1This chapter applies to a firm:

1. (1)

   communicating with a client in relation to its designated investment business (other than MiFID, equivalent third country or optional exemption business)10;

2. (1A)

   10communicating with a client in relation to its MiFID, equivalent third country or optional exemption business;

3. (2)

   communicating or approving a financial promotion other than:

   1. (a)

      a financial promotion of qualifying credit, a home purchase plan or a home reversion plan; or

   2. (b)

      a financial promotion in respect of a non-investment insurance contract; or

   3. (c)

      a promotion of an unregulated collective investment scheme that would breach section 238(1) of the Act if made by an authorised person (firms may not communicate or approve such promotions); or8

      8
   4. (d)

      a financial promotion in relation to a credit agreement, a consumer hire agreement or a credit-related regulated activity; or14

      8
   5. (e)

      a financial promotion in relation to a funeral plan contract or a regulated funeral plan activity.14

4. (3)

   9when a MiFID investment firm or a credit institution is communicating in connection with selling, or advising clients in relation to, structured deposits as specified by COBS 1.1.1AAR.

6 COBS 4.4.3R applies to a firm with respect to the activity of issuing electronic money.

1. (1)

   15TP firms must comply with the rules in (3) to the extent that those rules do not already apply to those TP firms as a result of GEN 2.2.26R.

2. (2)

   Gibraltar-based firms must comply with the rules in (3) to the extent that those rules do not already apply to such a Gibraltar-based firm as a result of GEN 2.3.1R.

3. (3)

   The rules are those in:

   1. (a)

      COBS 4.5.2R (communicating with retail clients – general rule);

   2. (b)

      COBS 4.10 (approving and confirming compliance of financial promotions); and

   3. (c)

      COBS 4.11 (Record keeping: financial promotion).

13The rules in this chapter do not apply in relation to the form or content of a key investor information document, an EEA key investor information document or a NURS-KII document.

1. (1)

   In relation to communications by a firm to a client in relation to its designated investment business this chapter applies in accordance with the general application rule and the rule on business with UKclients from an overseas establishment (COBS 1 Annex 1 Part 2 paragraph 2.1R).

2. (2)

   In addition, the financial promotion rules apply to a firm in relation to:

   1. (a)

      the communication of a financial promotion to a person inside the United Kingdom;

   2. (b)

      the communication of a cold call to a person outside the United Kingdom, unless:

      1. (i)

         it is made from a place outside the United Kingdom; and

      2. (ii)

         it is made for the purposes of a business which is carried on outside the United Kingdom and which is not carried on in the United Kingdom; and

   3. (c)

      the approval of a financial promotion for communication to a person inside the United Kingdom.

1. (1)

   A firm must ensure that a communication or a financial promotion is fair, clear and not misleading.

2. (2)

   This rule applies in relation to:

   1. (a)

      a communication by the firm to a customer6 in relation to designated investment business which is not MiFID, equivalent third country or optional exemption business,7 other than a third party prospectus;

   2. (aa)

      6a communication to an eligible counterparty that is in relation to:8

      1. (i)

         MiFID or equivalent third country business other than a third party prospectus; or8

      2. (ii)

         insurance distribution;8

   3. (ab)

      7a communication by the firm to a customer in relation to MiFID, equivalent third country or optional exemption business, other than a third party prospectus;

   4. (b)

      a financial promotioncommunicated by the firm that is not:

      1. (i)

         an excluded communication;

      2. (ii)

         a non-retail communication;

      3. (iii)

         a third party prospectus; and

   5. (c)

      a financial promotion approved by the firm.

3. (3)

   6As part of complying with (1), a firm must take into account the nature of the client.

1If, in relation to a particular communication or financial promotion, a firm takes reasonable steps to ensure it complies with the fair, clear and not misleading rule, a contravention of that rule does not give rise to a right of action under section 138D of the Act.

1. (1)

   A firm must ensure that a financial promotion addressed to a client is clearly identifiable as such.

   [Note: article 24(3)4 of MiFID, article 17(2) of the IDD5 and article 77 of the UCITS Directive]3

2. (2)

   If2 a financial promotion relates to a2firm'sMiFID, equivalent third country or optional exemption business4, this rule does not apply to the extent that the2financial promotion is a third party prospectus.

   2
3. (3)

   If2 a financial promotion relates2 to a 2 firm's business that is not 2MiFID or equivalent third country business, this rule applies to communicating or approving the2financial promotion but does not apply:

   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 Regulation7 applies;

   3. (c)

      if it is image advertising;

   4. (d)

      if it is a non-retail communication;

   5. (e)

      [deleted]5

      1
4. (4)

   In the case of a marketing communication that relates to:5

   1. (a)

      a UCITS scheme6, or

      5
   2. (b)

      insurance distribution,5

   (2) and (3) do not limit the application of this rule.3

A firm must ensure that any reference in advertising to an investor compensation scheme 3 is limited to a factual reference to the scheme.

2To ensure that a firm pays due regard to the information needs of its clients, and communicates information to them in a way which is clear, fair and not misleading with respect to the activity of issuing electronic money, a firm must ensure that, in good time before the firm issues electronic money to a person, it has been communicated to that person on paper or in another durable medium that the compensation scheme does not cover claims made in connection with issuing electronic money.

