider them before the variation takes effect.

2. (2)

   If the circumstances of the variation, whether by the exercise of an option or otherwise, make it impossible to provide the key features before the variation takes effect, the firm must do so as soon as possible afterwards.

1. (1)

   4When a policyholder applies to vary:4

   1. (a)

      a life policy issued before 1 January 1995; or4

   2. (b)

      a pure protection contract issued before 31 October 2004 and which would after 30 October 2004 be a long-term care insurance contract;4

   (or is personally recommended to do so) and the variation of the policy gives rise to a right to cancel under COB 6.7.7 R, information must be given to the policyholder by the firm that is personally recommending, arranging or effecting the variation before it is put into effect, unless COB 6.2.19 R or COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.

2. (2)

   When giving the information in (1), the firm must:35

   1. (a)

      believe on reasonable grounds that the information given is sufficient to enable the policyholder to understand the consequences of the variation; and3

   2. (b)

      in the case of a variation which results in a new distance contract, in good time before the variation is put into effect, provide all the contractual terms and conditions and the information in COB App 1.3

COB 6.2.16 R and COB 6.2.18 R do not apply to a product provider when the variation to its life policy is effected on the personal recommendation of or arranged by another person, provided that other person:3

1. (1)

   is a firm (or appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or3

2. (2)

   is operating from an establishment in an EEA State whose law imposes an obligation on the person to provide information about the variation to the life policy in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive.37

There is no requirement for key features to be provided for a new life policy or a variation to an existing policy if, at the time that the private customer signs the application, he is habitually resident:3

1. (1)

   (except for distance contracts with retail customers) in an EEA State other than the United Kingdom; or3

2. (2)

   outside the EEA and he is not present in the United Kingdom.13

COB 6.2.7 does not apply to a CTF provider in relation to a variation to an existing policy held within a CTF, if:

1. (1)

   the terms and conditions, including all charges, are the same as applied at the time of the purchase, or the most recent purchase or payment, of the existing policy; and

2. (2)

   key features outlining those terms and conditions were issued to the customer in respect of that previous purchase.6

When a firm sells, personally recommends or arranges for the sale of a scheme to a private customer, unless COB 6.2.24 R (exceptions) or COB 6.4.27 to COB 6.4.31 R (telephone sales and other exemptions) applies, the private customer must be provided with key features for the scheme before the private customer completes an application for the scheme holding.35

A firm need not provide key features to a private customer in respect of a scheme if:

1. (1)

   the firm is a product provider and the scheme holding is sold on the personal recommendation of, or arranged to be sold by another person, provided that other person:3

   1. (a)

      is a firm (or appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or3

   2. (b)

      is operating from an establishment in an EEA State whose law imposes obligations on the person to provide information about the scheme holding in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive; or3

2. (2)

   at the time he signs the application, the private customer is habitually resident outside the EEA and is not present in the United Kingdom; or

3. (3)

   (except for distance contracts with retail customers) the scheme holding is purchased by a private customer on an execution-only basis; or3

4. (4)

   the scheme holding is purchased on behalf of a private customer by an investment manager exercising discretion; or

5. (5)

   the sale of the scheme holding is arranged or recommended by an investment manager who is not exercising discretion and the private customer has agreed, either in relation to that specific holding or generally, that key features need not be provided; or

6. (6)

   a private customer is making a purchase of a scheme holding (whether or not held within a CTF) in a fund in which he already has a scheme holding and has already been provided with appropriate key features covering the purchase; or36

7. (7)

   a private customer is transferring from accumulation units to income units of the same scheme (or vice versa) and has already been supplied with key features which cover the transfer; or3

8. (8)

   the scheme is a UCITS scheme recognised under section 264 of the Act (Schemes constituted in other EEA States); however, if the sale is by way of a distance contract, the firm must provide all the contractual terms and conditions and the information in COB App 1 instead of key features.23

3[Deleted]

3[Deleted]27

1. (1)

   2When a firm sells, personally recommends or arranges for the sale of a UCITS scheme which is a recognised scheme under section 264 of the Act (Schemes constituted in other EEA States) to a client, it must offer the client free of charge a copy of the scheme's most recent simplified prospectus before an application for the scheme holding is completed.

2. (2)

   The simplified prospectus must meet the requirements of the UCITS Directive necessary for the scheme to enjoy the rights conferred by the Directive.

3. (3)

   When the scheme holding is purchased on behalf of a client by an investment manager exercising discretion, the requirement in (1) will be satisfied by the investment manager being offered the simplified prospectus free of charge before the application form for a scheme holding is completed.

4. (4)

   A firm must not carry on any of the activities referred to in (1) in relation to a UCITS scheme which is a recognised scheme under section 264 of the Act unless it is satisfied on reasonable grounds that:

   1. (a)

      a copy of the scheme's simplified prospectus has been filed with the FSA before any units in the scheme are marketed in the UK; and

   2. (b)

      the information contained in the simplified prospectus is up to date and is not in need of revision;

   and that any subsequent amendments thereto have been filed with the FSA.

COB 6.3 applies to a firm in accordance with COB 6.1.1 R, in respect of life policies.1

When a private customer buys a life policy which is a packaged product or varies such an existing life policy, and the variation gives rise to a right to cancel under COB 6.7.7 R, the long-term insurer must send to, or in the case of an industrial assurance policy must either give or send to, the private customer the information required in COB 6.5.46 R, unless COB 6.3.6 R applies.

The post-sale confirmation required by COB 6.3.3 R must be sent or given to the private customer as soon as reasonably practicable after the contract is effected.2

A long-term insurer need not send or give the post-sale confirmation required by COB 6.3.3 R when:

1. (1)

   the long-term insurer has taken reasonable steps to determine that the life policy or variation is purchased or effected on behalf of a private customer by an investment manager exercising discretion; or

2. (2)

   the life policy is purchased by the trustees of an occupational pension scheme; or

3. (3)

   the life policy is purchased by the trustees or manager of a stakeholder pension scheme; or

4. (4)

   a life policy issued before 1 January 1995 is being varied; or

5. (5)

   at the time the private customer signs the application for the new life policy or variation, he is habitually resident:

   1. (a)

      in an EEA State other than the United Kingdom; or

   2. (b)

      outside the EEA and he is not present in the United Kingdom.

COB 6.4 applies to a firm in accordance with COB 6.1.1 R, in respect of occupational pension schemes, self invested personal pension schemes,, cash deposit ISAs, cash deposit CTFs, Revenue allocated CTFs, traded life policies, stakeholder pension schemes, packaged products, other deposits and long-term care insurance contracts.124

1. (1)

   When a firm sells, personally recommends or arranges the sale of a new group or master life policy, the first in a series of individual life policies or the first units in a particular scheme to or for the trustees of a money-purchase occupational scheme, it must provide the trustees with key features, in accordance with COB 6.2.7 R to COB 6.2.25 R.

2. (2)

   In COB 6.2 to COB 6.5, for the purposes of (1), the firm must treat the trustees as private customers.

3. (3)

   In addition to the information to be provided to trustees under COB 6.4.4 R (1), the firm must ensure that key features are made available to the trustees to distribute to all scheme members at the outset of the scheme and for subsequent new members.

4. (4)

   The requirement in COB 6.4.4 R (3) applies to main scheme benefits and to additional voluntary contributions where members' benefits are linked to earmarked segments of life policies or schemes. It does not apply where trustees make pooled investments and make their own arrangements for allocation of investment returns to determine members' benefits, whether attached to defined benefit pension schemes or money purchase occupational scheme.

1. (1)

   A firm which sells, personally recommends or arranges the sale of a packaged product ) to or for a member, prospective member or trustees of a self-invested personal pension scheme, must provide key features to that member or trustees,in accordance with COB 6.2.7 R to COB 6.2.25 R.

2. (2)

   In COB 6.2 to COB 6.5, for the purposes of (1), members, prospective members and trustees must be treated by the firm as private customers.

When a firm personally recommends, arranges or effects income withdrawals to or for a private customer, the customer must be provided with key features in good time before he signs any form of application or authority electing to make those withdrawals, whether that election is made with advice on investments or on an execution-only basis, unless COB 6.4.10 R to COB 6.4.12 R or COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.13

In relation to an election to make income withdrawals, the requirement for the provision of key features in:

1. (1)

   COB 6.2.7 R also applies when an existing life policy is to be endorsed;

2. (2)

   COB 6.2.22 R also applies when an existing scheme holding is to be used.

In relation to an election to make income withdrawals, the requirements of COB 6.4.11 R and COB 6.4.12 R override the relevant requirement in COB 6.2 (Provision of key features), where there is conflict.

