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COBS 3.2 Clients

General definition

COBS 3.2.1RRP

  1. (1)

    A person to whom a firm provides, intends to provide or has provided:

    1. (a)

      a service in the course of carrying on a regulated activity; or

    2. (b)

      in the case of MiFID or equivalent third country business, an ancillary service,

    is a "client" of that firm.4

  2. (2)

    A "client" includes a potential client.

  3. (3)

    In relation to the financial promotion rules, a person to whom a financial promotion is or is likely to be communicated is a "client" of a firm that communicates or approves it.

  4. (4)

    A client of an appointed representative or, if applicable, a tied agent is a "client" of the firm for whom that appointed representative, or tied agent, acts or intends to act in the course of business for which that firm has accepted responsibility under the Act or MiFID (see sections 39 and 39A of the Act5).

[Note: article 4(1)(9)4 of MiFID]

COBS 3.2.2GRP
1
  1. (1)

    A corporate finance contact or a venture capital contact is not a client under the first limb of the general definition. This is because a firm does not provide a service to such a contact. However, it will be a client under the third limb of the general definition for the purposes of the financial promotion rules if the firm communicates or approves a financial promotion that is or is likely to be communicated to such a contact. 1

  2. (2)

    Communicating or approving a financial promotion that is or is likely to be communicated to such a contact is not MiFID or equivalent third country business. In such circumstances, the "non-MiFID" client categorisations are relevant and, in categorising elective professional clients, the "quantitative test" will not need to be satisfied.1

Who is the client?

COBS 3.2.3RRP

  1. (1)

    If a firm provides services to a person that is acting as an agent, the identity of its client will be determined in accordance with the rule on agents as clients (see COBS 2.4.3 R).

  2. (2)

    In relation to a firm establishing, operating or winding up a personal pension scheme or a stakeholder pension scheme, a member or beneficiary of that scheme is a client of the firm.

  3. (3)

    If a firm that does not fall within (2) provides services to a person that is acting as the trustee of a trust, that person will be the firm's client and the underlying beneficiaries of the trust will not.

  4. (4)

    In relation to business that is neither MiFID or equivalent third country business, if a firm provides services to a fund3 that does not have separate legal personality, that fund3 will be the firm's client.

    33
  5. (5)

    If a firm provides services relating to a contribution to or interest in a CTF (except for a personal recommendation relating to a contribution to a CTF or in relation to the communication or approval of a financial promotion), the firm's only client is:

    1. (a)

      the registered contact, if there is one;

    2. (b)

      otherwise, the person to whom the statement must be sent in accordance with Regulation 10 of the CTF Regulations.

      2