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)

   3(except in relation to the requirements under the PRIIPs Regulation) ‘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, cash-only lifetime ISA2 and cash-deposit CTF.

1A firm that sells, or (where relevant) gives effect to22:

1. (1)

   a non-PRIIP packaged product17 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 regulated collective investment scheme17);

   777
2. (2)

   a life policy to a client, must provide:20

   131313
   1. (a)

      the Solvency II Directive information to that client;20

   2. (b)

      a client with objective and relevant information about the policy:20

      1. (i)

         in a comprehensible form to allow the client to make an informed decision;20

      2. (ii)

         modulated in a way that takes into account the complexity of the policy and the type of client;20

      3. (iii)

         whether or not the firm makes a personal recommendation; and

      4. (iv)

         irrespective of whether the policy is offered as part of a package pursuant to COBS 6.1ZA.16AR to COBS 6.1ZA.16ER;

   3. (c)

      the information in (b) must be provided prior to the conclusion of the life policy and in accordance with COBS 7.4, rather than in accordance with the other rules in this section;20

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;

   11
4. (3A)

   [deleted]10

   410
5. (3B)

   a retail client’s request to make income withdrawals from their personal pension scheme or stakeholder pension scheme for the first time must provide that retail client with:22

   61465
   1. (a)

      a key features illustration; and22

   2. (b)

      such other information as is necessary for the client to understand the consequences of the request;22

6. (3C)

   a retail client's request to make22 one-off or regular uncrystallised funds pension lump sum payments from their personal pension scheme or stakeholder pension scheme for the first time must provide that client with:22

   14
   1. (a)

      a key features illustration; and22

   2. (b)

      such other information as is necessary for the client to understand the consequences of the request;22

7. (3D)

   a retail client’s request to designate personal pension scheme or stakeholder pension scheme funds to enable the retail client to make income withdrawals must provide that client with:22

   1. (a)

      a key features illustration; and22

   2. (b)

      such other information as is necessary for the retail client to understand the consequences of the request;22

8. (3E)

   a retail client’s request to make an income withdrawal subsequent to (3B) or uncrystallised funds pension lump sum payment subsequent to (3C) must provide:22

   1. (a)

      such information as is necessary for the client to understand the consequences of the request; and22

   2. (b)

      where relevant, the information required by COBS 13 Annex 2.2.9R (Additional requirements: drawdown pensions and regular uncrystallised funds pension lump sum payments); 22

9. (3F)

   a retail client’s request for a short-term annuity must provide: 22

   1. (a)

      a key features illustration; and22

   2. (b)

      such other information as is necessary for the client to understand the consequences of the request; 22

10. (4)

    a cash-deposit ISA, cash-only lifetime ISA16 or cash-deposit CTF to a retail client, must provide a key features document to that client;

11. (4A)

    16a lifetime ISA, which is not a cash-only lifetime ISA, to a retail client must provide to that client the information in COBS 14 Annex 1;

12. (5)

    [deleted]17

13. (5A)

    a unit in a KII-compliant NURS must provide the following to a retail client:17

    1. (a)

       a copy of the scheme’s NURS-KII document and (unless already provided) the information required by COBS 13.3.1R(2) (General requirements); and 17

    2. (b)

       if that client is present in the United Kingdom21, 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);17

14. (6)

    [deleted]7

    7
15. (7)

    a unit in a UCITS scheme, or in an EEA UCITS scheme which is a recognised scheme (other than a scheme in (7A))25, 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 United Kingdom21, the information required by (5A)(b); and25

       177
16. (7A)

    a unit in an OFR recognised scheme to a client, must provide the documents and information specified in COBS 14.2.1-BR.25

17. (8)

    [deleted]17

    7

25For the purpose of COBS 14.2.1R(7A), in relation to a unit in a scheme which is an OFR recognised scheme, the specified documents and information are as follows:

1. (1)

   Where the scheme is an EEA UCITS scheme, the firm must provide a copy of the scheme’s EEA key investor information document to that client.

2. (2)

   Where the client is a retail client, the firm must provide separately (unless already provided):

   1. (a)

      the information required by COBS 13.3.1R(2)(a) and (b) (General requirements);

   2. (b)

      if the client is present in the United Kingdom, the information required by COBS 14.2.1R(5A)(b); and

   3. (c)

      information that clearly explains:

      1. (i)

         whether the Financial Ombudsman Service is likely to be able to consider complaints against the scheme, its operator or its depositary; and

      2. (ii)

         what arrangements, if any, exist that would enable investors in the United Kingdom to have a complaint against the scheme, its operator or its depositary considered by an alternative dispute resolution mechanism in the relevant Home State;

      3. (iii)

         that the activities of the scheme's operator and its depositary are unlikely to be covered by the compensation scheme and investors might not be protected under the regulatory system if either person should become unable to meet its liabilities to them; and

      4. (iv)

         what arrangements, if any, exist in the Home State(s) of the scheme’s operator or its depositary for the payment of compensation to investors in the United Kingdom if either person should become unable to meet its liabilities to them.

1. (1)

   7This rule applies to:17

   1. (a)

      an authorised fund manager of a UCITS scheme or a KII-compliant NURS that is either an authorised unit trust, authorised contractual scheme or an ICVC; and17

   2. (b)

      an ICVC that is a UCITS scheme or KII-compliant NURS.17

   12
2. (2)

   An authorised fund manager and an ICVC in (1) that sells units in a UCITS scheme or a KII-compliant NURS17 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 UCITS scheme or the NURS-KII document for the KII-compliant NURS17.

