COBS 6.4 Disclosure of charges, remuneration and commission

1This section applies to a firm when it sells or arranges the sale of a packaged product to a retail client and the firm's services to sell or arrange are not in connection with the provision of a personal recommendation2.

1. (1)

   If a firm sells or arranges the sale of a packaged product to a retail client, and subsequently if the retail client requests it, the firm must disclose to the client in cash terms:

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   1. (a)

      any commission receivable by it or any of its associates in connection with the transaction;

   2. (b)

      if the firm is also the product provider, any commission or commission equivalent payable in connection with the transaction; and

   3. (c)

      if the firm or any of its associates is in the same immediate group as the product provider, any commission equivalent in connection with the transaction.

2. (2)

   Disclosure "in cash terms" in relation to commission does not include the value of any indirect benefits listed in the table at COBS 2.3.15 G.

3. (3)

   In determining the amount to be disclosed as commission equivalent, a firm must put a proper value on the cash payments, benefits and services provided to its representatives in connection with the transaction.

4. (4)

   This rule does not apply if:

   1. (a)

      the firm is acting as an investment manager; or

   2. (b)

      the retail client is not present in the EEA at the time of the transaction; or

   3. (c)

      the firm provides the client with a key features document, a simplified prospectus, a key investor information document or EEA key investor information document,4 in accordance with COBS 14, provided that the firm discloses to the client the actual amount or value of commission or equivalent within five business days of effecting the transaction.

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5. (5)

   If the terms of a packaged product are varied in a way that results in a material increase in commission or commission equivalent, a firm must disclose to a retail client in writing any consequent increase in commission or equivalent receivable by it in relation to that transaction.

3If the firm or its associate is the pure protection contract insurer, it may comply with COBS 6.4.3R (1)(b) and (c) by disclosing to the consumer an indicative adviser charge as an alternative to a commission equivalent.

3The indicative adviser charge must be at least reasonably representative of the cost of the5 services associated with making the personal recommendation in relation to the pure protection contract.

1. (1)

   A firm must make the disclosure required by the rule on disclosure of commission or equivalent (COBS 6.4.3 R) as close as practicable to the time that it sells or arranges the sale of a packaged product.

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2. (2)

   The firm must make the disclosure:

   1. (a)

      in a durable medium; or

   2. (b)

      when a retail client does not make a written application to enter into a transaction, orally. In these circumstances, the firm must give written confirmation as soon as possible after the date of the transaction, and in any event within five business days.

A firm must not enter into an arrangement to pay commission other than to the firm responsible for a sale, unless:

1. (1)

   the firm responsible for the sale has passed on its right to receive the commission to the recipient; or

2. (2)

   [deleted]2

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3. (3)

   the commission is paid following the sale of a packaged product by the firm in response to a financial promotion communicated by that firm to a client of the recipient firm; or

4. (4)

   the arrangement is with a firm in the same immediate group.