When a private customer makes a series of elections within a period of 12 months to make income withdrawals, the firm that is personally recommending, arranging or effecting the elections may provide one combined set of key features, for those elections, or may provide separate sets of key features for elections which relate to life policies and schemes.

At intervals no longer than 12 months from the date of an election by a private customer to make income withdrawals, the relevant product provider must:

1. (1)

   provide the private customer with such information required by COB 6.6.13 R as will enable the private customer to review the election; and

2. (2)

   inform the private customer how to obtain advice on investments in respect of his income withdrawals, and that it would be in his best interests to do so.

When a firm manages, personally recommends or sells a cash deposit ISA or cash deposit CTF to a private customer, that customer must be provided with the information specified in whichever of COB 6.5.42 R or COB 6.5.42A R applies to it in good time before the customer is bound by the transaction, unless COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.134

When a firm personally recommends that a private customer should purchase a traded life policy, the customer need not be provided with key features, if the firm instead supplies the information in COB 6.5.44 R in good time before the customer is asked to complete any form of application or authority giving effect to the purchase of the traded life policy.1

When a firm sells, manages, personally recommends or arranges the sale of a stakeholder pension scheme to or for a private customer, the firm must, subject to COB 6.4.18 R and unless COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies, provide the private customer with key features before the private customer completes an application for the stakeholder pension scheme.3

When a firm proposes to deal with a private customer on the telephone for the purposes of providing information through a decision tree about stakeholder pension schemes, the firm may do so only if it has adequate evidence to show that the private customer has access to a copy of a decision tree (as specified in COB 6.5.8 R) during the conversation.

COB 6.4.15 R does not apply to a stakeholder pension scheme operator when its stakeholder pension scheme is sold on the personal recommendation of, or arranged to be sold by, another person, provided that other person:1

1. (1)

   is a firm (or an appointed representative) operating from an establishment maintained by the firm (or appointed representative) in the United Kingdom; or1

2. (2)

   is operating from an establishment in an EEA State whose law imposes an obligation on the person to provide information about the stakeholder pension scheme in accordance with articles 3 and 5(1) and (2) of the Distance Marketing Directive.1

1. (1)

   When a firm sells, personally recommends or arranges the sale of a new group or master life policy, the first in a series of individual life policies or the first units in a particular scheme to the trustees or the operator of a stakeholder pension scheme, it must provide the trustees or operator with key features, in accordance with COB 6.2.7 R to COB 6.2.25 R.

2. (2)

   In COB 6.2 to COB 6.5, for the purposes of (1), the firm must treat trustees and operators as private customers.1

When a firm provides a private customer with information through a decision tree concerning membership of a stakeholder pension scheme, but does not give advice on investments or make a personal recommendation, the firm must provide the private customer with a written notice in accordance with COB 6.4.22 R and COB 6.4.23 R.

A written notice required by COB 6.4.21 R must be provided by the firm no later than 8 business days after the cancellation period commences.1

The notice in COB 6.4.22 R must:

1. (1)

   confirm that no advice on investment has been given and that the private customer has decided that the stakeholder pension scheme is appropriate as a result of the answers he has given to the questions posed in the decision tree; and

2. (2)

   include a copy of the decision tree indicating the answers which the private customer has given.

1. (1)

   1A retail customer must be provided with all the contractual terms and conditions and the information in COB App 1 in a durable medium in good time before he is bound by a distance contract or offer under which the firm will accept deposits (other than a cash deposit ISA, for which see COB 6.5.42 R), unless an exemption in COB 6.4.27 R to COB 6.4.31 R (telephone sales and other exemptions) applies.3

1. (1)

   1Where this chapter requires key features or other information to be provided, in the case of voice telephony communications, a firm:

   1. (a)

      must provide the customer at the beginning of the telephone conversation with the name of the firm and (if the call is initiated by the firm) the commercial purpose of the call;4

   2. (b)

      provided the customer gives his explicit consent to receiving only limited information, may proceed on the basis of at least the following information:3

      1. (i)

         the name of the person in contact with the customer and his link with the firm;

      2. (ii)

         a description of the main characteristics of the service;

      3. (iii)

         the total price to be paid by the customer to the firm for the service, including all related fees, charges and expenses, and all taxes paid through the firm together with a statement, where relevant, that commission or remuneration will be paid to the adviser or representative, or, where an exact price cannot be indicated, the basis for the calculation of the price enabling the customer to verify it;

      4. (iv)

         where relevant, notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it;

      5. (v)

         the existence or absence of a right to cancel the service under COB 6.7 and, where there is such a right, its duration and the conditions for exercising it, including information on the amount which the customer may be required to pay if the contract is terminated early or unilaterally under its terms, as well as the consequences of not exercising it; and

      6. (vi)

         that other information is available on request, and the nature of that information, and4

      7. (vii)

         in addition to (a) and (b) above, where the product is a CTF, provided the customer gives his explicit consent to receiving only limited information, may proceed on the basis of the information referred to in COB 6.5.40 R (7) given orally.4

2. (2)

   If the customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the firm must prior to the conclusion of the contract provide all of the information required by COB App 1 orally to the customer.3

3. (3)

   In the case of either (1) or (2), the firm must send the private customer immediately after the contract is concluded, the required key features or other information (as applicable) in a durable medium.

3This exemption applies where this chapter requires a key features or other information to be provided in relation to a distance contract, if the distance contract is concluded at the customer's request using a means of distance communication (other than telephone) which does not enable provision of the information in a durable medium before the customer is bound by the contract or offer. In that case, the firm must provide key features or other information to the customer in a durable medium immediately after the conclusion of the contract.2

This exemption applies where this chapter requires a key features or other information to be provided in relation to a distance contract, if the firm has an initial service agreement with the customer and the contract is in relation to a successive operation or a separate operation of the same nature under that agreement (see COB 1.10.2 G (1)).2

3This exemption applies where this chapter requires a key features or other information to be provided in relation to a distance contract, if:

1. (1)

   the firm has no initial service agreement with the customer:

2. (2)

   the firm has performed an operation for the customer within the last year: and

3. (3)

   the contract is in relation to a successive operation or separate operation of the same nature (see COB 1.10.2 G (2)).

2At each anniversary of the date on which a long-term care insurance contract which is based on single premium investment bonds was entered into, the insurer must:

1. (1)

   provide the private customer with a table based on the format of COB 6.5.24 containing at least the current fund value and projected future policy values (as in column "What you might get back");

2. (2)

   where it is the case, inform the private customer of the possibility that future policy values may be insufficient to fulfil the original purpose of the contract; and

3. (3)

   inform the private customer how to obtain advice on investments in respect of long-term care insurance contracts, and that it is in his best interest to do so.

4When a firm opens a Revenue allocated CTF, the firm must send the private customer on the first available opportunity after the account has been opened, whichever of the key features or other information is required in a durable medium.

COB 6.5 applies in accordance with COB 6.1.1 R.

A firm must ensure, unless COB 6.5.3 R applies, that:

1. (1)

   the key features it produces for a packaged product other than a stakeholder pension scheme includes the information required by COB 6.5.11 R, set out in the order shown divided by appropriate and prominent sub-headings, some of which are prescribed in the rules;

2. (2)

   the information it produces under COB 6.4.13R (1) for a cash deposit ISA or cash deposit CTF complies with whichever of COB 6.5.42 Ror COB 6.5.42A applies to it;15

3. (3)

   the information document or abbreviated form of key features it produces:

   1. (a)

      relating to friendly society tax exempt policies or traded life policies contains the applicable information specified in COB 6.5.43 R- COB 6.5.44;14

   2. (b)

      relating to broker funds contains the applicable information in COB 6.5.45;14

4. (4)

   the post-sale confirmation document it produces contains the applicable information specified in COB 6.5.46 R;11

5. (5)

   the key features it produces or issues for a stakeholder pension scheme:

   1. (a)

      includes the relevant sub-headings set out at COB 6.5.11 R, the applicable information specified in COB 6.5.12 R - COB 6.5.40 R appropriate to those sub-headings; and

   2. (b)

      is, subject to COB 6.5.6 R, accompanied by or includes the decision trees specified in COB 6.5.8 R, unless the stakeholder pension scheme is being purchased as a result of a personal recommendation; and11

6. (6)

   11all:14

   1. (a)

      key features; and14

   2. (b)

      abbreviated key features mentioned at COB 6.5.2 (3)(a) above,14

   it produces in relation to a distance contract with a retail customer include or are accompanied by all the contractual terms and conditions and the information in COB App 1 except to the extent that they are separately provided to the retail customer in a durable medium in good time before the retail customer is bound by the contract or offer.14

A firm may adapt the prescribed content and format requirements in COB 6.5 only when it can demonstrate that this is necessary to reflect the terms and nature of a particular product and that, in relation to a distance contract with a retail customer, in doing so it does not omit the contractual terms and conditions and information in COB App 1.11

Where a firm knows that a certain decision tree or trees will not be relevant to a private customer to whom key features are to be given, the firm can omit them and include only the relevant decision tree or trees.

