COBS 10A.2 Assessing appropriateness: the obligations

A2 firm must ask the client to provide information regarding that client’s knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded to enable the firm to assess whether the service or product envisaged is appropriate for the client.

[Note: article 25(3) of MIFID, first paragraph of article 30(2) of the IDD2]

Where a bundle of services or products is envisaged pursuant to COBS 6.1ZA.16R (for MiFID business) or COBS 6.1ZA.16AR to COBS 6.1ZA.16E (for insurance-based investment products)2, the assessment made pursuant to COBS 10A.2.1R must consider whether the overall bundled package is appropriate.

[Note: article 25(3) of MiFID, first paragraph of article 30(2) of the IDD2]

6Without prejudice to the fact that, in accordance with COBS 7.3.4R, any insurance-based investment product proposed must be consistent with the client’s demands and needs, a firm must determine whether the client has the necessary knowledge and experience in order to understand the risks involved in relation to the service or insurance-based investment product proposed or demanded when assessing whether an insurance service or insurance-based investment product distributed in accordance with COBS 10A.2.1R and COBS 10A.2.2R is appropriate for the client.

[Note: article 15 of the IDD Regulation]

1. (1)

   6For the purposes of COBS 10A.2.1R and COBS 10A.2.2R in relation to insurance-based investment products, the necessary information to be obtained by a firm with regard to the client’s knowledge and experience in the relevant investment field must include, where relevant, the following, to the extent appropriate to the nature of the client, and the nature and type of insurance-based investment product or service offered or demanded, including their complexity and the risks involved:

   1. (a)

      the types of service, transaction, insurance-based investment product or financial instrument with which the client is familiar;

   2. (b)

      the nature, number, value and frequency of the client’s transactions in insurance-based investment products or financial instruments and the period over which they have been carried out;

   3. (c)

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

2. (2)

   Where information required for the purposes of COBS 10A.2.1R and COBS 10A.2.2R has already been obtained for the purposes of COBS 7.3.4R, a firm must not request information it already has anew from the client.

[Note: article 17(1) and (3) of the IDD Regulation]

6In relation to an insurance-based investment product, a firm must not discourage a client from providing information required for the purposes of COBS 10A.2.1R and COBS 10A.2.2R.

[Note: article 17(2) of the IDD Regulation]

6In relation to an insurance-based investment product, a firm may rely on the information provided by the client unless it is aware or ought to be aware that the information is manifestly out of date, inaccurate or incomplete.

[Note: article 17(4) of the IDD Regulation]