1In this chapter:

1. (1)

   'retail client' includes the trustee or operator of a stakeholder pension scheme or personal pension scheme and the trustee of a money-purchase occupational pension scheme; and

2. (2)

   ‘sell’ includes ‘sell, personally recommend or arrange the sale of’ in relation to a designated investment and equivalent activities in relation to a cash-deposit ISA and cash-deposit CTF.

1A firm that sells:

1. (1)

   a packaged product to a retail client, must provide a key features document and a key features illustration2 to that client (unless the packaged product is a unit in a UCITS scheme,7simplified prospectus scheme or an EEA UCITS scheme which is a recognised scheme);7

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2. (2)

   a life policy that is not a reinsurance contract to a client, must provide the Consolidated Life Directive information to that client;

3. (3)

   the variation of a life policy or personal pension scheme to a retail client, must provide that client with sufficient information about the variation for the client to be able to understand the consequences of the variation (unless the policy or scheme is a SIPP);

4. (3A)

   the variation of a SIPP to a retail client, to contract out of the State Second Pension, must provide the client with a projection for an appropriate personal pension and a contracting-out comparison for those benefits together with such additional information as is necessary for the client to understand the consequences of the variation;4

5. (3B)

   the variation of a personal pension scheme to a retail client, which involves an election by the client to make income withdrawals or a purchase of a short-term annuity, must provide that client with such information as is necessary for the client to understand the consequences of the variation, including where relevant, the information required by COBS 13 Annex 2.2.9 R (Additional requirements: unsecured and alternatively secured pensions);5

6. (4)

   a cash-deposit ISA or cash-deposit CTF to a retail client, must provide a key features document to that client;

7. (5)

   a unit in a simplified prospectus scheme to a client, must offer the scheme's current simplified prospectus to that client. In addition, if the client is a retail client present in the EEA, the firm must provide the simplified prospectus to the client together with:

   1. (a)

      enough information for the client to be able to make an informed decision about whether to hold the units in a wrapper (if the units will, or may, be held in that way); and

   2. (b)

      information about the three types of CTF that are generally available (stakeholder CTFs, cash-deposit CTFs and2security-based CTFs2), and the type of CTF the firm is offering (if the units will, or may, be held in a CTF);

8. (6)

   [deleted]7

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9. (7)

   a unit in a UCITS scheme, or in an EEA UCITS scheme which is a recognised scheme, to a client, must:7

   1. (a)

      provide a copy of the scheme'skey investor information document or, as the case may be, EEA key investor information document to that client; and7

   2. (b)

      where the client is a retail client, provide separately (unless already provided) the information required by COBS 13.3.1R (2) (General requirements) and, if that client is present in the EEA, the information required by (5)(a) and (b);7

10. (8)

    where the operator of a non-UCITS retail scheme has a dispensation from the FSA in the form of a general waiver by consent under which it may market units of the scheme on the basis of a key investor information document (as modified by the general waiver direction, a "NURS KII document"), rather than on the basis of a key features document or simplified prospectus, a firm that sells units in the scheme must comply with its obligations under this rule by:7

    1. (a)

       providing the retail client with the relevant NURS KII document; and7

    2. (b)

       offering any client that is not a retail client the relevant NURS KII document;7

    on condition that it complies with each of the other rules in this section in relation to the provision of the document, as if references in those rules to a “key features document” or “simplified prospectus” were a reference to the “NURS KII document”.

1. (1)

   7This rule applies

   to an authorised fund manager of a UCITS scheme that is either an authorised unit trust or an ICVC, and an ICVC that is a UCITS scheme.

2. (2)

   An authorised fund manager and an ICVC in (1) that sells units in a UCITS scheme directly, or through another natural or legal person who acts on its behalf and under its full and unconditional responsibility, must ensure that investors are provided with the key investor information document for the scheme.

3. (3)

   An authorised fund manager and an ICVC in (1) that does not sell units in a UCITS scheme directly, or through another natural or legal person who acts on its behalf and under its full and unconditional responsibility, must ensure that the key investor information document for the scheme is provided on request to product manufacturers and intermediaries selling, or advising investors on, potential investments in those UCITS schemes or in products offering exposure to them.

4. (4)

   The key investor information document must be provided to investors free of charge.

5. (5)

   An authorised fund manager and an ICVC in (1) may, instead of providing the key investor information document to investors in paper copy in accordance with (2), provide it in a durable medium other than paper or by means of a website that meets the website conditions, in which case the authorised fund manager and ICVC must:

   1. (a)

      deliver a paper copy of the key investor information document to the investor on request and free of charge; and

   2. (b)

      make available an up-to-date version of the key investor information document to investors on the website of the ICVC or authorised fund manager.