1. (1)

   Whether a firm produces decision trees within or separate from key features, it must (unless COB 6.5.9 R applies and subject to COB 6.5.8A R) reproduce the text, content and format set out in COB 6 Annex 1.

2. (2)

   If COB 6 Annex 1 is subsequently amended:

   1. (a)

      the firm must amend its decision trees as soon as reasonably practicable and, in any case, within three months of the date when the amendments to COB 6 Annex 1 come into force; and

   2. (b)

      the firm may continue to use decision trees that complied with the previous version of COB 6 Annex 1 until it has done so.

A firm must ensure that its decision trees include:

1. (1)

   (in the place in the relevant table in the Further information text at COB 6 Annex 1 where the square brackets appear):

   1. (a)

      in the heading of the table, the current tax year; and

   2. (b)

      the Basic State Pension rates and Pension Credit minimum income rates for the current tax year;

2. (2)

   (where the square brackets appear) at the bottom of the cover page and at the bottom of each page of the flow charts, the current tax year; and

3. (3)

   (where the square brackets appear) in the introductory text where additional explanatory text within Further information is signposted, the appropriate page number.512

1. (1)

   A firm must, subject to (2), make the changes required by COB 6.5.8A R as soon as reasonably practicable and, in any case, within three months of the start of the tax year.

2. (2)

   Where, in any year, a firm is required to make changes to the trees under COB 6.5.8 R and COB 6.5.8A R, it may make both sets of changes at the same time, provided that it does so within the time limits in COB 6.5.8 R (2)(a).5

A firm must ensure, subject to COB 6.5.8 R (2), that it uses only the most recent version of its decision trees.5

Where a firm makes use of both electronic and hard copy versions of the decision trees specified in COB 6.5.8 R, it must synchronise the timing of any changes to those trees as far as reasonably practicable.5

The only adaptations, other than those in COB 6.5.8A R - COB 6.5.8E R, that a firm may make to the decision trees specified in COB 6.5.8 R are those suitable to brand the decision tree with the corporate image of the firm, to reflect the design of its stakeholder pension scheme promotional material or to reflect the use of interactive delivery.5

A firm must include this heading: 'key features of the [name of life policy/scheme/stakeholder pension scheme]'.

1. (1)

   A firm must describe the nature of the life policy or scheme or stakeholder pension scheme under the following headings: 'its aims', 'your commitment', or, 'your investment' (whichever is more appropriate) and 'risk factors'.

2. (2)

   Under 'risk factors' a firm must give a brief description of the factors which may have an adverse effect on performance or are otherwise material to the decision to invest.

A firm must include a projection, illustrating how the principal terms of the proposed transaction apply to the private customer:

1. (1)

   where the proposed transaction is for a life policy other than: 17

   1. (a)

      a long-term care insurance contract which is a pure protection contract;1317

   2. (b)

      a linked life stakeholder product.17

   3. (c)

      one that relates to a CTF or a stakeholder product sold through basic advice,17

2. (2)

   where the proposed transaction does not relate to a CTF or a stakeholder product sold through basic advice and is for a scheme19 or a linked life stakeholder product:17

   1. (a)

      and relates to an election to make income withdrawals; or

   2. (b)

      where the private customer's primary objective is to acquire;

      1. (i)

         a specified sum of money on a specified date; or

      2. (ii)

         a specified sum of money on death; or

      3. (iii)

         an annuity of a specified amount payable as from a specified date.

1. (1)

   All projections included in key features, except a specimen projection in a decision tree for a stakeholder pension scheme, must be calculated in accordance with COB 6.6 (Projections), using the lower, intermediate and higher rates of return in COB 6.6.50 R, and followed by the appropriate statements form COB 6.6.15 R.

2. (2)

   In addition, if the projection in (1) is for a pension scheme or a stakeholder pension scheme, a firm may also include a type P projection in the key features (see COB 6.6.34 R (5)). The pension must assume increases linked to the retail prices index using the appropriate intermediate rate in COB 6.6.51 R. 6

1. (1)

   A life policy projection in key features must be specific to the private customer, calculated on the basis of the private customer's age and sex, the sum assured, the premium and other principal factors of the proposed life policy unless:

   1. (a)

      the life policy is a single premium life policy; or

   2. (b)

      the total premiums payable do not exceed £120 a year (or £130 a year if the premiums are paid every four weeks); or

   3. (c)

      the total premiums are less than £1,000; or

   4. (d)

      the key features are part of a direct offer financial promotion.

2. (2)

   If (1)(a), (b), (c) or (d) applies and no customer specific projection is included, a projection must be provided which typically represents the type of business which the firm conducts (or proposes to conduct) in relation to the life policy in question.

3. (3)

   A scheme projection in key features must be based on either:

   1. (a)

      the actual amount which the private customer is proposing to invest; or

   2. (b)

      an amount which typically represents the type of business which the firm conducts (or proposes to conduct) in relation to the scheme in question;

   unless it is for income withdrawals, when it must be on the basis of (a).

In addition to COB 6.5.13 R and COB 6.5.18 R, a firm must set out in the form of questions and answers a description of the principal terms of the life policy, scheme, or stakeholder pension scheme, and any other information necessary to enable the private customer to make an informed decision.

For life policies which can have a surrender value, a firm must include the contents of COB 6.5.24 R unless COB 6.5.28 R applies.

When completing COB 6.5.24 R, a firm must:

1. (1)

   under the heading 'the early years' include figures for the first five years of the life policy or, if the life policy has a fixed term of less than five years, as many of them as fall before the maturity date;

2. (2)

   under the heading 'the later years' include figures for the tenth and every subsequent fifth year of the term of the life policy (or of the contract period as defined in COB 6.6.25 R if that is shorter) and for the final year, except in the following cases:

   1. (a)

      for a whole-life policy, figures must be included for every tenth year and:

      1. (i)

         the final year, assuming that the life policy will continue (unless and until converted to a fixed term) until the insured life (or the youngest insured life) attains the age of 75 years or to a term of ten years if that is later; or

      2. (ii)

         the year in which the projected fund reaches zero if earlier than (i); the consequences of this must be drawn to the private customer's attention;

   2. (b)

      in the case of a single premium life policy with no fixed term, a term of ten years should be assumed, but figures for a longer term may be shown in addition;

   3. (c)

      for a ten-year life policy, the figures for the final year may be included in the 'early years' table;

   4. (d)

      for a personal pension policy with income withdrawals, there is an option to quote figures for the sixth year and at three-yearly intervals thereafter; and

   5. (e)

      where there is any significant discontinuity in the trend of surrender or transfer values, figures should be given for all the intervening years.

3. (3)

   in the 'Total paid in to date' column, include cumulative totals of premiums paid (making adjustment as necessary to take account of any automatic premium changes);

4. (4)

   in the 'Total actual deductions to date' and 'Effect of deductions to date' columns, include the cumulative sum of the charges and expenses (as defined in COB 6.6.23 R) and the cost of any protection benefits expected to be levied against the life policy; they must be calculated in accordance with COB 6.5.29 R;

5. (5)

   in the 'What you might get back' column, include projections of surrender values for the life policy:

   1. (a)

      these must be calculated in accordance with COB 6.6.38 R (projections of surrender values) assuming the premium and any other relevant matters given for the purposes of COB 6.5.13 R (Nature of policy) and COB 6.5.15 R (An Example);

   2. (b)

      the surrender value of a premium on a particular date must be calculated by assuming that any premium payable on that date is payable on the following day; and

   3. (c)

      where any surrender values are guaranteed they must be provided with a suitably adjusted heading and introductory text;

6. (6)

   where the life policy is a personal pension, replace 'What you might get back' with 'What the transfer value might be' and make suitable amendments to the explanatory text; for a personal pension policy with income withdrawals it must be replaced with 'Open market value';

7. (7)

   where the private customer is entitled to exercise and has chosen, or expressed the intention, to exercise the right to make partial surrenders, include a column headed 'Withdrawals' or, in the case of a personal pension with income withdrawals, 'Total income taken'; the sum of withdrawals must be shown;

8. (8)

   for a personal pension with income withdrawals, include a table headed 'What effect will the deductions have?' instead of 'The early years' and 'The later years'; where there is any charge or penalty in calculating the open market value, all the years to which this applies should be given; and

9. (9)

   in the case of a long-term care insurance contract based on single premium investment bonds, where the standard ten-year table does not illustrate adequately how the charges taken from a policy can increase considerably with age:13

   1. (a)

      the table must be extended to show figures at ten-year intervals and the year in which the private customer attains 100 years or the year the fund is exhausted if earlier; but

   2. (b)

      the standard ten-year figure must be used for the reduction in yield and the accompanying words amended accordingly.