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

   333
3. (3)

   This6 section does not apply in relation to a communication6:

   333
   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 (and also, where relevant, the name of the firm that has confirmed the compliance of the financial promotion for the purposes of COBS 4.10.9AR(3)(a));12

2. (1A)

   where relevant, includes the date on which the financial promotion was approved;12

3. (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;

4. (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

5. (4)

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

6. (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;

7. (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

8. (7)

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

1. (1)

   12This rule applies:

   1. (a)

      to a financial promotioncommunicated by way of a website, mobile application or other digital medium; and

   2. (b)

      where the format is such that, where relevant:

      1. (i)

         the name of the firm that approved or confirmed the compliance of the financial promotion; or

      2. (ii)

         the date on which the financial promotion was approved,

      cannot reasonably be included in the financial promotion.

2. (2)

   The information in (1)(b) may be provided on a webpage to which a link is clearly provided in the financial promotion.

3. (3)

   The link in (2) must be in the format: ‘Approver FRN [firm reference number of the firm that approved or confirmed the compliance of the financial promotion]'.

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 to66a 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.

11The rules in COBS 4.5.12R to COBS 4.5.15R apply to:

1. (1)

   a financial promotion relating to an authorised fund;

2. (2)

   a communication which contains a statement referring to or concerning the past performance of an authorised fund; and

3. (3)

   any other communication about an authorised fund that refers in any way to the aims of the fund or describes the benefits or risks of investing in it.

8Subject to COBS 4.5.13R, an authorised fund manager must include in any communication about an authorised fund to which this rule11 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 rule11 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.

8 COBS 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’sprospectus.

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.

1. (1)

   1This section applies to a firm in relation to:

   1. (a)

      the provision of information; or

   2. (b)

      the communication of a financial promotion,

   which relates to the firm’sMiFID, equivalent third country or optional exemption business.

2. (2)

   This section does not apply to a communication:

   1. (a)

      to the extent that it is a third party prospectus; or

   2. (b)

      if it is image advertising.

[Note: article 24(3) of MiFID]

Provisions in this section marked “UK”2 apply in relation to MiFID optional exemption business as if they were rules (see COBS 1.2.2G).

1. (1)

   3This rule applies to any financial promotion relating to a FIIA that is addressed to, or disseminated in such a way that it is likely to be received by, a retail client, except the FIIA’sprospectus.

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, the risk warning must be prominently placed in the financial promotion in a font size that is at least equal to the predominant font size used throughout the communication.

1. (1)

   Subject to (2) and (3), this section applies to a firm in relation to:1

   1. (a)

      [deleted]6

      1222
   2. (b)

      the communication or approval of a financial promotion,6

      1

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.1

1. (2)

   This section does not apply to a firm communicating in relation to its MiFID, equivalent third country or optional exemption business6

   33
2. (3)

   This6 section does not apply in relation to a communication6:

   3333
   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 Regulation8 applies;

   3. (c)

      if it is image advertising;

   4. (d)

      to the extent that it relates to a deposit that is not a structured deposit (see also COBS 4.1.1R(3))6;

   5. (e)

      to the extent that it relates to a pure protection contract that is a long-term care insurance contract.

A firm must ensure that information that contains an indication of past performance of relevant business, a relevant investment or a financial index, satisfies the following conditions:

1. (1)

   that indication is not the most prominent feature of the communication;

2. (2)

   the information includes appropriate performance information which covers the6 preceding five years, or the whole period for which the investment has been offered, the financial index has been established, or the service has been provided (where6 less than five years, or such longer period as the firm may decide)6, and in every case that performance information must be based on6 complete 12-month periods;

3. (3)

   the reference period and the source of information are clearly stated;

4. (4)

   the information contains a prominent warning that the figures refer to the past and that past performance is not a reliable indicator of future results;

5. (5)

   if the indication relies on figures denominated in a currency other than pounds sterling7, the currency is clearly stated, together with a warning that the return may increase or decrease as a result of currency fluctuations;

6. (6)

   if the indication is based on gross performance, the effect of commissions, fees or other charges is disclosed.

A firm must ensure that information that contains an indication of simulated past performance of relevant business, a relevant investment or a financial index, satisfies the following conditions:

1. (1)

   it relates to an investment or a financial index;

2. (2)

   the simulated past performance is based on the actual past performance of one or more investments or financial indices which are the same as, substantially the same as,6 or underlie, the investment concerned;

3. (3)

   in respect of the actual past performance referred to in (2)6, the conditions set out in paragraphs (1) to (3), (5) and (6) of the rule on past performance (COBS 4.6.2 R) are complied with; and

4. (4)

   the information contains a prominent warning that the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

1. (1)

   A firm must ensure that information that contains an indication of future performance of relevant business, a relevant investment, a structured deposit or a financial index, satisfies the following conditions:

   1. (a)

      it is not based on and does not refer to simulated past performance;

   2. (b)

      it is based on reasonable assumptions supported by objective data;

   3. (c)

      where6 the indication is based on gross performance, the effect of commissions, fees or other charges is disclosed6;

   4. (ca)

      6it is based on performance scenarios in different market conditions (both negative and positive scenarios), and reflects the nature and risks of the specified types of investments included in the analysis; and

   5. (d)

      it contains a prominent warning that such forecasts are not a reliable indicator of future performance.