The documents or information required to be provided or offered by the first provision rule (COBS 14.2.1 R) must be in a durable medium or made available on a website (where that does not constitute a durable medium) that meets the website conditions.

1. (1)

   A firm that personally recommends that a retail client holds a particular asset in a SIPP must provide that client with sufficient information for the client to be able to make an informed decision about whether to buy or invest.

2. (2)

   This rule does not apply if the asset is described in COBS 14.2.1 R.

When a firm provides a document or information in accordance with the rules in this section, it must not do anything that might reasonably cause a retail client to be mistaken about the identity of the firm that has produced, or will produce, the product.

A firm is not required to provide:

1. (1)

   a document, if the firm produces the product and the rules in this section require another firm to provide the document;

2. (2)

   a key features document or key features illustration2, if another person is required to provide the distance marketing information by the rules of another EEA State;

3. (3)

   the Consolidated Life Directive information, if another person is required to provide that information by the rules of another EEA State;

4. (4)

   a simplified prospectus if:

   1. (a)

      [deleted]7

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   2. (b)
      1. (i)

         the client is buying or investing in response to a direct offer financial promotion without receiving a personal recommendation to buy or invest; and

      2. (ii)

         the firm offers an up-to-date copy of the simplified prospectus to the client and provides materially the same information to the client in some other way.

2A firm is not required to provide a key features illustration for a product if the information that would have been included in that illustration is included in the key features document provided to the client. 2

A firm is not required to provide a key features document or a key features illustration2for:

1. (1)

   a key features scheme if it provides a simplified prospectus instead;

2. (2)

   a life policy that is not a reinsurance contract if:

   1. (a)

      the firm is operating from an establishment in another EEA State and the sale is by distance contract; or

   2. (b)

      the client is habitually resident outside the United Kingdom and the sale is not by distance contract.

3. (3)

   a traded life policy.

A firm is not required to provide a key features document or a key features illustration2, if:

1. (1)

   the client is buying or investing in response to a direct offer financial promotion without receiving a personal recommendation to buy or invest; and

2. (2)

   the firm provides materially the same information in some other way.

A firm is not required to provide a , a key features illustration2 or a simplified prospectus for a key features scheme or simplified prospectus scheme if:

1. (1)

   the client is habitually resident outside the EEA and not present in the EEA when the relevant application is signed; or

2. (2)

   the purchase is by a discretionary investment manager on behalf of a retail client; or

3. (3)

   the sale is arranged or personally recommended by an investment manager and the client has agreed that a key features document or simplified prospectus is not required; or

4. (4)

   a retail client is purchasing a holding in a scheme in which the client already has a holding, or the client is switching from one class of shares or units to another in the same scheme, and the relevant document has already been provided to that client.

7For the purposes of the provision rules in relation to a key investor information document, a firm:

1. (1)

   may satisfy the requirement to provide the document to the investor by providing it to a person who has written authority to make investment decisions on that investor’s behalf; and

2. (2)

   is not required to consider as a new transaction:

   1. (a)

      a subscription to units in a UCITS scheme or an EEA UCITS scheme in which the client already holds units; or

   2. (b)

      a series of connected transactions undertaken as the consequence of a single investment decision; or

   3. (c)

      a decision by the client to switch from one class of units to another in the same scheme;

      if an up-to-date version of the key investor information document for the scheme or the relevant class of units has already been provided to that client.

A firm may provide a single document, which describes more than one key features scheme or7simplified prospectus scheme, or any combination of those schemes, if:

1. (1)

   the schemes are offered through a funds supermarket service;

2. (2)

   the document clearly describes the difference between the relevant schemes; and

3. (3)

   (in the case of a simplified prospectus scheme) the firm also offers a copy7 of the relevant prospectus7 to the client.

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In the case of a distance contract comprising an initial service agreement, followed by successive operations or a series of separate operations of the same nature performed over time, the rules in this section only apply to the initial agreement.

If there is no initial service agreement but the successive operations or separate operations of the same nature performed over time are performed between the same contractual parties, the rules in this section only apply:

1. (1)

   when the first operation is performed; and

2. (2)

   if no operation of the same nature is performed for more than a year, when the next operation is performed (the next operation being deemed to be the first in a new series of operations).

When the rules in this section require a firm to:

1. (1)

   offer a simplified prospectus to a client, that prospectus must be offered free of charge before the conclusion of the contract; or

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2. (2)

   provide a key features document, a simplified prospectus, or any other document or information to a client, the document or information must be provided free of charge and in good time before the firm carries on the relevant business; or7

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3. (3)

   provide a key investor information document or EEA key investor information document to a client, it must be provided in good time before the client's proposed subscription for units in the scheme.7

A key features document for an HMRC allocated CTF must be provided as soon as reasonably possible after the CTF has been opened.

