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  2. Point in time
    2014-10-01

COBS 6.1E Platform services: platform charges and using a platform service for advising2

Platform service providers: platform charges2

COBS 6.1E.-1R

This section does not apply if the retail client is outside the United Kingdom.

COBS 6.1E.1RRP
  1. (1)

    1A2 platform service provider must clearly disclose the total platform charge to the retail client32 in a durable medium in good time before the provision of designated investment business.

    22
  2. (2)

    In the event that it is not possible to make the disclosure in (1) in good time before the provision of designated investment business, the disclosure must be made as soon as practicable thereafter.

COBS 6.1E.2GRP

A2 platform service provider should pay due regard to its obligations under Principle 6 (Customers’ interests), Principle 7 (Communications with clients) and the client's best interests rule, and ensure that it presents retail investment products without bias.

2232
COBS 6.1E.3GRP

2A platform service provider should pay due regard to its obligations under Principle 6 (Customers’ interests) and the client's best interests rule and not vary its platform charges inappropriately according to provider or, for substitutable and competing retail investment products, the type of retail investment product.

Requirement to be paid through platform charges

COBS 6.1E.4RRP

2Except as specified in COBS 6.1E.6 R and COBS 6.1E.7 R, a platform service provider must:

  1. (1)

    only be remunerated for its platform service (and any other related services it provides), by platform charges; and

  2. (2)

    ensure that none of its associates accepts any remuneration in respect of those services.

COBS 6.1E.5GRP

2Examples of remuneration that should not be accepted by a platform service provider or its associates include (but are not limited to):

  1. (1)

    a share of an annual management charge; and

  2. (2)

    any payment (other than a product charge or a platform charge) made to a platform service provider in its capacity as a retail investment product provider where the relevant retail investment product is distributed to retail clients by its platform service.

Exceptions

COBS 6.1E.6RRP

2A platform service provider or its associates may solicit and accept payments from:

  1. (1)

    a firm, other than a retail investment product provider, which is in the business of making personal recommendations to retail clients in relation to retail investment products; and/or

  2. (2)

    a firm, other than a retail investment product provider, which is in the business of arranging or dealing retail investment products for retail clients.

COBS 6.1E.7RRP

2Other than in COBS 6.1E.6 R, a3 platform service provider or its associates may solicit and accept payments from any3 firm, including a retail investment product provider,3 which are only for:

  1. (1)

    pricing error corrections;

  2. (2)

    administering corporate actions;

  3. (3)

    research carried out by the platform service provider and management information; and

  4. (4)

    advertising;

provided that:

  1. (5)

    the services are available to firms at a price which does not vary inappropriately according to firm;

  2. (6)

    the payments are reasonable and proportionate for the service; and

  3. (7)

    the payments or service could not reasonably be expected to result in a channelling of business to the firm other than through the normal effect of general advertising.

Distinguishing platform charges from product charges and adviser charges

COBS 6.1E.8RRP

2A platform service provider must not arrange for a retail client to buy a retail investment product if:

  1. (1)

    the product’s charges are presented in a way that offsets or may appear to offset any adviser charges or platform charges that are payable by that retail client; or

  2. (2)

    the platform service provider's charges are presented in a way that offsets or may appear to offset any product charges or adviser charges that are payable by the retail client; or

  3. (3)

    the product’s charges or other payments are maintained by the retail investment product provider at a level such that a cash rebate, other than a cash rebate permitted by COBS 6.1E.10R (2), is payable to the retail client.

Using a platform service when advising

COBS 6.1E.9RRP

2A firm must not use a platform service as part of a personal recommendation to a retail client in relation to a retail investment product unless it has satisfied itself that the platform service provider, and its associates, only receive remuneration for business carried on in the UK which is permitted by the rules in this section.

Providing additional units or payment in cash to a retail client

COBS 6.1E.10RRP

2COBS 6.1E.4 R does not prevent a platform service provider receiving a share of an annual management charge from an authorised fund manager if the platform service provider passes that share on to the retail client in the form of:

  1. (1)

    additional units; or

  2. (2)

    cash, provided that it does not offset or appear to offset any adviser charges or platform charges.

COBS 6.1E.11GRP

2Examples of a cash share of an annual management charge that would not offset or appear to offset any adviser charges or platform charges are:

  1. (1)

    where the retail client has redeemed his retail investment product; or

  2. (2)

    where the value of the payment made to the retail client in each month does not exceed £1 for each fund.

COBS 6.1E.12GRP

2If a platform service provider passes a share of an annual management charge on to a retail client by way of additional units or cash, it should pay due regard to its obligations under Principle 7 (Communications with clients).