2. (2)

   This6rule only applies in relation6 to financial promotions that relate to a financial instrument (or a financial index that relates exclusively to financial instruments) or a structured deposit.

1. (1)

   1A firm that communicates to a client a projection for a packaged product which is not a financial instrument2must ensure that the projection complies with the projectionsrules in COBS 13.4, COBS 13.5 and COBS 13 Annex 2.

   2
2. (2)

   A firm must not communicate a projection for a highly volatile product to a client unless the product is a financial instrument.

16This section (other than COBS 4.7.-1AEU to COBS 4.7.-1DG) does not apply in relation to a communication:

1. (1)

   to the extent that it is an excluded communication;

2. (2)

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

3. (3)

   if it is image advertising;

4. (4)

   to the extent that it relates to a deposit that is not a cash deposit ISA, cash-only lifetime ISA or cash deposit CTF;

5. (5)

   to the extent that it relates to a pure protection contract that is a long-term care insurance contract.

Provisions in this section marked “UK”12 apply in relation to MiFID optional exemption business as if they were rules (see COBS 1.2.2G).

1. (1)

   Subject to (3) and (4), a firm must ensure that a direct offer financial promotion that is addressed to, or disseminated in such a way that it is likely to be received by, a retail client contains:

   1. (a)

      11the information referred to in the rules on information disclosure (COBS 6.1.4 R, COBS 6.1.6 R, COBS 6.1.7 R, COBS 6.1.9 R, COBS 14.3.2 R, COBS 14.3.3 R, COBS 14.3.4 R and COBS 14.3.5 R) as is relevant to that offer or invitation; and11

   2. (b)

      11additional appropriate information about the relevant business and relevant investments so that the client is reasonably able to understand the nature and risks of the relevant business and relevant investments and consequently to take investment decisions on an informed basis.

2. (2)

   This rule does not require the information in (1) to be included in a direct offer financial promotion if, in order to respond to an offer or invitation contained in it, the retail client must refer to another document or documents, which, alone or in combination, contain that information.

3. (3)

   This rule16 does not apply in relation to a marketing11 communication that11 relates to a firm's MiFID, equivalent third country or optional exemption business11

   33
4. (4)

   [deleted]16

   311311
5. (5)

   [deleted]11

   2

1. (1)

   2A firm must not communicate or approve a direct offer financial promotion:

   1. (a)

      relating to a warrant or derivative;

   2. (b)

      to or for communication to a retail client; and

   3. (c)

      where the firm will not itself be required to comply with the rules on appropriateness (see COBS 10 and 10A11);

   unless the firm has adequate evidence that the condition in (2) is satisfied.

2. (2)

   The condition is that the person who will arrange or deal in relation to the derivative or warrant will comply with the rules on appropriateness or equivalent requirements for any application or order that the person is aware, or ought reasonably to be aware, is in response to the direct offer financial promotion.

This section applies to a firm in relation to the communication of 3a financial promotion that is not in writing, but it does not apply:

1. (1)

   to the extent that the financial promotion is an excluded communication;

2. (2)

   if the financial promotion is image advertising;

3. (3)

   if the financial promotion is a non-retail communication;1

4. (4)

   [deleted]2

   2
5. (5)

   to the extent that the financial promotion relates to a pure protection contract that is a long-term care insurance contract.1

A firm must not make a cold call unless:

1. (1)

   the recipient has an established existing client relationship with the firm and the relationship is such that the recipient envisages receiving cold calls; or

2. (2)

   the cold call relates to a generally marketable packaged product which is not:

   1. (a)

      a higher volatility fund; or

   2. (b)

      a life policy with a link (including a potential link) to a higher volatility fund; or

3. (3)

   the cold call relates to a controlled activity to be carried on by an authorised person or exempt person and the only controlled investments involved or which reasonably could be involved are:

   1. (a)

      readily realisable securities (other than warrants); and

   2. (b)

      generally marketable non-geared packaged products.

A firm must not communicate a solicited or unsolicited financial promotion that is not in writing, to a client3 outside the firm's premises, unless the personcommunicating it:

1. (1)

   only does so at an appropriate time of the day;

2. (2)

   identifies himself and the firm he represents at the outset and makes clear the purpose of the communication;

3. (3)

   clarifies if the client would like to continue with or terminate the communication, and terminates the communication at any time that the client requests it; and

4. (4)

   gives a contact point to any client with whom he arranges an appointment.

1. (1)

   4Subject to (2) and (3), this section applies to a firm in relation to the communication or approval of a financial promotion that relates to the business of an overseas person.4

2. (2)

   This section does not apply to a firm in relation to its MiFID or equivalent third country business.

3. (3)

   4If a communication relates to a firm's business that is not MiFID or equivalent third country business, this section does not apply:4

   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 Regulation5 applies;

   3. (c)

      if it is image advertising;

   4. (d)

      if it is a non-retail communication;1

   5. (e)

      [deleted]3

      23
   6. (f)

      to the extent that it relates to a pure protection contract that is a long-term care insurance contract.1

A firm must not communicate or approve a financial promotion which relates to a particular relevant investment or relevant business of an overseas person, unless:

1. (1)

   the financial promotion makes clear which firm has approved or communicated it and, where relevant, explains:

   1. (a)

      that the rules made under the Act for the protection of retail clients do not apply;

   2. (b)

      the extent and level to which the compensation scheme will be available, or if the scheme will not be available, a statement to that effect; and

   3. (c)

      if the communicator wishes, the protection or compensation available under another system of regulation; and

2. (2)

   the firm has taken reasonable steps to satisfy itself4 that the overseas person will deal with retail clients in the United Kingdom in an honest and reliable way.

