1. (1)

   1This section applies to a firm that carries on designated investment business for:

   1. (a)

      a retail client; and

   2. (b)

      in the case of MiFID or equivalent third country business, a client.

2. (2)

   If expressly provided, this section also applies to ancillary services not covered by (1), but only in the course of MiFID or equivalent third country business carried on with or for a client.

If a firm provides basic advice on stakeholder products in accordance with the basic advicerules, this section does not apply to that service.

A firm must provide a retail client with the following general information, if relevant:

1. (1)

   the name and address of the firm, and the contact details necessary to enable a client to communicate effectively with the firm;

2. (2)

   in the case of MiFID or equivalent third country business, the languages in which the client may communicate with the firm, and receive documents and other information from the firm;

3. (3)

   the methods of communication to be used between the firm and the client including, where relevant, those for the sending and reception of orders;

4. (4)

   a statement of the fact that the firm is authorised and the name of the competent authority that has authorised it;

5. (5)

   in the case of MiFID or equivalent third country business, the contact address of the competent authority that has authorised the firm;

6. (6)

   if the firm is acting through an appointed representativeor, where applicable, a tied agent, a statement of this fact specifying the EEA State in which that appointed representative or tied agent is registered;

7. (7)

   the nature, frequency and timing of the reports on the performance of the service to be provided by the firm to the client in accordance with the rules on reporting to clients on the provision of services (COBS 16);

8. (8)
   1. (a)

      in the case of a common platform firm3, a description, which may be provided in summary form, of the conflicts of interest policy;

   2. (b)

      other than in the case of a common platform firm, when a material interest or conflict of interest may or does arise, the manner in which the firm will ensure fair treatment of the client;

9. (9)

   in the case of a common platform firm, at any time that the client requests it, further details of the conflicts of interest policy.

1. (1)

   A firm that manages investments for a client must establish an appropriate method of evaluation and comparison such as a meaningful benchmark, based on the investment objectives of the client and the types of designated investments included in the client portfolio, so as to enable the client to assess the firm's performance.

2. (2)

   If a firm proposes to manage investments for a retail client, the firm must provide the client with such of the following information as is applicable:

   1. (a)

      information on the method and frequency of valuation of the designated investments in the client portfolio;

   2. (b)

      details of any delegation of the discretionary management of all or part of the designated investments or funds in the client portfolio;

   3. (c)

      a specification of any benchmark against which the performance of the client portfolio will be compared;

   4. (d)

      the types of designated investments that may be included in the client portfolio and types of transaction that may be carried out in those designated investments, including any limits; and

   5. (e)

      the management objectives, the level of risk to be reflected in the manager's exercise of discretion, and any specific constraints on that discretion.

1. (1)

   A firm that holds designated investments or client money for a retail client subject to the custody chapter or the client money chapter must provide that client with the following information:

   444
   1. (a)

      if applicable,

      1. (i)

         that the designated investments or client money of that client may be held by a third party on behalf of the firm;

      2. (ii)

         the responsibility of the firm under the applicable national law for any acts or omissions of the third party; and

      3. (iii)

         the consequences for the client of the insolvency of the third party;

   2. (b)

      if applicable, that the designated investments belonging to the retail client may be held in an omnibus account by a third party and a prominent warning of the resulting risks;

   3. (c)

      if it is not possible under national law for designated investments belonging to a client held with a third party to be separately identifiable from the proprietary designated investments of that third party or of the firm, that fact and a prominent warning of the resulting risks;

   4. (d)

      if applicable, that accounts that contain designated investments or client money belonging to that client are or will be subject to the law of a jurisdiction other than that of a EEA State, an indication that the rights of the client relating to those instruments or money may differ accordingly;

   5. (e)

      a summary description of the steps which it takes to ensure the protection of any designated investments belonging to the client or client money it holds, including summary details of any relevant investor compensation or deposit guarantee scheme which applies to the firm by virtue of its activities in an EEA State.

2. (2)

   A firm that holds designated investments or client money for a retail client must inform the client:

   1. (a)

      if applicable, about the existence and the terms of any security interest or lien which the firm has or may have over the client'sdesignated investments or client money, or any right of set-off it holds in relation to the client'sdesignated investments or client money; and

   2. (b)

      if applicable, that a depositary may have a security interest or lien over, or right of set-off in relation to those instruments or money.

3. (3)

   A firm within (1) must also, before entering into securities financing transactions in relation to designated investments held by it on behalf of a retail client, or before otherwise using such designated investments for its own account or the account of another client, in good time before the use of those designated investments provide the client, in a durable medium, with clear, full and accurate information on the obligations and responsibilities of the firm with respect to the use of those designated investments, including the terms for their restitution, and on the risks involved.

4. (4)

   A firm within (1) that holds clientdesignated investments or client money for a professional client must provide that client with the information in paragraphs (1)(3d3) and (2)(a) and(b).

A firm must provide a retail client with information on costs and associated charges including, if applicable:

1. (1)

   the total price to be paid by the client in connection with the designated investment or the designated investment business or ancillary services, including all related fees, commissions, charges and expenses, and all taxes payable via the firm or, if an exact price cannot be indicated, the basis for the calculation of the total price so that the client can verify it. The commissions charged by the firm must be itemised separately in every case;

2. (2)

   if any part of the total price referred to (1) is to be paid in or represents an amount of foreign currency, an indication of the currency involved and the applicable currency conversion rates and costs;

3. (3)

   notice of the possibility that other costs, including taxes, related to transactions in connection with the designated investment or the designated investment business may arise for the client that are not paid via the firm or imposed by it; and

4. (4)

   the arrangements for payment or other performance.