1. (1)

   A firm may provide a document, or the information required to be provided by the rules in this section, in a durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a client's request using a means of distance communication that does not enable the document or information to be provided in that form in good time before the client is bound by the contract.7

2. (2)

   The exception in (1) does not apply in relation to the provision of an EEA key investor information document or a key investor information document required to be provided under COBS 14.2.1 R and COBS 14.2.1A R.7

1. (1)

   Where the rules in this section require a document or information to be provided, in the case of a voice telephony communication, a firm must:7

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   1. (a)

      if the client gives explicit consent to receiving only limited information, provide the abbreviated distance marketing disclosure information () orally to the client;7

   2. (b)

      if the client does not give explicit consent to only receiving limited information, and the parties wish to proceed by voice telephony communication, provide the distance marketing information () orally to the client;7

   3. (c)

      in the case of (a) or (b), send the documents or information to the client in a durable medium immediately after the contract is concluded.7

2. (2)

   The exception in (1) does not apply in relation to the provision of an EEA key investor information document or a key investor information document required to be provided under COBS 14.2.1 R and COBS 14.2.1A R.7

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This section applies to a firm in relation to:

1. (1)

   MiFID or equivalent third country business; and

2. (2)

   the following regulated activities when carried on for a retail client:

   1. (a)

      making a personal recommendation about a designated investment; or

   2. (b)

      managing investments that are designated investments; or

   3. (c)

      arranging (bringing about) or executing a deal in a warrant or derivative; or

   4. (d)

      engaging in stock lending activity.

A firm must provide a client with a general description of the nature and risks of designated investments, taking into account, in particular, the client's categorisation as a retail client or a professional client. That description must:

1. (1)

   explain the nature of the specific type of designated investment concerned, as well as the risks particular to that specific type of designated investment, in sufficient detail to enable the client to take investment decisions on an informed basis; and

2. (2)

   include, where relevant to the specific type of designated investment concerned and the status and level of knowledge of the client, the following elements:

   1. (a)

      the risks associated with that type of designated investment including an explanation of leverage and its effects and the risk of losing the entire investment;

   2. (b)

      the volatility of the price of designated investments and any limitations on the available market for such investments;

   3. (c)

      the fact that an investor might assume, as a result of transactions in such designated investments, financial commitments and other additional obligations, including contingent liabilities, additional to the cost of acquiring the designated investments; and

   4. (d)

      any margin requirements or similar obligations, applicable to designated investments of that type.

If a firm provides a retail client with information about a designated investment that is the subject of a current offer to the public and a prospectus has been published in connection with that offer in accordance with the Prospectus Directive, that firm must inform the retail client where that prospectus is made available to the public.

Where the risks associated with a designated investment composed of two or more different designated investments or services are likely to be greater than the risks associated with any of the components, a firm must provide an adequate description of the components of that designated investment and the way in which its interaction increases the risks.

In the case of a designated investment that incorporates a guarantee by a third party, the information about the guarantee must include sufficient detail about the guarantor and the guarantee to enable the retail client to make a fair assessment of the guarantee.

The documents and information provided in accordance with the rules in this section must be in a durable medium or available on a website (where that does not constitute a durable medium) that meets2 the website conditions.

1. (1)

   The information to be provided in accordance with the rules in this section must be provided in good time before a firm carries on designated investment business or ancillary services with or for a retail client.

2. (2)

   A firm may provide that information immediately after it begins to carry on that business if:

   1. (a)

      the firm was unable to comply with (1) because, at the request of the client, the agreement was concluded using a means of distance communication which prevented the firm from complying with that rule; and

   2. (b)

      in any case where the rule on voice telephony communications (COBS 5.1.12 R) does not otherwise apply, the firm complies with that rule as if the client was a consumer.

A firm must notify a client in good time about any material change to the information provided under the rules in this section which is relevant to a service that the firm is providing to that client. That notification must be given in a durable medium if the information to which it relates is given in a durable medium.

If a firm provides a client with a key investor information document or EEA key investor information document3 that meets the requirements of articles 78 and 793 of the UCITS Directive (see COLL 4.7 (Key investor information and marketing communications)) and the KII Regulation,3 it will have provided appropriate information for the purpose of the requirement to disclose information on:

1. (1)

   designated investments and investment strategies (COBS 2.2.1R (1)(b)); and

2. (2)

   costs and associated charges (COBS 2.2.1R (1)(d) and COBS 6.1.9 R1;

in relation to the costs and associated charges in respect of the UCITS scheme itself, including the exit and entry commissions.