COB 6.5.23 R - COB 6.5.25 R do not apply to a life policy which will never have a surrender value; the following warning must be given instead of the tables: 'WARNING - this policy has no cash-in value at any time'.

The following statements must appear beneath the information required by COB 6.5.23 R, unless COB 6.5.28 R applies:

1. (1)

   'What are the deductions for?'

2. (2)

   'The deductions include [the cost of life cover, sickness benefits,] [commissions/remuneration,] expenses, charges, any surrender penalties and other adjustments.'

3. (3)

   'The last line in the table shows that over the full term of the policy the effect of the total deductions could amount to £x.'

and then either:

1. (4)

   'Putting it another way, leaving out the cost of life cover [and sickness benefits] this would have the same effect as bringing investment growth from x% a year down to y% a year.' or

2. (5)

   'Putting it another way, if the growth rate were to be x%, which is in no way guaranteed, this would have the effect of reducing it to y% a year.'

The information relating to 'Total actual deductions to date' and 'Effect of deductions to date' in COB 6.5.23 R, and the information relating to reduction in yield required by COB 6.5.27 R, do not need to be given for the following categories of life policy:

1. (1)

   a without-profits life policy of which the benefits, except on surrender or variation, are guaranteed benefits;

2. (2)

   a life policy for a term not exceeding five years; and15

3. (3)

   a life policy held within a CTF.15

In COB 6.5.24 R the 'Total actual deductions to date' and the 'Effect of deductions to date' must be calculated for each of the years detailed in COB 6.5.25 R. These are the amounts of all deductions that are expected to be levied against the assets and premiums in respect of charges and expenses (as defined in COB 6.6.23 R), and surrender penalties, as well as allowance for the cost of risk benefits (defined in COB 6.6.28 R) to the end of the year. They must be calculated as follows.

1. (1)

   The premiums must be accumulated at the intermediate rate prescribed in COB 6.6.49 R for the category of life policy to which the key features relates (the 'prescribed rate'), making no allowance for charges and expenses and other deductions.

2. (2)

   'Effect of deductions to date' must be derived by subtracting the amount shown in the column 'What you might get back' from premiums accumulated in accordance with (1).

3. (3)

   The figures in the column 'Effect of deductions to date' must reflect the charges and expenses accumulated at the prescribed rate. The column headed 'Total actual deductions to date' must show the sum of actual deductions.

4. (4)

   The deductions for each year must be calculated by subtracting from the 'Effect of deductions to date' for that year the 'Effect of deductions to date' for the previous year (if any), increased by the amount of interest for the year calculated at the prescribed rate.

5. (5)

   'Total actual deductions to date' is the sum of the figures derived in accordance with (4) for the year in question and all previous years; where it is negative, nil must be shown for that year.

For schemes, a firm must include the contents of COB 6.5.31 R unless the scheme is to be held within a stakeholder CTF.15

When including the contents of COB 6.5.31 R, a firm must replace the wording in brackets as directed by the instructions in those brackets and:

1. (1)

   when the inclusion of a scheme projection within key features is compulsory in accordance with COB 6.5.15 R (2), include figures calculated in accordance with COB 6.6 (Projections):

   1. (a)

      at the end of years 1, 3, 5 and 10 and (optionally) for years 2 and 4;

   2. (b)

      then for each fifth year following the tenth year which falls within the period of the projection; and

   3. (c)

      the final year of the projection;

2. (2)

   when a scheme projection is not required by COB 6.5.15 R (2) but is included at a firm's discretion, include figures at the end of years 5 and 10 and (optionally) for years 1 and 3 or for years 1 to 4, all calculated in accordance with COB 6.6 (Projections);

3. (3)

   in the 'Investment to date' column, include:

   1. (a)

      the actual amount which the private customer is proposing to invest; or

   2. (b)

      an amount which is representative of the type of business which the firm conducts (or proposes to conduct) in relation to the contract in question;

   but where, under COB 6.5.15 R (2), a projection is included in the key features, the amount shown as the 'Investment' must be the same as the amount used as the basis for the projection;

4. (4)

   in the 'Effect of deductions to date' column, include the cumulative sum of charges and expenses (as defined in COB 6.6.23 R) for each of the years shown, these figures must be calculated in accordance with COB 6.5.35 R- Calculation Method for Effect of charges to date;

5. (5)

   in the 'What you might get back' column, include figures taking account of charges and expenses showing what the value might be if the scheme were cashed in;

6. (6)

   where the contract is a personal pension, replace 'What you might get back' with 'What the transfer value might be', and make suitable amendments to the explanatory text; for a personal pension contract with income withdrawals the replacement must be 'Open market value';

7. (7)

   include extra columns in the Table in the following cases:

   1. (a)

      where the private customer is entitled to exercise and has chosen, or expressed the intention, to exercise the right to make partial withdrawals, an extra column must be included headed 'Withdrawals' or, in the case of a personal pension contract with income withdrawals, 'Total income taken'; 'Withdrawals' must include distributions of income;

   2. (b)

      where the investment involves periodic redemptions at pre-determined intervals to make payments to the private customer, a column headed 'Redemptions' is needed;

   3. (c)

      where the investment distributes income and does not involve the automatic reinvestment of this income, a column headed 'Income' must be included;

   in (a), (b) and (c) the arithmetic sum of the withdrawals or redemptions or income payments must be stated, on the assumption that these are made throughout on the same basis as contemplated at the time the projection was prepared; the method set out in COB 6.6.36 R must be used to calculate distributions of income;

8. (8)

   for a personal pension contract with income withdrawals, include in a table under the heading 'What effect will deductions have?' figures for every third year or every fifth year; where there is any charge or penalty in calculating the open market value, all the years to which this applies must be given;

9. (9)

   include a statement that allowance for tax relief has been made in the calculation where any tax relief available to the scheme has been taken into account in the calculation of charges and expenses.

The statements in (1) and (2), or in (1) and (3) must appear beneath the information required by COB 6.5.31 R:

1. (1)

   'The last line in the table shows that over [n] years the effect of the total charges and expenses could amount to £x';

2. (2)

   'Putting it another way, if the growth rate were to be (x)%, which is in no way guaranteed, this would have the effect of reducing it to (y)% a year';

3. (3)

   'Putting it another way, this would have the same effect as bringing investment growth from (x)% a year down to (y)% a year'.24

1. (1)

   The figure [n] in the prescribed wording in COB 6.5.33 R is the number of years in figures given at the bottom of the table, as appropriate for each transaction.

2. (2)

   The 'Investment to date' must be accumulated to the end of [n] years at the relevant rate of return (x)% making full allowance for the charges and expenses (as specified in COB 6.6.23 R).

3. (3)

   The rate of return (y)% must be found which, if applied (on a compound basis) to the amounts included in the 'Investment to date' column over the [n] years, without making any allowance for the charges and expenses, would produce the same sum as that calculated in (2).

For each year, figures must be given for the effect of deductions assuming the fund grows in accordance with a relevant rate of return (as defined in COB 6.6.33 R). These calculations must reflect all deductions (charges and expenses as defined in COB 6.6.23 R) expected to be levied against the fund and against the private customer's investment. The calculations must be made on the basis of the following principles:

1. (1)

   for each year the 'Investment' must be accumulated, at the relevant rate of return (as specified in COB 6.6.33 R), to the end of each year, making due allowance for the charges and expenses;

2. (2)

   for each year the 'Investment' must be accumulated, at the relevant rate of return, to the end of each year, but making no allowance for the charges and expenses;

3. (3)

   the 'Effect of deductions to date' is the amount calculated in (1) subtracted from the amount calculated in (2);

4. (4)

   a rate of return which is lower than the relevant rate of return must be used where the firm expects that rate would imply an overstatement of the investment potential; and

5. (5)

   the calculations specified in (1) and (2) must allow for any partial encashment of units or shares or distributions of income where under the terms of the scheme the private customer has exercised, or has expressed the intention of exercising, an option to make such encashments or to receive such income or where such encashments or distributions will automatically apply. The allowance must be assumed in accordance with the estimated rate or amount, unless to do so would be inappropriate for that scheme.