A firm may only2communicate or approve a financial promotion to enter into a life policy with a person who is:

1. (1)

   an authorised person; or

2. (2)

   an exempt person who is exempt in relation to effecting or carrying out contracts of insurance of the class to which the financial promotion relates; or

3. (3)

   an overseas long-term insurer that is entitled under the law of its home country or territory to carry on there insurance business of the class to which the financial promotion relates.

A financial promotion for an overseas long-term insurer, which has no establishment in the United Kingdom, must include:

1. (1)

   the full name of the overseas long-term insurer, the country where it is registered, and, if different, the country where its head office is situated;

2. (2)

   a prominent statement that 'holders of policies issued by the company will not be protected by the Financial Services Compensation Scheme if the company becomes unable to meet its liabilities to them'; and

3. (3)

   if any trustee, investment manager or United Kingdom agent of the overseas long-term insurer is named which is not independent of the overseas long-term insurer, a prominent statement of that fact.

A financial promotion for an overseas long-term insurer which is authorised to carry on long-term insurance business in any country or territory listed in paragraph (c) of the Glossary definition of overseas long-term insurer must also include:

1. (1)

   the full name of any trustee of property of any description which is retained by the overseas long-term insurer in respect of the promoted contracts;

2. (2)

   an indication whether the investment of such property (or any part of it) is managed by the overseas long-term insurer or by another person and the full name of any investment manager;

3. (3)

   the registered office of any such trustee and of any investment manager and of his principal office (if different); and

4. (4)

   where any person in the United Kingdom takes, or may take, any steps on behalf of the overseas long-term insurer to enter into a promoted contract, the following details:

   1. (a)

      the full name of the overseas long-term insurer;

   2. (b)

      the registered office, head office or principal place of business of that person in the United Kingdom; and

   3. (c)

      if there is more than one such person, the principal or main person in the United Kingdom.

If a financial promotion relates to a life policy with an overseas long-term insurer but does not name the overseas long-term insurer by giving its full name or its business name:

1. (1)

   it must include the following prominent statement: "This financial promotion relates to an insurance company which does not, and is not authorised to, carry on in any part of the United Kingdom the class of insurance business to which this promotion relates. This means that the management and solvency of the company are not supervised by the Financial Conduct Authority or the Prudential Regulation Authority. Holders of policies issued by the company will not have the right to complain to the Financial Ombudsman Service if they have a complaint against the company and will not be protected by the Financial Services Compensation Scheme if the company should become unable to meet its liabilities to them"; and

2. (2)

   if it also refers to other investments, it must make this clear.

1. (1)

   Before a firmapproves a financial promotion for communication by an unauthorised person, it must confirm that the financial promotion complies with the financial promotion rules.

2. (1A)

   After a firm has complied with (1), and for as long as the financial promotion is communicated, the firm must take reasonable steps to monitor the continuing compliance of that financial promotion with the financial promotion rules.3

   [Note: for the FCA’s guidance on ‘Ongoing monitoring’ see: https://www.fca.org.uk/firms/financial-promotions-and-adverts/approving-financial-promotions]3

3. (1B)

   A firm that has approved a financial promotion issued, and for communication by, an unauthorised person must require from that person, a written quarterly attestation that there has been no material change:3

   1. (a)

      to the financial promotion; or3

   2. (b)

      in circumstances which might affect the continuing compliance of the financial promotion with the financial promotion rules.3

4. (1C)

   For the purpose of (1B), a firm must:3

   1. (a)

      require the first attestation no less than 3 months after it approves the financial promotion; and3

   2. (b)

      thereafter, require attestations at least once every 3 months for as long as the financial promotion is communicated.3

5. (2)

   If, at any time after a firm has complied with (1), a firm becomes aware that a financial promotion no longer complies with the financial promotion rules, it must withdraw its approval and notify any person that it knows to be relying on its approval as soon as reasonably practicable.3

6. (3)

   When approving a financial promotion, the firm must confirm compliance with the financial promotion rules that would have applied if the financial promotion had been communicated by a firm other than in relation to MiFID or equivalent third country business.3

1. (1)

   3This rule applies to a firm that approves:

   1. (a)

      a direct offer financial promotion relating to a restricted mass market investment; or

   2. (b)

      a financial promotion relating to a non-mass market investment,

   for communication to a retail client.

2. (2)

   A firm must take reasonable steps to ensure, on a continuing basis:

   1. (a)

      that the conditions specified in:

      1. (i)

         COBS 4.12A.15R(1)(b) are being satisfied in relation to each communication of the direct offer financial promotion relating to the restricted mass market investment;

      2. (ii)

         COBS 4.12B.10R(2)(b) are being satisfied in relation to each communication of the financial promotion relating to the non-mass market investment; and

   2. (b)

      if the firm will not itself carry out the appropriateness assessment required by COBS 4.12A.28R, that the appropriateness assessments undertaken comply with the rules specified in COBS 4.12A.28R.