1. (1)

   A firm must provide a client with the information required by this section in good time before the provision of designated investment business or ancillary services unless otherwise provided by this rule.

2. (2)

   A firm may instead provide that information immediately after starting to provide designated investment business or ancillary services if:

   1. (a)

      the firm was unable to comply with (1) because, at the request of the client, the agreement was concluded using a means of distance communication2 which prevented the firm from doing so; and

   2. (b)

      in any case where the rule on voice telephony communications (COBS 5.1.12 R)2 does not otherwise apply, the firm complies with that rule in relation to the retail client, as if that client were a consumer.

Except where expressly provided, a firm must provide the information required by this section in a durable medium or via a website (where it does not constitute a durable medium) where the website conditions are satisfied.

1. (1)

   A firm must notify a client in good time about any material change to the information provided under this section which is relevant to a service that the firm is providing to that client.

2. (2)

   A firm must provide this notification in a durable medium if the information to which it relates was given in a durable medium.

1. (1)

   A firm carrying on MiFID business must make available to a client, who has used or intends to use those services, information necessary for the identification of the compensation scheme or any other investor-compensation scheme of which the firm is a member (including, if relevant, membership through a branch) or any alternative arrangement provided for in accordance with the Investor Compensation Directive.

2. (2)

   The information under (1) must include the amount and scope of the cover offered by the compensation scheme and any rules laid down by the EEA State pursuant to article 2 (3) of the Investor Compensation Directive.

3. (3)

   A firm must provide, on the client's request, information concerning the conditions governing compensation and the formalities which must be completed to obtain compensation.

4. (4)

   The information provided for in this rule must be made available in a durable medium or via a website if the website conditions are satisfied in the official language or languages of the EEA State.

1This section applies to a firm which makes a personal recommendation to a retail client to buy a packaged product.

This section does not apply if a firm gives basic advice in accordance with the basic advicerules.

A firm must not hold itself out as providing personal recommendations from the whole market on any type of personal pension scheme unless its advice is based on all types of personal pension schemes, including SIPPs.

1. (1)

   A firm must make, and keep up to date, a record of the scope (or scopes) and the range (or ranges) it will use.

2. (2)

   A firm must maintain a record of the particular scope and range on which its personal recommendation to each retail client is based.

3. (3)
   1. (a)

      The record of the firm'sscope and range (or ranges) must be retained for five years from the date on which it was superseded by a more up-to-date record.

   2. (b)

      The client-specific record required by (2) must be retained for five years from the date of the provision of the personal recommendation.

1. (1)

   A firm must not hold itself out to a client as acting independently unless it intends to:

   1. (a)

      provide personal recommendations to that client on packaged products from the whole market (or the whole of a sector of the market); and

   2. (b)

      offers the client the opportunity of paying a fee for the provision of such advice.

2. (2)

   Paragraph (1) does not apply to group personal pension schemes if a firm discloses information to a client in accordance with the rule on group personal pension schemes (COBS 6.3.21 R).

1. (1)

   A firm which charges a retail client a fee under COBS 6.2.15R (1)(b) must do so on the basis that it will, in respect of any commission which it receives in respect of transactions in packaged products for that client (and to which the particular fee charging arrangement relates), ensure the value of that commission is transferred to the client.

2. (2)

   This rule does not prohibit such a firm from agreeing with the client (in writing) that it will retain an amount or rate of trail or renewal commission up to an amount each year specified in the agreement and so small, relative to the overall amount of fees paid by the client, that it would be manifestly disproportionate for the firm to be required to account to the client in one of the ways outlined in this rule.

1This section applies to a firm which makes a personal recommendation to, deals in investments as agent for, or arranges for, a retail client in relation to a packaged product.

This section does not apply to a firm giving basic advice where the firm follows the basic advicerules in COBS 9.6.

For the purposes of GEN 5, a firm may not use the Key facts logo in relation to any document that is designed to comply with rules in COBS 5, 6.1 or COBS 7 unless it is a services and costs disclosure document or a 3combined initial disclosure document produced in accordance with the templates and Notes in the annexes to this chapter.

A firm must take reasonable steps to ensure that its representatives when making contact with an employee with a view to giving a personal recommendation on his employer's group personal pension scheme or stakeholder pension scheme, inform the employer:

1. (1)

   that the firm will be providing a personal recommendation on group personal pension schemes and/or stakeholder pension schemes provided by the employer;

2. (2)

   whether the employee will be provided with a personal recommendation that is restricted to the group personal pension scheme or stakeholder pension scheme provided by the employer or the recommendation will also cover other products;

3. (3)

   the amount and nature of any payments that the employee will have to pay, directly or indirectly, for the personal recommendation.

1This section applies to a firm carrying on designated investment business with a retail client.

1. (1)

   If a firm sells, personally recommends 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:

   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 or a simplified prospectus, 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.

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.

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, personally recommends or arranges the sale of a packaged product.

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)

   another firm has given a personal recommendation to the same retail client after the sale; or

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.