1. (1)

   1This section applies to a firm that carries on designated investment business, other than MiFID, equivalent third country or optional exemption business or insurance distribution activities7,6 for 6 a retail client.

2. (2)

   [deleted]6

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 client6 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)

   [deleted]6

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 by the FCA or the PRA, as applicable8;

5. (5)

   [deleted]6

6. (6)

   if the firm is acting through an appointed representative6, a statement of this fact

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 client6, 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 client6 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 client6 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 the United Kingdom8, 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 the United Kingdom8.

2. (2)

   A firm that holds designated investments or client money for a client6 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 client6, 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)

   [deleted]6

   3

A firm must provide a client6 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 business6,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 business6 unless otherwise provided by this rule.

2. (2)

   A firm may instead provide that information immediately after starting to provide designated investment business6 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 client6, 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 firm6must make available to a client, who has used or intends to use the firm’s6 services, information necessary for the identification of the compensation scheme if the firm is a participant firm8.

2. (2)

   The information under (1) must include the amount and scope of the cover offered by the compensation scheme8.

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 United Kingdom8.

1. (1)

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

   1. (a)

      in relation to its MiFID, equivalent third country or optional exemption business; and3

   2. (b)

      carrying on insurance distribution activities.3

2. (2)

   COBS 6.1ZA.16R2 does not apply to a firm in respect of its MiFID optional exemption business.

3. (3)

   Where a firm is carrying on insurance distribution activities for a professional client only those rules which implemented4 the requirements of the IDD apply.3

2Provisions in this section marked “UK”4 apply in relation to MiFID optional exemption business as if they were rules (see COBS 1.2.2G).

3A firm carrying on insurance distribution activities 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)

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

3. (3)

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

4. (4)

   if the firm is acting through an appointed representative a statement of this fact4;

5. (5)

   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 or COBS 16A in relation to an insurance-based investment product);

6. (6)
   1. (a)

      a description, which may be provided in summary form, of (as applicable) the conflicts of interest policy, SYSC 3.3.1 UK4 (applied by SYSC 3.3.3R) or the policy required by article 4(1) of the IDD Regulation; and

   2. (b)

      if not included in the information provided under (a), 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;

7. (7)

   at any time that the client requests it, further details of the conflicts of interest policy.

The timing of these disclosures is governed by COBS 6.1ZA.19AR.

3In good time before the conclusion of a life policy and, if necessary, on its amendment:

1. (1)

   a firm must provide the client with at least the following information:

   1. (a)

      its identity, address and whether it is an insurance intermediary or an insurance undertaking;

   2. (b)

      whether it provides a personal recommendation about the insurance products offered;

   3. (c)

      the procedures allowing clients and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its clients; and

2. (2)

   an insurance intermediary must also provide the client with the following information:

   1. (a)

      the fact that it is included in the Financial Services Register (or if it is not on the Financial Services Register, the register in which it has been included) and the means for verifying this;

   2. (b)

      whether it has a direct or indirect holding representing 10% or more of the voting rights or capital in a given insurance undertaking (that is not a pure reinsurer);

   3. (c)

      whether a given insurance undertaking (that is not a pure reinsurer) or its parent undertaking has a direct or indirect holding representing 10% or more of the voting rights or capital in the firm; and

   4. (d)

      whether it is representing the client or is acting for and on behalf of the insurer.

[Note: articles 18 and 19(1)(a) and (b) of the IDD]

3Where an insurance intermediary proposes or advises on a life policy, in good time before the conclusion of a life policy and, if necessary, on its amendment, an insurance intermediary must provide the client with at least information on whether the firm:

1. (1)

   gives a personal recommendation on the basis of a fair and personal analysis; or

2. (2)

   is under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings, in which case it must provide the names of those insurance undertakings; or

3. (3)
   1. (a)

      is not under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings; and

   2. (b)

      does not give a personal recommendation on the basis of a fair and personal analysis,

   in which case it must provide its client with the name of those insurance undertakings with which the insurance intermediary may and does conduct business.

[Note: article 19(1)(c) of the IDD]

3If an insurance intermediary informs a client that it gives a personal recommendation on the basis of a fair and personal analysis, it must give that personal recommendation on the basis of an analysis of a sufficiently large number of insurance contracts available on the market to enable it to make a personal recommendation in accordance with professional criteria, regarding which life policy would be adequate to meet the client’s needs.