3. (3)

   If the firm is not satisfied that the relevant conditions are being satisfied or that the appropriateness assessments undertaken comply with the relevant rules then it must withdraw its approval of the financial promotion in accordance with COBS 4.10.2R(2).

A firm must not approve a financial promotion to be made in the course of a personal visit, telephone conversation or other interactive dialogue.

If a firmapproves a financial promotion in circumstances in which one or more of the financial promotion rules, or the prohibition on approval of promotions for collective investment schemes in section 240(1) of the Act (Restriction on approval), are expressly disapplied, the approval must be given on terms that it is limited to those circumstances.

1. (1)

   3A firm must not communicate or approve a financial promotion unless the individual or individuals responsible for the compliance of the financial promotion with the financial promotion rules has or have appropriate competence and expertise.

2. (2)

   Appropriate competence and expertise for the purposes of (1) means competence and expertise in the investment or financial service to which the financial promotion relates. It does not necessarily, for example, require competence or expertise in the day-to-day commercial activities of a company issuing securities for the purposes of raising capital.

3. (3)

   If a firm (A) determines that it lacks appropriate competence and expertise in relation to a financial promotion, it must:

   1. (a)

      have another firm (B) confirm that the financial promotion complies with the financial promotion rules before A communicates that financial promotion; or

   2. (b)

      decline to approve that financial promotion.

1. (1)

   3A firm must not confirm the compliance of a financial promotion for the purpose of COBS 4.10.9AR(3)(a) unless:

   1. (a)

      it is satisfied that the financial promotion complies with the financial promotion rules; and

   2. (b)

      the individual or individuals responsible for providing that confirmation has or have appropriate competence and expertise.

2. (2)

   A firm must not confirm the compliance of a financial promotion to be made in the course of a personal visit, telephone conversation or other interactive dialogue.

1. (1)

   A firm (A) will not contravene any of the financial promotion rules if it communicates a financial promotion which has been produced by another person and:

   1. (a)

      A takes reasonable care to establish that another firm (B) has confirmed that the financial promotion complies with the financial promotion rules;

   2. (b)

      A takes reasonable care to establish that it communicates the financial promotion only to recipients of the type for whom it was intended at the time B carried out the confirmation exercise; and

   3. (c)

      so far as A is, or ought reasonably to be, aware:

      1. (i)

         the financial promotion has not ceased to be fair, clear and not misleading since that time; and

      2. (ii)

         B has not withdrawn the financial promotion.

2. (2)

   This rule does not apply in relation to MiFID, equivalent third country or optional exemption business2.

1. (1)

   3This rule applies to a firm that:

   1. (a)

      approves a financial promotion for communication by an unauthorised person; or

   2. (b)

      confirms the compliance of a financial promotion for the purposes of COBS 4.10.9AR(3)(a).

2. (2)

   A firm must take all appropriate steps to identify and to prevent or manage conflicts of interest between the firm, including its managers, employees and appointed representatives (or, where applicable, tied agents), or any person directly or indirectly linked to them by control, and a person for whom the firm:

   1. (a)

      approves a financial promotion; or

   2. (b)

      confirms the compliance of a financial promotion.

1. (1)

   A firm must make an adequate record of any financial promotion:10

   1. (a)

      it communicates;10

   2. (b)

      it approves; or10

   3. (c)

      of which it confirms compliance (COBS 4.10.9AR(3)(a)),10

   other than a financial promotion made in the course of a personal visit, telephone conversation or other interactive dialogue.

2. (2)

   For a telemarketing campaign, a firm must make an adequate record of copies of any scripts used.

3. (2A)

   [deleted] [Editor’s note: This provision now appears with minor amendments at COBS 4.11.4R]10

   5
4. (2B)

   In respect of each financial promotion in (1), a firm must make an adequate record demonstrating how it has satisfied itself that it has the necessary competence and expertise required by COBS 4.10.9AR.10

5. (3)

   A firm must retain the record in relation to a financial promotion relating to:

   1. (a)

      a pension transfer, pension conversion, 7pension opt-out or FSAVC, indefinitely;

   2. (b)

      a life policy, occupational pension scheme1, SSAS, personal pension scheme or stakeholder pension scheme, for six years;

   3. (c)

      MiFID or equivalent third country business, for five years; and

   4. (d)

      any other case, for three years.

6. (4)

   4If a communication relates to a firm'sMiFID, equivalent third country or optional exemption business8, this section does not apply:4

   1. (a)

      to the extent that the communication is a third party prospectus;2

   2. (b)

      if it is image advertising;2

   3. (c)

      if it is a non-retail communication.2

7. (5)

   4If a communication relates to a firm's business that is not MiFID or equivalent third country business, this section does not apply:4

   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;

   4. (d)

      if it is a non-retail communication;2

   5. (e)

      [deleted]3

      3
   6. (f)

      to the extent that it relates to a pure protection contract that is a long-term care insurance contract2.