1. (1)

   The statement in (2) must appear beneath or within the information required by COB 6.5.20 R.

2. (2)

   "There is an annual charge of [y]% of the value of the funds you accumulate. If your fund is valued at £500 throughout the year, this means we deduct [£500 x y/100] that year. If your fund is valued at £7500 throughout the year, we will deduct [£7500 x y/100 that year."

1. (1)

   17If a firm imposes one annual charge including expenses, it need not make the detailed disclosures required by COB 6.5.24 and COB 6.5.30; but if it does not make those disclosures, it must instead include either:

   1. (a)

      the following statement (the last sentence must be included if and only if it is clear at the time of acquisition that the annual charge will reduce to r% after a fixed period):

      "There is an annual charge of [y]% of the value of the funds you accumulate. If your fund is valued at £250 throughout the year, this means we deduct [£250 x y/100] that year. If your fund is valued at £500 throughout the year, this means we deduct [£500 x y/100] that year. After ten years these deductions would reduce to [£250 x r/100] and [£500 x r/100] respectively."

      or;

   2. (b)

      the information required by COB 6.5.20.

A firm must include under the heading 'How much will the advice cost?' either the statement prescribed in (1), (1A) or (1B), as applicable, or the information required by (2):13

1. (1)

   for life policies (other than long-term care insurance contracts which are pure protection contracts) or stakeholder pension schemes: 'Your adviser will give you details about the cost. The amount will depend on the size of the premium and the length of the policy term. It will be paid for out of the deductions'; or13

2. (1A)

   for schemes: 'Your adviser will give you details about the cost. The amount will depend on the size of your [use: 'investment' or 'contribution'] [add if appropriate: 'and in the case of regular savings the period for which you make them']. It will be paid for out of the charges'; or

3. (1B)

   for long-term care insurance contracts which are pure protection contracts: 'Your adviser will give you details about the cost. The amount will depend on the size of the premium and the length of the policy term.'13

4. (2)
   1. (a)

      the amount or value in cash terms of the commission or remuneration, and an indication of the timing of these payments; and16

   2. (b)

      a statement that commission or equivalent is paid for out of 'the deductions or charges, if more appropriate' and, if applicable, that the amount will depend on the size of the premium or contribution and the length of the life policy, scheme or stakeholder pension scheme term.164

A firm must include the following information in the key features, separately or as part of the information required by COB 6.5.2 R:

1. (1)

   for life policies:

   1. (a)

      a clear indication, in one place, of the nature and amount or rate of any charges or expenses which the private customer will or may bear; if charges or expenses are levied in the form of reduced investment, both the method and effect must be clearly explained; in the case of a single premium charge for mortality or morbidity under linked benefit policies, it is sufficient to describe its nature and basis;

   2. (b)

      the information that Annex III to the Consolidated Life Directive requires to be communicated to policyholders, which is specified in COB 6.5.49 R; and

   3. (c)

      an explanation how the private customer may obtain further information about compensation arrangements and other matters relating to the life policy;

2. (2)

   for all schemes, an explanation that other information about the scheme is available on request and how it may be obtained;

3. (3)

   for regulated collective investment schemes and for such investments held within a PEP or an ISA:

   1. (a)

      a statement where details of the latest estimated distribution yield and buying and selling prices can be found;

   2. (b)

      in the case of any purchase, how and when the price to be allocated in respect of each payment will be determined;

   3. (c)

      whether certificates will be issued and, if so, when they will be sent;

   4. (d)

      how units or shares may be redeemed and when payment on redemption will be made;

   5. (e)

      the names and addresses of the scheme manager or authorised corporate director, and the names of the trustees, or depositary (if any);

   6. (f)

      where and how copies of scheme particulars, annual and half-yearly reports and accounts and prospectuses can be obtained;

   7. (g)

      an explanation of any relevant right to cancel or withdraw, or, where it is the case, that such rights do not apply;

   8. (h)

      how complaints and queries are dealt with and how further details of compensation arrangements (if any) can be obtained;

   9. (i)

      a summary of the private customer's potential liability (if any) to income tax and capital gains tax;

   10. (j)

       whether the private customer has a choice to reinvest income, where uninvested money will be held and whether interest is paid on such money;

   11. (k)

       for single-priced schemes:

       1. (i)

          how the scheme may suffer dealing costs as a result of transactions in units; and

       2. (ii)

          whether it is the authorised fund manager's policy that investors who carry out such transactions may be liable to contribute towards those dealing costs by means of a dilution levy or dilution adjustment, and, if not, an explanation of how this may affect the future growth of the scheme;

   12. (l)

       in relation to SDRT provision:

       1. (i)

          how the scheme may suffer stamp duty reserve tax as a result of transactions in units; and

       2. (ii)

          whether the authorised fund manager's policy is such that an SDRT provision may be imposed;

   13. (m)

       if there is any arrangement intended to result in a particular capital or income return from the units or shares or any investment objective of giving protection to their capital value or income return:

       1. (i)

          details of that arrangement or protection;

       2. (ii)

          for any related guarantee, sufficient details about the guarantor and the guarantee to enable a fair assessment of the guarantee; and

       3. (iii)

          a description of the risks that could affect achievement of that return or protection including details of what happens when an investment is encashed before the expiry of any related guarantee or protection;

   14. (n)

       if there is a class of limited issue shares or limited issue units, a summary of the restrictions on the issue and sale of those shares or units.

4. (4)

   for investment trust savings schemes and for such investments held within a PEP or an ISA:

   1. (a)

      when shares will be purchased for the scheme, where uninvested money will be held and whether interest is paid;

   2. (b)

      where information about the investment trustshare price, yield, and premium and discount information can be obtained;

   3. (c)

      where information about the net asset value and latest dividend can be found;

   4. (d)

      whether the private customer has a choice to reinvest income, how it is reinvested, or how it is paid to the private customer;

   5. (e)

      details of any nominees with which shares are registered;

   6. (f)

      how shares can be sold and how the sale proceeds are determined;

   7. (g)

      whether applications and payments will be acknowledged and whether contract notes or certificates are issued;

   8. (h)

      whether there will be a statement of account showing details such as number and cost of shares and balance of cash;

   9. (i)

      an explanation of any right to withdraw or cancel (as specified in COB 6.7) or, where it is the case, that such rights do not apply;

   10. (j)

       where the investment trust report and accounts may be obtained;

   11. (k)

       information about the manager and administrator of the scheme;

   12. (l)

       the private customer's options in the case of items such as rights issues;

   13. (m)

       how to stop investing in or how to leave a scheme and the position in respect of the shares held;

   14. (n)

       terminations or alterations by the scheme manager;

   15. (o)

       taxation details in respect of the private customer's investment; and

   16. (p)

       how complaints are dealt with and how further details of compensation arrangements (if any) can be obtained;

5. (5)

   for ISAs with a life policy (insurance) or equity (stocks and shares) component and PEPs, in addition to (1), (2), (3) or (4):

   1. (a)

      a description of the nature of the services which will be provided for the private customer;

   2. (b)

      for ISAs or ISA components which are stated as satisfying the CAT standards:

      1. (i)

         a table comparing the ISA or ISA component with the CAT standards;

      2. (ii)

         clarification that satisfying the CAT standards does not mean that the investment is appropriate for the private customer or that there is any guarantee of performance;

   3. (c)

      the fact, if applicable, that an ISA does not meet the CAT standards together with any relevant explanation;

   4. (d)

      a statement that the favourable tax treatment of ISAs may not be maintained;

   5. (e)

      how and when statements (if any) will be sent;

   6. (f)

      an explanation how the ISA or plan may be terminated or transferred to another ISA or PEP manager; and

   7. (g)

      whether the ISA is a mini-or maxi-ISA agreement and an explanation of the differences between the two.

6. (6)

   For stakeholder pension schemes, an explanation how complaints are dealt with and how further details of compensation arrangements (if any) can be obtained.

