COBS 4.1 Application

15COBS 4.12A.3R and COBS 4.12B.1R apply the rules on promoting restricted mass market investments and non-mass market investments to TP firms and Gibraltar-based firms.

17A firm is reminded of its obligations under the naming and marketing rules in ESG 4.3 (in particular, ESG 4.3.1R) when it:

1. (1)

   communicates or approves a financial promotion that references the sustainability characteristics of a product or service; or

2. (2)

   undertakes sustainability in-scope business in relation to a sustainability product.

1. (1)

   4This chapter applies in relation to an authorised professional firm in accordance with COBS 18 (Specialist regimes).

2. (2)

   This chapter applies, to a limited extent, in relation to communicating or approving a financial promotion that relates to a deposit if the deposit is a structured deposit, cash deposit ISA or cash deposit CTF.

A firm is required to comply with the financial promotion rules in relation to a financial promotion communicated by its appointed representative even where the financial promotion does not require approval because of the exemption in article 16 of the Financial Promotion Order (Exempt persons).

1. (1)

   In COBS 4.3.1 R,9 the defined term9 "financial promotion" includes:11

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   1. (a)

      in relation to MiFID, equivalent third country or optional exemption business, all communications that are marketing communications within the meaning of MiFID; and11

   2. (b)

      in relation to insurance distribution, all communications that are marketing communications within the meaning of IDD.11

2. (2)

   In the case of MiFID, equivalent third country or optional exemption business9, certain requirements in this chapter are subject to an exemption for the communication of a third party prospectus in certain circumstances (see recital 73 of the MiFID Org Regulation)9. This has a similar effect to the exemption in article 70(1)(c) of the Financial Promotion Order, which is referred to in the definition of an excluded communication.

3. (3)

   In this chapter “financial promotion” and “direct offer financial promotion” include communications that are marketing communications for the purposes of the UCITS Directive.5

9A firm communicating with an eligible counterparty should have regard to the application of COBS to eligible counterparty business (COBS 1 Annex 1 Part 1).

Approving a financial promotion without communicating it (which includes causing it to be communicated)3 is not MiFID, equivalent third country or optional exemption business9. Communicating a financial promotion to a person, such as a corporate finance contact or a venture capital contact, who is not a client within the meaning of COBS 3.2.1 R (1), COBS 3.2.1 R (2) or COBS 3.2.1 R (4) in respect of the MiFID, equivalent third country or optional exemption business9 to which the financial promotion relates,3 is also not MiFID, equivalent third country or optional exemption business9. Further guidance on what amounts to MiFID business may be found in PERG 13.

A reference in this chapter to MiFID, equivalent third country or optional exemption business9 includes a reference to communications that occur before an agreement to perform services in relation to MiFID, equivalent third country or optional exemption business9.

1. (1)

   13The KII Regulation specifies in an exhaustive manner the form and content of the key investor information document for a UCITS scheme.

2. (2)

   The form and content of a NURS-KII document is specified by COLL 4.7.3AR (Form and content of a NURS-KII document) and in COLL Appendix 2R (Modifications to the KII Regulation for KII-compliant NURS).

[Note: see article 3(1) of the KII Regulation]

1. (1)

   16COBS 4.1.7CR(1) requires a registered person to comply with the relevant rules in this chapter on the form and content of financial promotions (including those in COBS 4.12A). It also requires a registered person to make records of the financial promotions it communicates in compliance with the relevant rules in COBS 4.11 (Record keeping: financial promotion).

2. (2)

   There are other requirements outside this chapter which apply to registered persons communicating financial promotions relating to qualifying cryptoassets, including:

   1. (a)

      Principle 7 (Communications with clients);

   2. (b)

      GEN 1.2 (Referring to approval by the FCA); and

   3. (c)

      GEN 4.5 (Statements about authorisation and regulation by the appropriate regulator).

16The exemption in article 73ZA of the Financial Promotion Order does not give rise to a type of excluded communication.

Firms should note the territorial scope of this chapter is also affected by:

1. (1)

   the disapplication for financial promotions originating outside the United Kingdom that are not capable of having an effect within the United Kingdom (section 21(3) of the Act (Restrictions on financial promotion)) (see the defined term “excluded communication”);

2. (2)

   the exemptions for overseas communicators (see the defined term “excluded communication”); and

3. (3)

   the rules on financial promotions with an overseas element (see COBS 4.9).