10If a firmcommunicates or approves a financial promotion which relates to a non-mass market investment where that financial promotion is addressed to or disseminated in such a way that it is likely to be received by a retail client:

1. (1)

   the person allocated the compliance oversight function in the firm must make a record at or near the time of the communication or approval certifying that the promotion complies with the restrictions set out in section 238 of the Act and in COBS 4.12B, as applicable;

2. (2)

   the making of the record required in (1) may be delegated to one or more employees of the firm who report to and are supervised by the person allocated the compliance oversight function, provided the process for certification of compliance has been reviewed and approved by the person allocated the compliance oversight function no more than 12 months before the date of the communication or approval of the promotion;

3. (3)

   as part of the record required in (1), the firm must make a record of which exemption was relied on for the purposes of the promotion, together with the reason why the firm is satisfied that that exemption applies;

4. (4)

   where the firm relies on an exemption that requires investor certification and warnings to investors, the record required in (1) must include a record of any certificate or investor statement (as signed by the investor) and of any warnings or indications required by the exemption;

5. (5)

   if the rules in COBS 4.12B do not apply because the promotion is an excluded communication (COBS 4.12B.4R), the firm must identify in the record required in (1) which type of financial promotion defined as an excluded communication corresponds to the promotion being made, including, where applicable, which article in the Financial Promotion Order or in the Promotion of Collective Investment Schemes Order was relied on for the purposes of the promotion, together with the reason why the firm is satisfied that the exemption applies.

1. (1)

   10This rule applies to a firm that communicates or may communicate a direct offer financial promotion in relation to a restricted mass market investment to which COBS 4.12A.15R applies.

2. (2)

   A firm must make an adequate record of:

   1. (a)

      the categorisation of each retail client (COBS 4.12A.21R) and the evidence obtained in support of that categorisation;

   2. (b)

      where an appropriateness assessment is undertaken (COBS 4.12A.28R):

      1. (i)

         the total number of assessments undertaken;

      2. (ii)

         the number of assessments resulting in a determination that the investment was appropriate;

      3. (iii)

         the number of assessments resulting in a determination that the investment was not appropriate;

      4. (iv)

         in respect of each retail client, the outcome of the appropriateness process; and

      5. (v)

         in respect of each retail client, the number of times that retail client was subject to an appropriateness assessment in respect of the same investment.

10A firm that approves a direct offer financial promotion in relation to a restricted mass market investment to which COBS 4.12A.15R applies must take reasonable steps to ensure that:

1. (1)

   adequate records of the information required by COBS 4.11.5R are made in connection with the communication of the direct offer financial promotion; and

2. (2)

   the firm is provided with, or otherwise has ready access to, the records in (1).

10A firm must retain the records required by COBS 4.11.4R and COBS 4.11.5R for 5 years.

10Where a firm is required by COBS 4.12A.44R(2)(b) or COBS 4.12B.13R(2)(b) to maintain a record of its grounds for using an alternative form of risk summary, it must retain the record of its decision for 5 years.

1This section applies to a firm when communicating a financial promotion, or approving a financial promotion for communication, to a retail client in relation to a restricted mass market investment.

1In this section, reference to a firm includes:

1. (1)

   TP firms, to the extent that this section does not already apply to those TP firms as a result of GEN 2.2.26R; and

2. (2)

   Gibraltar-based firms, to the extent that this section does not already apply to such a Gibraltar-based firm as a result of GEN 2.3.1R.

1This section does not apply to:

1. (1)

   excluded communications;

2. (2)

   image advertising; or

3. (3)

   financial promotions to the extent that they relate to local authority securities.

1. (1)

   1A firm must not communicate or approve a financial promotion which relates to a restricted mass market investment and which offers to a retail client any monetary or non-monetary incentive to invest.

2. (2)

   The rule in (1) does not apply to a product or service produced or provided by the person, or a member of the group of the person, who will benefit from the proceeds of the investment.

1A firm must not communicate or approve a financial promotion which relates to a restricted mass market investment unless it contains a risk warning that complies with COBS 4.12A.11R.

1. (1)

   1Unless permitted by COBS 4.12A.17R and subject to (2) and (3), a firm must not:

   1. (a)

      communicate a direct offer financial promotion relating to a restricted mass market investment to a retail client unless the conditions in COBS 4.12A.18R (cooling off period), COBS 4.12A.20R (personalised risk warning), COBS 4.12A.21R (categorisation) and COBS 4.12A.28R (appropriateness) are satisfied; or

   2. (b)

      approve a direct offer financial promotion relating to a restricted mass market investment for communication to a retail client unless the firm is satisfied that the conditions in COBS 4.12A.18R (cooling off period), COBS 4.12A.20R (personalised risk warning), COBS 4.12A.21R (categorisation) and COBS 4.12A.28R (appropriateness) will be satisfied in relation to each communication of the direct offer financial promotion.

2. (2)

   The conditions in COBS 4.12A.18R (cooling off period) and COBS 4.12A.20R (personalised risk warning) do not need to be satisfied if the retail client has previously received a direct offer financial promotion relating to a restricted mass market investment from the same person as would otherwise need to satisfy them.

3. (3)

   The condition in COBS 4.12A.28R (appropriateness) does not need to be satisfied if the specific type of restricted mass market investment to which the direct offer financial promotion relates has previously been assessed as appropriate for the retail client by the same person as would otherwise need to undertake the assessment.