7. (7)

   For investments held within a CTF:15

   1. (a)

      a prominent statement that after money is paid into a CTF it is locked in, and that this means that it can only be accessed by the child when he is 18, except as permitted by the CTF Regulations, and any contributions made to the CTF cannot be returned to the donor;15

   2. (b)

      if the CTF is a stakeholder CTF, an explanation of the minimum standards (as described in paragraph 2 of the Schedule to the CTF Regulations) and CTF lifestyling approach (as described in paragraph 2 of the Schedule to the CTF Regulations), together with a statement that satisfying these minimum standards does not mean that the investment is suitable for a customer or that there is any guarantee of performance;15

   3. (c)

      if the CTF is a non-stakeholder CTF, a prominent statement that it is not a stakeholder CTF and that a stakeholder CTF is available from a named alternative CTF provider, together with a detailed description of that stakeholder CTF;15

   4. (d)

      a statement that the CTF will not be opened until any cancellation period has expired; and15

   5. (e)

      a balanced comparison between stakeholder CTFs and non-stakeholder CTFs.15

If COB 6.4.13 R applies, for a cash deposit ISA, the private customer must be given the following information (in accordance with COB 6.4.13 R) and, in relation to a distance contract with a retail customer, all the contractual terms and conditions and the information in COB App 1 in place of key features:1114

1. (1)
   1. (a)

      for the cash deposit ISA which is stated as satisfying the CAT standards, a comparison with the CAT standards; or

   2. (b)

      if the cash deposit ISA is not stated as satisfying the CAT standards, a statement making this clear, together with, if desired, any relevant information;

2. (2)

   a statement making it clear whether the ISA is a mini or a maxi-ISA agreement and explaining the differences between the two;

3. (3)

   the minimum amount needed to open an account;

4. (4)

   the maximum yearly deposit;

5. (5)

   the interest rate earned, and if and how it may vary;

6. (6)

   the calculation of interest;

7. (7)

   how to make withdrawals and any limits;

8. (8)

   details of the arrangements for the application of the right to cancel, including the following:11

   1. (a)

      the options available on cancellation (a firm must either assist the private customer in switching accounts or refund all monies deposited together with interest);11

   2. (b)

      information about how cancellation will operate in circumstances where the account forms part of a maxi-ISA which contains other components;11

   3. (c)

      a statement that the effect of cancelling the last component has the effect of cancelling the entire ISA agreement and may also (where it is the case) delay the customer from entering into another ISA agreement until the next tax year; and11

   4. (d)

      a statement that a private customer who exercises a right to cancel will not incur any additional charges or be affected by any notice period; 11

9. (9)

   the arrangements for handling complaints;

10. (10)

    that the favourable tax treatment may not be maintained;

11. (11)

    that compensation may be available from the Financial Services Compensation Scheme;

12. (12)

    where applicable, that the firm cannot accept money directly and acts only as agent in arranging the cash deposit ISA, identifying the principal to whom such monies should be made payable, and explaining that the principal has accepted responsibility for the activities of the firm in relation to the cash deposit ISA;

13. (13)

    where a private customer can obtain further information about ISAs and, if applicable, other products within the firm's range; and

14. (14)

    a warning that a mini- and maxi-ISA may not be opened in the same tax year and that, by opening a mini cash ISA, the customer will be limiting the amount of investment in equities that he can make through ISAs, if he does not already have a mini stocks and shares or insurance ISA (not applicable for a TESSA-only ISA).10

15If COB 6.4.13 applies, for a cash deposit CTF, the private customer must be given in place of key features:

1. (1)

   the information contained in COB 6.5.42 (4) and COB 6.5.42 (8) and in COB 6.5.40 (7);

2. (2)

   details of the arrangements for exercising any right to cancel;

3. (3)

   a statement explaining where a private customer can obtain further information about CTFs

4. (4)

   in relation to a distance contract with a retail customer, all the contractual terms and conditions and the information in COB App 1.

Where a private customer buys a tax-exempt policy issued by a friendly society, or agrees to make additional contributions to such a policy, the firm may, where there is a right to cancel under COB 6.7 (Cancellation and withdrawal), issue an abbreviated form of key features containing the following details:14

1. (1)

   the amount of the contribution;

2. (2)

   the term over which the contribution will be paid;

3. (3)

   material differences between the terms of any increase and those of the existing policy;14

4. (4)

   the amount or value in cash terms of the commission or remuneration; and14

5. (5)

   in relation to a distance contract with a retail customer, all the contractual terms and conditions and the information in COB App 1.1114

When personally recommending the purchase of a traded life policy, a firm may provide a private customer with the information in COB 6.5.49 R and, in relation to a distance contract with a retail customer, all the contractual terms and conditions and the information in COB App 1 in place of key features (in accordance with COB 6.4.14 R).11

In relation to any fund or scheme of which the firm is a broker fund adviser, at the same time as providing a private customer with a suitability letter (in accordance with COB 5.3 (Suitability)) or before any change in investment objectives or strategies, the firm must inform the private customer in writing of:

1. (1)

   the investment objectives, and the policies and strategies which are proposed to be followed to achieve those objectives;

2. (2)

   the relevant published index or other indicator with which comparison of the performance of the fund or scheme may fairly be made, which is, in the case of:

   1. (a)

      life policies or pension funds:

      1. (i)

         where the long-term insurer has its own managed unit-linked life or pension fund, the average performance of that managed fund; or

      2. (ii)

         the average performance of one or more other funds, which are not broker funds, into which under the terms of the policy the private customer may switch, the objectives of which do not conflict with those of the broker fund; or

      3. (iii)

         where there is no such fund, the sector average of general managed life or pension funds;

   2. (b)

      broker unit trusts, the sector average of unit trusts appropriate to the objectives and strategy of the broker unit trust;

3. (3)

   a published index or sector average which the firm must identify as appropriate to the investment objectives and strategy of the fund or scheme under comparison; and

4. (4)

   the name of any person providing advice under the arrangement.

The post-sale confirmation to be given to private customers in accordance with COB 6.3.3 R must include the information required by COB 6.5.15 R - COB 6.5.19 R(an Example), COB 6.5.23 R to COB 6.5.28 R (Tables and Deductions Summary) and COB 6.5.38 R (Commission and commission equivalent).16

1. (1)

   A firm to which COB 6.5.40 R (1)(b) applies must communicate in writing the information prescribed in COB 6.5.49 R to the policyholder, before the policy is concluded, in an official language of the EEA State of the commitment.

2. (2)

   This information may be in another language if the policyholder so requests, and the law of the EEA State so permits or the policyholder is free to choose the law applicable.

When a long-term insurer receives:

1. (1)

   a request from a private customer for a quotation for the surrender value of a life policy; or

2. (2)

   any other indication that a private customer wishes to surrender a life policy;

which is of a type which may be traded on an existing secondary market for life policies, it must, before or when providing the quotation (or, if no quotation is provided, before accepting a surrender), make the policyholder aware in writing of:

1. (3)

   the fact that, as an alternative to surrendering to the long-term insurer, the life policy may be traded on that secondary market;

2. (4)

   the fact that there may be financial benefits in trading the life policy when compared to surrendering it to the long-term insurer;

3. (5)

   how the policyholder may trade the life policy on the secondary market should he decide to do so; and

4. (6)

   other relevant options available to the policyholder.3

Where a long-term insurer believes that COB 6.5.50 R does not apply because its own policies are of a type which are not tradable, it must review the position every six months and make and retain records indefinitely to support its view.3

1. (1)

   A firm must provide a scheme member or policyholder described in (2) with the information set out in (3) in writing:

   1. (a)

      when there is a request for a retirement quotation more than four months before the scheme member's or policyholder's intended retirement date; and

   2. (b)

      at least four months before the scheme member's or policyholder's intended retirement date.

2. (2)

   A person in relation to whom (1) applies is a private customer who:

   1. (a)

      is a member of a personal pension scheme; or

   2. (b)

      is a member of a stakeholder pension scheme; or

   3. (c)

      is the holder of a free-standing additional voluntary contribution contract; or

   4. (d)

      (where an open market option is available under the contract terms) is the holder of a retirement annuity contract; or

   5. (e)

      (where an open market option is available under the contract terms) is the holder of a pension buy-out contract.

3. (3)

   The information which a firm must provide in writing under (1) is an explanation of:

   1. (a)

      the open market option (including the fact that companies offer different annuity rates and different types of annuity, and that the scheme member or policyholder may get a better deal by shopping around);

   2. (b)

      the financial advantages and disadvantages in general terms of making use of this option when compared with taking a pension annuity with that firm;

   3. (c)

      how the scheme member or policyholder may make use of the open market option should he decide to do so; and

   4. (d)

      the advisability of taking professional advice.3

A firm which has provided information under COB 6.5.53 R must, at least six weeks before his intended retirement date, remind the scheme member or policyholder of that communication, and must provide him with an estimated final transfer value.3

When a scheme member or policyholder described in COB 6.5.53 R (2) indicates to the provider of that scheme or policy that he is considering or has decided:

1. (1)

   to discontinue an income withdrawal arrangement; or

2. (2)

   to take out a further sum of money from his pension fund to buy an annuity as part of a phased retirement arrangement;

the provider of that scheme or policy must send the scheme member or policyholder the information required by COB 6.5.53 R, unless the scheme member or policyholder has already been sent the information by the provider in the previous 12 months. 7

COB 6.6 applies to a firm in respect of projections for life policies, schemes and stakeholder pension schemes.

