COBS 10.2 Assessing appropriateness: the obligations

1. (1)

   When providing a service to which this chapter applies, a firm must ask the client to provide information regarding his knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded so as to enable the firm to assess whether the service or product envisaged is appropriate for the client.

2. (2)

   When assessing appropriateness, a firm:

   1. (a)

      must determine whether the client has the necessary experience and knowledge in order to understand the risks involved in relation to the product or service offered or demanded;

   2. (b)

      may assume that a professional client has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the client is classified as a professional client.

The information regarding a client's knowledge and experience in the investment field includes, to the extent appropriate to the nature of the client, the nature and extent of the service to be provided and the type of product or transaction envisaged, including their complexity and the risks involved, information on:

1. (1)

   the types of service, transaction and designated investment with which the client is familiar;

2. (2)

   the nature, volume, frequency of the client's transactions in designated investments and the period over which they have been carried out;

3. (3)

   the level of education, profession or relevant former profession of the client.

A firm must not encourage a client not to provide information required for the purposes of its assessment of appropriateness.

A firm is entitled to rely on the information provided by a client unless it is aware that the information is manifestly out of date, inaccurate or incomplete.