1A firm may communicate or approve a direct offer financial promotion relating to a restricted mass market investment to, or for communication to, a retail client if:

1. (1)

   the firm itself will comply with the suitability rules (COBS 9 and 9A) in relation to the investment promoted; or

2. (2)

   the retail client has confirmed before the promotion is made that they are a retail client of another firm that will comply with the suitability rules (COBS 9 and 9A) in relation to the investment promoted; or

3. (3)

   the retail client is a corporate finance contact or a venture capital contact.

1. (1)

   1The first condition is that following the retail client's request to receive the direct offer financial promotion, the firm, or other personcommunicating the direct offer financial promotion:

   1. (a)

      allows a period of at least 24 hours (the ‘cooling off period’) to elapse before communicating the direct offer financial promotion;

   2. (b)

      following the lapse of time in (a), invites the retail client to specify whether they wish to:

      1. (i)

         leave the investment journey; or

      2. (ii)

         continue to receive the direct offer financial promotion; and

   3. (c)

      the retail client specifies that they wish to continue to receive the direct offer financial promotion.

2. (2)

   The options in (1)(b) must be presented with equal prominence.

1The third condition is that before communicating the direct offer financial promotion, the firm, or other personcommunicating the direct offer financial promotion, takes reasonable steps to establish that the retail client is:

1. (1)

   certified as a ‘high net worth investor’;

2. (2)

   certified as a ‘sophisticated investor’;

3. (3)

   self-certified as a ‘sophisticated investor’; or

4. (4)

   certified as a ‘restricted investor’,

in each case in accordance with COBS 4.12A.22R.

1. (1)

   1A certified high net worth investor, a certified sophisticated investor, a self-certified sophisticated investor or a restricted investor is an individual:

   1. (a)

      who has completed and signed, within the period of 12 months ending on the day on which the communication is made, a statement in the terms set out in the applicable rule listed below and as modified by (2):

      1. (i)

         certified high net worth investor: COBS 4 Annex 2R;

      2. (ii)

         certified sophisticated investor: COBS 4 Annex 3R;

      3. (iii)

         self-certified sophisticated investor: COBS 4 Annex 4R;

      4. (iv)

         restricted investor: COBS 4 Annex 5R; and

   2. (b)

      whose completion of the statement in (a) indicates that they meet the relevant criteria to be categorised as such.

2. (2)

   When used in relation to P2P agreements or a P2P portfolio, the statement in COBS 4 Annex 4R (self-certified sophisticated investor) must be modified as follows:

   1. (a)

      the reference to “an unlisted company” must be replaced with a reference to “a P2P agreement or P2P portfolio”; and

   2. (b)

      the reference to “private equity, or in the provision of finance for small and medium enterprises” must be replaced with a reference to “the provision of finance, resulting in an understanding of the P2P agreements or P2P portfolios to which the promotions will relate”.

1A firm must not:

1. (1)

   influence, or seek to influence, the information that a retail client provides when completing a certificate in COBS 4.12A.22R; or

2. (2)

   encourage a retail client to complete a further certificate in the event that a client’s signed certificate indicates that they do not meet the criteria to be categorised as a high net worth, sophisticated or restricted investor, as applicable.

1. (1)

   1The fourth condition applies where the firm itself or the person who will:

   1. (a)

      arrange or deal in relation to a non-readily realisable security; or

   2. (b)

      facilitate the retail client becoming a lender under a P2P agreement or a P2P portfolio,

   is aware, or ought reasonably to be aware, that an application or order is in response to the direct offer financial promotion.

2. (2)

   The condition is that the firm or person in (1) will only process the application or order once it has assessed that the restricted mass market investment is appropriate for the retail client in compliance with the rules in COBS 10 or COBS 10A (as applicable) or equivalent requirements as modified and supplemented by COBS 4.12A.30R to COBS 4.12A.32R.

1In the course of providing information regarding their knowledge and experience for the purpose of the appropriateness assessment required by COBS 4.12A.28R, the retail client must not be provided with assistance, information, guidance or feedback which might affect the substance of the information that they provide.

1. (1)

   1This rule applies if:

   1. (a)

      a restricted mass market investment is assessed as not being appropriate for a particular retail client; and

   2. (b)

      the assessment of appropriateness is based on a series of questions which the retail client is required to answer.

2. (2)

   The retail client must not be informed of the particular answers which led to the restricted mass market investment being assessed as not appropriate for them.

3. (3)

   Any further assessment of the appropriateness of that restricted mass market investment for that retail client must not be based on the same questions as were used for the purpose of a previous assessment of the appropriateness of that restricted mass market investment for that retail client.

1. (1)

   1This rule applies where a restricted mass market investment has been assessed as not being appropriate for a particular retail client pursuant to two consecutive assessments.

2. (2)

   Following the second determination that a restricted mass market investment is not appropriate for a retail client, any further assessment of the appropriateness of that restricted mass market investment for that retail client must not be undertaken for at least 24 hours.

1. (1)

   1The relevant risk warning in COBS 4.12A.11R(1) or (2) and the relevant risk summaries in COBS 4.12A.11R(4)(b) and COBS 4.12A.20R(3)(a)(ii) must:

   1. (a)

      be prominent, taking into account the content, size and orientation of the financial promotion as a whole;

   2. (b)

      except where the risk warning cannot be provided in writing, be clearly legible, contained within its own border and with bold and underlined text as indicated in COBS 4.12A.11R or COBS 4 Annex 1R.