A firm must not provide a projection for a life policy, schemeor stakeholder pension scheme unless the projection is calculated and presented in accordance with the rules in COB 6.6.

COB 6.6.4 R does not apply to a firm when it provides a projection:

1. (1)

   of the benefits payable under a defined benefit occupational pension scheme, unless they are money-purchase benefits;

2. (2)

   issued with a view to determining a maximum contribution allowed by the Inland Revenue, provided the assumptions used in calculating such a contribution are disclosed;

3. (3)

   if the benefits are fixed and do not depend on an assumption of a future investment return;

4. (4)

   of a benefit under an existing contract where the date to which the benefit is being projected is not more than six months after the date on which the projection is given;

5. (5)

   contained in a decision tree as specified in COB 6.5.8 R;

6. (6)

   of the benefits payable under pension scheme or a stakeholder pension scheme if they were:

   1. (a)

      calculated and issued in accordance with regulations made under section 113 of the Pensions Schemes Act 1993; or

   2. (b)

      calculated and issued as in (a) and, in addition, includes one or more of the following benefits:

      1. (i)

         the projected fund at the projection date; or

      2. (ii)

         the cash sum and the residual pension in real terms; or

      3. (iii)

         the pension in real terms calculated assuming a rate of return 1% per annum less than that prescribed in the regulations; or

   3. (c)

      calculated as in (a) or (b) but where the illustration of benefits is not required to be issued under the regulations by reference to proximity to the projection date or the small size of the fund.

7. (7)

   provided in accordance with COB 8.2.4 R and COB 8.2.17 E where the life policy, schemeor stakeholder pension scheme is a structured capital-at-risk product.24

A firm must not provide a projection of possible investment returns or realisable values, or figures or statements which would enable the calculation of such a projection, for an investment in a higher volatility fund.

A firm must, in addition to complying with other rules in this section, ensure that a projection given to a particular customer is relevant to that customer's circumstances. 7

1. (1)

   A document containing a projection must include the information detailed in COB 6.5 (Key Features) under the headings 'An Example', 'Tables', 'Deductions Summary' and 'Commission and Remuneration', unless (2) applies.

2. (2)

   The information under the headings 'Tables', 'Deductions Summary' and 'Commission and Remuneration' need not be included in a projection issued in respect of:

   1. (a)

      an existing contract; or

   2. (b)

      a financial promotion (other than a direct offer financial promotion); or

   3. (c)

      an execution-only transaction relating to a scheme.

3. (3)

   If the projection relates to a contract to which regular premiums or contributions can be made, the total amount or number of premiums or contributions payable over the projection term must be made clear.

4. (3A)

   If the projection is a type P projection or a type Q projection, the basis used for increases in premiums or contributions must be disclosed.

5. (4)

   Other than a type P projection or a type Q projection, where a projection is given which makes allowance for increases in premiums or contributions, the premium or contribution in the final year must be shown (or, where the rate of possible future increments is based upon rates of growth in a salary or index, details of that salary or index).2

1. (1)

   A firm may provide a generic projection for illustrative purposes based on a single rate of investment return only in the following circumstances:

   1. (a)

      in a financial promotion (other than a direct offer financial promotion) which comprises a table (or extracts from a table) published by a newspaper, magazine or other periodical publication, or by the firm itself, which compares illustrative projections from at least five product providers; or

   2. (b)

      where the purpose is to indicate the likely cost of a proposed transaction; or

   3. (c)

      to provide an estimate of the additional premium or contribution required to achieve a specified target; or

   4. (d)

      when providing a type P projection or a type Q projection.

2. (2)

   A firm which provides a generic projection must ensure that:

   1. (a)

      it does not relate solely to an existing contract;

   2. (b)

      the rate of return used does not exceed the higher projection rate for its class of business;

   3. (c)

      where the rate used exceeds the middle rate by more than 0.5 percentage point, a statement is included advising why it is believed reasonable to project at such a high rate of return;

   4. (d)

      where the charges and expenses (as described in COB 6.6.23 R) of the product provider are available, they are used, or an estimate is given based on the firm's knowledge of the charges and expenses applicable to similar contracts;

   5. (e)

      it is accompanied by the written statements contained in COB 6.6.17 R; and

   6. (f)

      key features are supplied in accordance with COB 6.1 to COB 6.5 (Key Features) if a recommendation is subsequently made.

3. (3)

   A firm may issue a stochastic projection only where:

   1. (a)

      the purpose is to indicate a range of possible outcomes; and

   2. (b)

      either:

      1. (i)

         it is provided for the purpose of a proposed transaction; or

      2. (ii)

         it is provided in addition to a projection which: (A) is not a stochastic projection but which complies with COB 6.6.4 R; or (B) is a projection excepted under COB 6.6.5 R(6).

4. (4)

   A firm which issues a stochastic projection must ensure that:

   1. (a)

      it is based on a reasonable number of simulations and is consistent with the economic assumptions underlying the rates of inflation in COB 6.6.48A R and the intermediate rates of return in COB 6.6.50 R and COB 6.6.51 R;

   2. (b)

      its presentation does not reduce the impact of non-stochastic projections; and

   3. (c)

      it is issued only in circumstances in which the firm has taken reasonable steps to ascertain that the customer will be able to understand the stochastic projection.23

For pension targeting, a firm's own assumptions as to future rates of return (but not exceeding the higher rate of return as specified in COB 6.6.49 R), salary increases and inflation must be used to determine the level of contributions. Any allowance for salary increases used in pension targeting must not be less than the rate of return assumed before retirement less 3% per annum.

A projection in respect of the protected rights for an appropriate personal pension must, for the purpose of comparison, include a projection which:

1. (1)

   is calculated to the customer's State retirement age, using the lower and higher real rates of return specified in COB 6.6.52 R, together with a statement of the benefits which the minimum contributions would secure if the customer did not take out an appropriate personal pension;

2. (2)

   [deleted]

3. (3)

   aggregates contributions in respect of the current and the next two tax years;

4. (4)

   is followed by the appropriate personal pension projection and a description of any differences in:

   1. (a)

      presentation, for example, real or monetary rates of return, joint or single life;

   2. (b)

      the dates from which the benefits are assumed to be payable;

   3. (c)

      the nature of the benefits, for example, index-linked or limited price indexation ('LPI') increases.2

A projection for income withdrawals from a personal pension or stakeholder pension scheme:

1. (1)

   must include:

   1. (a)

      a statement of the initial amounts of minimum andmaximum income as specified in the current tables published by the Government Actuary for income withdrawals;

   2. (b)

      a statement of the assumed initial level of income and the assumed basis for future years;

   3. (c)

      a schedule showing under the heading 'WHAT THE BENEFITS MIGHT BE' the amount of income and the fund at each, or every third, anniversary for each of the rates of return specified in COB 6.6.49 R;

   4. (d)

      a statement of the projected open market values and the amounts of annuity at age 75 or the date at which it is reasonably assumed an annuity will be purchased; and

   5. (e)

      a statement of the amount of annuity that could be secured using an immediate annuity rate available in the market; and

2. (2)

   must assume that the current rate of gilt-index yield will continue to apply in projecting amounts of minimum and maximum income throughout the term of the projection.2

1. (1)

   A document containing a projection must include the appropriate statements set out in COB 6.6.16 R - COB 6.6.18 R.

2. (2)

   A statement may be altered if a firm believes on reasonable grounds that it is not wholly appropriate to the contract in question. But the alteration must not reduce the significance or impact of the statement.

3. (3)

   Any statement required to accompany a projection must appear adjacent to the projected values and be in a type size no smaller or less prominent than that used for the projected values.

1. (1)

   The statements in COB 6.6.16 R must accompany each projection for a life policy or scheme as indicated, except a generic projection given in accordance with COB 6.6.9 R (see COB 6.6.17 R), or a protected rights annuity projection calculated in accordance with COB 6.6.11 R (see COB 6.6.18 R).

2. (2)

   For a pension scheme or stakeholder pension scheme, the appropriate statement from item 4 of COB 6.6.16 R must appear immediately after the projection.

