COBS 6.3 Disclosing information about services, fees and commission4

4If a firm makes a personal recommendation to a retail client in relation to a packaged product and uses the services and costs disclosure document or combined initial disclosure document to make the disclosures required under the rule on describing the breadth of a firm's advice service (COBS 6.2A.5 R) and the rule on content and wording of disclosure (COBS 6.2A.6 R), it may also use these documents for its disclosures in respect of any other retail investment products.

1. (1)

   In the FSA's opinion, a firm may3 comply with the rules referred to in (4) of which (a) to (g) are derived from the Single Market Directives and the Distance Marketing Directive4 by ensuring3 that in good time before:

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   1. (a)

      a retail client is bound by an agreement for the provision of a personal recommendation on packaged products; or

   2. (b)

      the firm performs an act preparatory to the provision of a personal recommendation;

   3. (c)

      (3in relation to the amendment of a life policy for that retail client)3 it gives a personal recommendation in relation to packaged products;

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   its representative provides the client with a services and costs disclosure document 3 or combined initial disclosure document.3

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2. (2)

   A firm should consider the extent to which it is appropriate to provide a services and costs disclosure document 3or a combined initial disclosure document 3if the appropriate information has been given to the client on a previous occasion and the information is still accurate and appropriate for the client.

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3. (3)

   A firm should provide the information required by this section in a durable medium.

4. (4)

   For the purposes of (1), provision of a services and costs disclosure document or combined initial disclosure document 3 will comply with:

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   1. (a)

      the elements of the rule on summary disclosure of fees, commissions and non-monetary benefits (COBS 2.3.1R (2)(b), as qualified by COBS 2.3.2 R) that relate to disclosure of fees and commissions and, where included, non-monetary benefits;3

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   2. (b)

      the rule on information about costs and charges (COBS 6.1.9 R) but only if in the services and costs disclosure document or combined initial disclosure document :43

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      1. (i)

         if a firm is providing a personal recommendation or related services and the total adviser charge can be determined, the total adviser charge is disclosed as part of the charging structure; or4

      2. (ii)

         if the total adviser charge cannot be determined or a firm is not providing a personal recommendation, if hourly rates are disclosed, the hourly rates are actual hourly rates rather than indicative hourly rates;4

      ;3

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   3. (c)

      the rule on information disclosure before providing services (COBS 2.2.1R (1)(a) and COBS 2.2.1R (1)(d));3

   4. (d)

      the items of distance marketing information, set out in paragraphs (1), (2), (4), (5), (19) and (20) of COBS 5 Annex 1 R;3

   5. (e)

      paragraphs (1) (so far as it relates to the firm's name and address), (4) and (6) of the rule on disclosure of information about a firm and its services (COBS 6.1.4 R); 3

   6. (f)

      the investor compensation scheme rule in COBS 6.1.16R (1) and (2);3

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   7. (g)

      the rule on information to be provided by an insurance intermediary (COBS 7.2.1 R (1) and COBS 7.2.1 R (2)); and43

   8. (h)

      4the rule on describing the breadth of a firm's advice service (COBS 6.2A.5 R), the rule on content and wording of disclosure (COBS 6.2A.6 R) and the rule on initial information for clients on the cost of advice services (COBS 6.1A.15 G).

5. (5)

   [deleted]3

   3
   1. (a)

      [deleted]3

      3
   2. (b)

      [deleted]3

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   3. (c)

      [deleted]3

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   4. (d)

      [deleted]3

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   5. (e)

      [deleted]3

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Each of the services and costs disclosure document and3 combined initial disclosure document that a firm provides to a client should be documents which the firm reasonably considers will be, or are likely to be, appropriate for the client having regard to the type of service which the firm may provide or business which the firm may conduct.

1. (1)

   A firm will satisfy the requirements as to timing in the rules referred to in COBS 6.3.3G (4) if its representative provides information to the client on first making contact with the client.2

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2. (2)

   [deleted]32

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1. (1)

   A services and costs disclosure document3 is a document that contains the Key facts logo, headings and text in the order shown in COBS 6 Annex 1 and in accordance with the Notes.

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2. (2)

   A combined initial disclosure document is a document that contains the Key facts logo, headings and text in the order shown in COBS 6 Annex 2 and in accordance with the Notes.

A firm may include, in a services and costs disclosure document or a combined initial disclosure document,3 information required by COBS or by the rule on disclosing a tied agent's capacity (SUP 12.6.13 R) and which is not in the template for the services and costs disclosure document or combined initial disclosure document,3if the information would be sufficiently prominent. For example, a firm may wish to use those documents to satisfy:3

1. (1)

   the parts of the rule on information about the firm and its services (COBS 6.1.4 R);3

2. (2)

   the rule on costs and associated charges (COBS 6.1.9 R);3

3. (3)

   the items of distance marketing information described in paragraphs (6), (8), (10) and (11) of COBS 5 Annex 1 R;3

that would not otherwise be satisfied by providing the services and costs disclosure document or combined initial disclosure document.3

Firms can obtain from the FSA website http://www.fsa.gov.uk a specimen of the services and costs disclosure document and the combined initial disclosure document.3 A firm may produce its services and costs disclosure document or combined initial disclosure document 3by using its own house style and brand. Electronic tools to help firms to construct their own versions of these documents 3 are available from the FSA website.

A firm would be unlikely to comply with the client's best interests rule and the fair, clear and not misleading rule, 3if:3

1. (1)

   the services and costs disclosure document or the combined initial disclosure document that it provided initially did not reflect the relevant adviser charge or 4expected commission arrangements; or3

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2. (2)

   the firm arranged to retain any commission which exceeded the amount or rate disclosed without first providing further appropriate inducements information and obtaining the client's prior informed consent to the proposed alteration in a durable medium.3

In cases where firms make initial contact with a client on the telephone a firm may, in addition, have to take into account and comply with the requirements in this sourcebook applicable to the conclusion of distance contracts3 (see COBS 5).

1. (1)

   In accordance with the rule on information disclosure before providing services (COBS 2.2.1 R), if a firm's initial contact with a retail client with a view to providing a personal recommendation on packaged products is by telephone then the following information should be provided before proceeding further:

   1. (a)

      the name of the firm and, if the call is initiated by or on behalf of a firm, the commercial purpose of the call;

   2. (b)

      whether the firm provides independent advice or restricted advice and, if a firm provides restricted advice, the oral disclosure required by the rule on additional oral disclosure for firms providing restricted advice (COBS 6.2A.9 R);4

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   3. (c)

      the firm's charging structure; and4

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   4. (d)

      that the information given under (a) to (c) will subsequently be confirmed in writing.4

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   5. (e)

      [deleted]4

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   6. (f)

      [deleted]4

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2. (2)

   If a firm's initial contact with a retail client is by telephone in circumstances in which the firm would otherwise provide a services and costs disclosure document, or a combined initial disclosure document,3 it should consider sending the client the document as soon as is reasonably practicable following the conclusion of the call.

   3