COBS 4.5 Communicating with retail clients (non-MiFID provisions)

1. (1)

   Subject to (2) and (3), this section applies to a firm in relation to:

   1. (a)

      the provision of information in relation to its designated investment business; and

   2. (b)

      the communication or approval of a financial promotion;

   where such information or financial promotion is addressed to, or disseminated in such a way that it is likely to be received by, a retail client.

2. (2)

   This section does not apply to a firm communicating in relation to its MiFID, equivalent third country or optional exemption business.6

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3. (3)

   This6 section does not apply in relation to a communication6:

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   1. (a)

      to the extent that it is an excluded communication;

   2. (b)

      to the extent that it is a prospectus advertisement to which article 22 of the Prospectus Regulation9 applies;

   3. (c)

      if it is image advertising.

A firm must ensure that information:

1. (1)

   includes the name of the firm;

2. (2)

   is accurate and always gives a fair and prominent indication of any relevant risks when referencing6 any potential benefits of relevant business or a relevant investment6;

3. (3)

   is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to whom it is directed, or by whom it is likely to be received;6

4. (4)

   does not disguise, diminish or obscure important items, statements or warnings.

5. (5)

   6uses a font size in the indication of relevant risks that is at least equal to the predominant font size used throughout the information provided, as well as a layout that ensures that such indication is prominent;

6. (6)

   6is consistently presented in the same language throughout all forms of information and marketing materials that are provided to each client, unless the client has agreed to receive information in more than one language; and

7. (7)

   6is up-to-date and relevant to the means of communication used.

6If information compares relevant business, relevant investments, or persons who carry on relevant business, a firm must ensure that the comparison is meaningful and presented in a fair and balanced way

1. (1)

   If any information refers to a particular tax treatment, a firm must ensure that it prominently states that the tax treatment depends on the individual circumstances of each client and may be subject to change in future.6

2. (2)

   This rule applies in relation to a financial promotion except6 to the extent that it relates to6 6a pure protection contract that is a long-term care insurance contract6.

1. (1)

   A firm must ensure that information contained in a financial promotion is consistent with any information the firm provides to a retail client in the course of carrying on designated investment business6.6

2. (2)

   This rule does not apply to a financial promotion to the extent that it relates 6a pure protection contract that is a long-term care insurance contract.

8Subject to COBS 4.5.13R, an authorised fund manager must include in any communication about an authorised fund to which this section applies:

1. (1)

   a short explanation, in terms consistent with the relevant prospectus, of the choice and use of every target benchmark, constraining benchmark or comparator benchmark used in relation to the scheme; or

2. (2)

   where no target benchmark, constraining benchmark or comparator benchmark is referred to in the prospectus, a statement to that effect and a short explanation of how investors can assess the performance of the scheme.

8Where an authorised fund manager includes, in any communication about an authorised fund to which this section applies, an indication of past performance for any authorised fund it manages, it must (in addition to complying with COBS 4.6.2R where applicable):

1. (1)

   include the corresponding past performance record of any target benchmark or constraining benchmark referred to in the prospectus of the scheme; and

2. (2)

   not include an indication of past performance for any index, indices or similar factor that is not referred to in the prospectus of the scheme.

1. (1)

   8Subject to paragraph (2), if a communication to which COBS 4.5.13R applies includes information comparing past performance of the scheme against one or more comparator benchmarks, the authorised fund manager must, for the period specified in paragraph (3) and in every subsequent communication it makes that is also subject to COBS 4.5.13R:

   1. (a)

      include a comparison against the same comparator benchmark or comparator benchmarks; and

   2. (b)

      not include a comparison against any other benchmark.

2. (2)

   Paragraph (1) does not apply if such a comparison would not be compliant with COBS 4.5.13R as a result of a change to the prospectus of the scheme.

3. (3)

   The period specified for the purposes of paragraph (1) is:

   1. (a)

      twelve months after a one-off communication is made; or

   2. (b)

      for as long as the communication remains available to the public in a durable medium and has not been superseded by a revised version.

8COBS 4.5.12R to COBS 4.5.14R do not apply in respect of any reference to a comparator benchmark that is not identified in the prospectus of the relevant scheme when that reference appears in a communication that is:

1. (1)

   used exclusively in the course of a personal visit, telephone conversation or other interactive dialogue; or

2. (2)

   in response to a specific unsolicited request by a client for past performance to be compared with a particular comparator benchmark.

1. (1)

   10This rule applies to any financial promotion relating to a FIIA except the FIIA’s prospectus.

2. (2)

   A firm must ensure that the following risk warning is given:

   1. “[Name of fund] invests in assets that may at times be hard to sell. This means that there may be occasions when you experience a delay or receive less than you might otherwise expect when selling your investment. For more information on risks, see the prospectus and key investor information document.”

3. (3)

   If the financial promotion is a non-real time financial promotion, a firm must ensure that the risk warning is prominently placed in the financial promotion in a font size that is at least equal to the predominant font size used throughout the communication.