3. (3)

   Where a pension scheme or stakeholder pension scheme projection, using monetary rates of return in COB 6.6.51 R, is provided at the same time as a type P projection or a type Q projection, the appropriate statement from COB 6.6.16 4 must appear immediately after the projection. The remainder of the appropriate statements in COB 6.6.16 R need only be included once, as long as the firm makes it clear that these statements apply to both types of projection.2

A firm must ensure that a record of a projection provided to a customer is made and retained, unless it relates to a proposal which does not proceed. The record must be retained for a minimum period of:

1. (1)

   six years in the case of a record relevant to a life policy, pension contract or stakeholder pension scheme;

2. (2)

   indefinitely in the case of a record relevant to a pension transfer or pension opt-out;

3. (3)

   three years in any other case.

The descriptions of defined terms in COB 6.6.22 R to COB 6.6.33 R apply to all references to those terms in COB 6.6.34 R - COB 6.6.78 G which detail the method of calculating projections and of calculating charges and expenses and the recommended method of calculating scheme expenses.

1. (1)

   The adjusted premium is the premium or contribution payable under the contract during the contract period (defined in COB 6.6.25 R), disregarding any increases that cannot be quantified at the commencement of the contract (but allowing for any increases which are assumed and disclosed in the key features).

2. (2)

   When calculating the amount of premium or contribution, a firm may deduct:

   1. (a)

      the cost of any rider benefits;

   2. (b)

      any part of a premium or contribution which is payable in respect of an exceptional mortality risk.

1. (1)

   For a scheme or unit-linked life policy, charges and expenses are all explicit charges and expenses the customer will or may bear:

   1. (a)

      including:

      1. (i)

         all other deductions and expenses which will or may bear upon the fund (including charges in respect of any collective investment scheme or insurance fund in which any funds of the contract in question are invested but excluding dealing costs of the underlying portfolio); and

      2. (ii)

         all deductions from the premium or contribution payable which do not accrue to the benefit of the customer by way of contribution to the value of the benefit;

   2. (b)

      having regard to:

      1. (i)

         the principal terms of the contract; and

      2. (ii)

         any tax relief which will be available to the fund or scheme in respect of so much of the fund's or scheme's gross expenses as can be properly attributed to the contract.

2. (2)

   For a with-profits contract, or a unit-linked life policy where not all charges and expenses are determined in accordance with (1), charges and expenses are such expenses as the firm reasonably determines to be appropriate to the contract having regard to:

   1. (a)

      the principal terms of the contract;

   2. (b)

      any tax relief which will be available to the firm in respect of so much of the firm's gross expenses as can properly be attributed to the contract;

   3. (c)

      any transfers to shareholders' funds, or equivalent retentions from established surplus offset by any sustainable rate of transfer of surplus from non-profit business;

   4. (d)

      dealing costs of the underlying portfolio which should be excluded; and

   5. (e)

      any guidance published by the Institute of Actuaries or the Faculty of Actuaries (or by both jointly).

3. (3)

   If a contract has explicit charges, it should be assumed that they continue at a rate no less than that at which similar charges are being made at the time when the projection or calculation of the effect of the charges is made.

The contract period of a life policy, scheme or stakeholder pension scheme is the period beginning with the commencement of the contract and ending as follows:

1. (1)

   for a contract which contains an option under which benefits may be:

   1. (a)

      payable earlier than the date on which they would be payable if the option were not exercised; and

   2. (b)

      the marketing of which seeks to draw to the attention of customers the existence of an option or surrender value, so that it is reasonable to infer that the firm expects some customers to purchase the contract with the intention of exercising the option or surrendering the contract in whole or in part;

   on the earliest date on which an option may be exercised or the contract may be surrendered (in whole or in part);

2. (2)

   for a contract which is a whole life assurance the premiums under which are regular premiums:

   1. (a)

      the anniversary of the commencement of the contract which first falls after the seventy-fifth birthday of the person whose life is assured under the contract, taking, if there are two or more such persons:

      1. (i)

         the older or oldest if the benefits under the contract are payable on the death of the first of them to die; and

      2. (ii)

         the younger or youngest in any other case; or

   2. (b)

      the tenth anniversary of the commencement of the contract;

   whichever is the later;

3. (3)

   in the case of an endowment assurance or a non-pension deferred annuity, the premiums under which are regular premiums, on the maturity date;

4. (4)

   in the case of an endowment assurance or a non-pension deferred annuity under which the only premium payable is a single premium and the term of which does not exceed ten years, on the maturity date;

5. (5)

   in the case of a Holloway sickness policy, on the latest date on which the sickness benefit will cease to be payable;

6. (6)

   in the case of a pension contract other than an immediate annuity, on the maturity date or, if the contract provides for annuities at various dates, the latest date at which an annuity may be purchased;

7. (7)

   in the case of an immediate annuity, on the date to which the customer is expected to live, calculating the expectancy of life for this purpose by reference to an appropriate mortality basis; and

8. (8)

   for the purpose of this section 'maturity date' means:

   1. (a)

      in relation to an endowment type assurance, the date specified in the contract as the maturity date;

   2. (b)

      in relation to a pension contract or stakeholder pension scheme, the vesting date of the annuity payable under the contract or, if no vesting date for the annuity is specified in the contract, the date specified in relation to the annuity as the retirement date by the firm in the projection in question, being a date not earlier than the earliest date on which the annuity could vest and not later than the latest such date.

In the case of any contract which falls within both COB 6.6.25 R (1) and one or more of COB 6.6.25 R (2)- (7), the contract period must be determined by reference to COB 6.6.25 R (1).

In the case of any contract not falling within COB 6.6.25 R, then:

1. (1)

   for schemes, the contract period will end on the tenth anniversary of the commencement date of the contract; and

2. (2)

   for all other contracts there will be two contract periods, the first ending on the fifth anniversary of the commencement date of the contract, and the second ending on the tenth anniversary of the commencement date.

Cost of risk benefits means:

1. (1)

   explicit mortality or morbidity charges (at a level no lower than the current level); or

2. (2)

   the implicit cost or effect of mortality or morbidity appropriate to the class of customers;

and risk benefits means all forms of mortality and sickness benefits under a contract.

The relevant contribution is the actual payment or payments to be made by the customer, or a sum which reasonably reflects the amounts which the customer is proposing to invest, into a scheme, except in the case of a protected rights annuity (see COB 6.6.31 R).

The relevant premium is the actual premium payable under a life policy less an amount equal to the cost of any rider benefit, except in the case of a protected rights annuity (see COB 6.6.31 R).

The relevant premium or contribution in relation to a protected rights annuity is an amount that may reasonably be estimated to be paid by the Secretary of State or the Department of Social Services for Northern Ireland by way of minimum contributions in respect of the customer involved.

The relevant rate of return is the intermediate projection rate appropriate to the category of business as set out in COB 6.6.50 R - COB 6.6.52 R, or the lower rate if COB 6.6.38 R (1) (Projections of surrender values and transfer values) applies.

1. (1)

   A projection of any future benefit payable under a life policy or stakeholder pension scheme must be calculated by reference to the relevant premium for the policy or stakeholder pension scheme.

2. (2)

   The relevant premium must be accumulated to the projection date at the rate of return for its class of business as detailed in COB 6.6.50 R to COB 6.6.52 R, subject to charges and expenses (as described in COB 6.6.23 R) and the cost of risk benefits. The intermediate projection rate need not be used for an existing contract.1

3. (3)

   An allowance must be made where a customer has exercised or has expressed the intention to exercise an option to effect a partial surrender of a policy.

4. (4)

   Allowance must not be made for income withdrawals, surrenders, lapses or early discontinuance, except as in (3).

5. (5)

   A type P projection or a type Q projection must be calculated as follows:

   1. (a)

      the relevant premium for the pension scheme or stakeholder pension scheme must be used;

   2. (b)

      the relevant premium, with allowance for premium increases as specified in COB 6.6.48A R, must be accumulated to the projection date at the intermediate monetary rate of return detailed in COB 6.6.51 R subject to charges and expenses (as described in COB 6.6.23 R) and the cost of risk benefits;

   3. (c)

      the retirement fund from (b) must then be converted to a real retirement fund by discounting from the projection date using the rate of increase in the retail prices index (for type P projection) or the rate of increase in earnings (for type Q projection) in COB 6.6.48A R;

   4. (d)

      the pension must be calculated from the real retirement fund using the appropriate intermediate rate in COB 6.6.51 R, using the mortality tables in COB 6.6.84 R, the format in COB 6.6.82 R (7) and expenses in COB 6.6.83 R.2