3. (3)

   An authorised fund manager and an ICVC in (1) that does not sell units in a UCITS scheme or a KII-compliant NURS17 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 UCITS scheme or the NURS-KII document for the KII-compliant NURS17 is provided on request to product manufacturers and intermediaries selling, or advising investors on, potential investments in those UCITS schemes or KII-compliant NURS17 or in products offering exposure to them.

4. (4)

   The key investor information document or the NURS-KII document17 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 or NURS-KII document17 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 or NURS-KII document17 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 or NURS-KII document17 to investors on the website of the ICVC or authorised fund manager.

9When the rules in this chapter require the offer or provision of a key features illustration, a firm may provide a generic key features illustration if that generic key features illustration has been prepared in accordance with COBS 13.4.2 R.

9A firm that arranges to facilitate the payment of an adviser charge or consultancy charge17, or an increase in such a charge17 from an in-force packaged product, must provide to the retail client sufficient information for the retail client to be able to understand the likely effect of that facilitation.

The documents or information required to be provided or offered by COBS 14.2.1 R and COBS 14.2.1C R9 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)

   [deleted]21

   2
3. (3)

   [deleted]21

   131317
4. (4)

   [deleted]17

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

18A firm is not required to provide a key features illustration in relation to a pension annuity if the firm provides the information required by COBS 19.9 (Pension annuity comparison information).

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

1. (1)

   [deleted]17

2. (2)

   a life policy if:

   13
   1. (a)

      [deleted]21

   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; or17

4. (4)

   an interest in an investment trust savings scheme.17

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 key features document or17 a key features illustration17 if:

1. (1)

   the client is habitually resident outside the United Kingdom21 and not present in the United Kingdom21 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 is not required.17

4. (4)

   [deleted]17

7For the purposes of the provision rules in relation to a key investor information document or a NURS-KII document17, 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,17 an EEA UCITS scheme or a KII-compliant NURS17 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 or NURS-KII document17 for the scheme or the relevant class of units has already been provided to that client.

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)

   [deleted]17

   7
2. (2)

   provide a key features document17 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

   7
3. (3)

   provide a key investor information document,17EEA key investor information document or NURS-KII document17 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,17 a key investor information document or a NURS-KII document17 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

   7
   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,17 a key investor information document or a NURS-KII document17 required to be provided under COBS 14.2.1 R and COBS 14.2.1A R.7

   7

This section applies to a firm in relation to:

1. (1)

   [deleted]8

2. (2)

   any of8 the following regulated activities when carried on for a retail client:

   1. (a)

      making a personal recommendation about a designated investment6;5 or

   2. (b)

      managing investments that are designated investments (other than a P2P agreement);5 or

   3. (c)

      arranging (bringing about) or executing a deal in a warrant, non-readily realisable security4speculative illiquid security,12 or derivative; or

   4. (d)

      engaging in stock lending activity; or4

      4
   5. (e)

      operating an electronic system in relation to lending, but only in relation to facilitating a person becoming a lender under a P2P agreement.4

   8except to the extent that the carrying on of such a regulated activity constitutes MiFID, equivalent third country or optional exemption business.

3. (3)

   12Where a rule in this chapter applies to a firm which is arranging (bringing about) or executing a deal in a speculative illiquid security, the rule also applies to:

   1. (a)

      a TP firm (to the extent that the rule does not already apply to such a TP firm as a result of GEN 2.2.26R); and

   2. (b)

      a Gibraltar-based firm (having the same meaning as in the Gibraltar Order) to the extent that the rule does not already apply to such a Gibraltar-based firm as a result of GEN 2.3.1R).

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 Regulation, that firm must inform the retail client where that prospectus is made available to the public.11

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 business8 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 all of9 the requirements applying in relation to that document9, 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.

7If a firm provides a client with a NURS-KII document it will have provided appropriate information for 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 6.1.9R);

in relation to the costs and associated charges for the KII-compliant NURS itself, including the exit and entry commissions.

1This section applies to a firm in relation to its MiFID, equivalent third country or optional exemption business.

Provisions in this section marked “UK”3apply in relation to MiFID optional exemption business as if they were rules (see COBS 1.2.2G).

A firm must provide a client with:

1. (1)

   appropriate guidance on, and warnings of, the risks associated with investments in financial instruments or in respect of particular investment strategies;

2. (2)

   information on whether a particular financial instrument is intended for retail or professional clients, taking account of the identified target market in accordance with the rules in PROD 3; and

3. (3)

   the information required by this section in a comprehensible form in such a manner that the client is reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis. That information may be provided in a standardised format.

[Note: article 24(4)(b) and article 24(5) of MiFID]

[not used]3

[not used]3

[not used]3

[not used]3

[not used]3

[not used]3

[not used]3

[not used]3

[not used]3

If an intermediate Unitholder receives a reasonable request from an authorised fund manager for information relating to the beneficial owners of the units of a scheme that it operates which the authorised fund manager reasonably needs for the purposes of liquidity management, the intermediate Unitholder must provide that information to the authorised fund manager as soon as is reasonably practicable.