2. (2)

   The relevant risk warning in COBS 4.12A.11R(1) or (2) must, if the financial promotion is, or is to be, communicated by means of:

   1. (a)

      a website or mobile application:

      1. (i)

         be statically fixed and visible at the top of the screen, below anything else that also stays static, even when the retail client scrolls up or down the webpage; and

      2. (ii)

         be included as described in (i) on each linked webpage on the website or page on the application relating to the relevant investment;

   2. (b)

      a television broadcast, be prominently fixed on the screen for the duration of the broadcast.

1The financial promotion must not contain any design feature which has the intent or effect of reducing the visibility or prominence of the risk warning or risk summary.

1The relevant personalised risk warning in COBS 4.12A.20R(2) and the relevant risk summaries in COBS 4.12A.11R(3)(a)(ii) and COBS 4.12A.20R(2)(b) must be:

1. (1)

   prominently brought to the retail client’s attention, taking into account the content, size and orientation of the financial promotion as a whole;

2. (2)

   clearly legible, contained within its own border and with bold and underlined text as indicated in COBS 4.12A.20R(1)(b)and COBS 4 Annex 1R;

3. (3)

   statically fixed and visible in the middle of the screen; and

4. (4)

   the main focus of the screen.

1The financial promotion must not contain any design feature which has the intent or effect of reducing the visibility or prominence of the personalised risk warning or risk summary.

1Where a rule in this section requires a firm to communicate a risk summary selected from COBS 4 Annex 1R, the firm must either:

1. (1)

   provide the risk summary as it appears in COBS 4 Annex 1R; or

2. (2)

   provide a version of the risk summary in COBS 4 Annex 1R in appropriately amended form, provided that:

   1. (a)

      the firm has a valid reason for each amendment;

   2. (b)

      the firm makes a record of each amendment and the reason for it;

   3. (c)

      any alternative or additional text is in plain English; and

   4. (d)

      the amended risk summary does not take longer than around 2 minutes to read.

1This section applies to:

1. (1)

   firms;

2. (2)

   TP firms, to the extent that this section does not already apply to those TP firms as a result of GEN 2.2.26R; and

3. (3)

   Gibraltar-based firms, to the extent that this section does not already apply to such a Gibraltar-based firm as a result of GEN 2.3.1R,

when approving or communicatingfinancial promotions in relation to non-mass market investments.

1Throughout this section, references to a firm include a TP firm and a Gibraltar-based firm.

1This section does not apply to:

1. (1)

   excluded communications; or

2. (2)

   financial promotions to the extent that they relate to local authority securities.

1. (1)

   1A firm must not communicate or approve a financial promotion which relates to a non-mass market investment where that financial promotion is addressed to, or disseminated in such a way that it is likely to be received by, a retail client.

2. (2)

   The restriction in (1) is subject to COBS 4.12B.7R and does not apply to units in unregulated collective investment schemes, which are subject to a statutory restriction on promotion in section 238 of the Act.

1A firm may communicate an invitation or inducement to participate in an unregulated collective investment scheme without breaching the restriction on promotion in section 238 of the Act if the promotion falls within an exemption in the table in COBS 4.12B.7R(5) and is in accordance with COBS 4.12B.7R(1).

1. (1)

   1COBS 4.12B.10R to COBS 4.12B.31G apply to financial promotions which:

   1. (a)

      relate to non-mass market investments unless the only non-mass market investment to which the financial promotion relates is a unit in a long-term asset fund; and

   2. (b)

      are communicated, or are to be communicated, to certified high net worth investors, certified sophisticated investors or self-certified sophisticated investors for the purposes of the exemptions in COBS 4.12B.7R(5).

2. (2)

   A firm may only rely on exemptions 9 (certified high net worth investors), 10 (certified sophisticated investors) or 11 (self-certified sophisticated investors) to:

   1. (a)

      communicate a financial promotion to which this rule applies if the firm has complied with the rules in COBS 4.12B.14R to COBS 4.12B.35R, as appropriate; or

   2. (b)

      approve for communication a financial promotion to which this rule applies if the firm is satisfied that the rules in COBS 4.12B.14R to COBS 4.12B.35R, as appropriate, will be satisfied in relation to each communication of the financial promotion.

3. (3)

   The conditions in COBS 4.12B.14R (personalised risk warning) and COBS 4.12B.15R (cooling off period) do not need to be satisfied if the retail client has previously received a financial promotion relating to a non-mass market investment from the same person as would otherwise need to satisfy them.

1Where a rule in this section requires a firm to communicate a risk summary selected from COBS 4 Annex 1R, the firm must either:

1. (1)

   provide the risk summary as it appears in COBS 4 Annex 1R; or

2. (2)

   provide a version of the risk summary in COBS 4 Annex 1R in appropriately amended form, provided that:

   1. (a)

      the firm has a valid reason for each amendment;

   2. (b)

      the firm makes a record of each amendment and the reason for it;

   3. (c)

      any alternative or additional text is in plain English; and

   4. (d)

      the amended risk summary does not take longer than around 2 minutes to read.