[Note: article 20(3) of the IDD]

1. (1)

   3Where a firm doing insurance distribution activities holds client money for a retail client and has elected to comply with the client money chapter, it must provide that client with the information specified in:

   1. (a)

      COBS 6.1.7R; or

   2. (b)

      (if it is a firm doing MiFID, equivalent third country or optional exemption business) COBS 6.1ZA.9UK4 and COBS 6.1.7R(1)(e);

   in relation to that client money.

2. (2)

   For the purposes of COBS 6.1ZA.10AR(1)(b), COBS 1.2.3R applies except ‘funds’ should be read as meaning client money that a firm receives or holds for, or on behalf of, a client in the course of, or in connection with, its insurance distribution activities.

3. (3)

   The timing of this disclosure is governed by COBS 6.1ZA.19AR.

2A3firm must3 provide a client with at least the following3 information about all costs and related charges (see also COBS 2.2A.2R)3:

1. (1)

   (as applicable)3 information relating to:3

   1. (a)

      both investment services and ancillary services; and3

   2. (b)

      the distribution of an insurance-based investment product;3

2. (2)

   where relevant, the cost of any investment advice;

3. (3)

   the cost of the financial instrument or insurance-based investment product3 recommended or marketed to the client;

4. (4)

   information on how the client may pay; and

5. (5)

   details of any third party payments.

[Note: article 24(4)(c) of MiFID, article 29(1)(c) of the IDD3]

1. (1)

   2A firm must aggregate the information about costs and charges required by COBS 2.2A.2R and COBS 6.1ZA.11R2, where those costs and charges are not caused by the occurrence of underlying market risk. This is to allow the client to understand the overall cost, and the cumulative effect on the return, of the investment.

2. (2)

   A firm must provide the client with an itemised breakdown of the costs and charges information required by (1) and COBS 6.1ZA.11R2 when requested by the client.

3. (3)

   The information must, where applicable, be provided to the client on a regular basis, and at least annually, during the life of the investment.

[Note: article 24(4) of MiFID, second paragraph of article 29(1) of the IDD3]

1. (1)

   2A firm must provide the information required by COBS 6.1ZA.11R2 and COBS 6.1ZA.12R2 in a comprehensible form in such a manner that the client is reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument or insurance-based investment product3 that is being offered and, consequently, to take investment decisions on an informed basis.

2. (2)

   That information may be provided in a standardised format.

[Note: article 24(5) of MiFID, third paragraph of article 29(1) of the IDD3]

3In addition to the information specified by COBS 2.2A.2R and COBS 6.1ZA.11R, a firm carrying on insurance distribution activities must provide a retail client with the following information on costs and associated charges, if applicable:

1. (1)

   the total price to be paid by the client in connection with the life policy or the insurance distribution activity, 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 in (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 life policy or the insurance distribution activity 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.

The timing of this disclosure is governed by COBS 6.1ZA.19AR.

3In good time before the conclusion of the life policy and, if necessary, on its amendment, an insurance intermediary must provide the client with information:

1. (1)

   on the nature of the remuneration received in relation to the life policy;

2. (2)

   about whether in relation to the life policy it works on the basis of:

   1. (a)

      a fee, that is remuneration paid directly by the client; or

   2. (b)

      a commission of any kind, that is the remuneration included in the premium; or

   3. (c)

      any other type of remuneration, including an economic benefit of any kind offered or given in connection with the contract; or

   4. (d)

      on the basis of a combination of any type of remuneration set out above in (a), (b) and (c).

[Note: article 19(1)(d) and (e) of the IDD]

3In good time before the conclusion of a life policy an insurance undertaking must provide its client with information on the nature of the remuneration received by its employees in relation to the life policy.

[Note: article 19(4) of the IDD]

3The remuneration referred to in this section includes remuneration that is not guaranteed or which is contingent on meeting certain targets.

3If any payments, other than ongoing premiums and scheduled payments, are made by the client under the life policy after its conclusion, a firm must make the disclosures required by COBS 6.1ZA.15BR or COBS 6.1ZA.15CR5, for each such payment.

[Note: articles 19(3) and (5) of the IDD]

1. (1)

   3Where a fee is payable in relation to a life policy, the firm must inform its client of the amount of the fee.

2. (2)

   The information in (1) must be given before the client incurs liability to pay the fee, or before conclusion of the life policy, whichever is earlier.

3. (3)

   To the extent that it is not possible for an amount to be given, a firm must give the basis for its calculation.

[Note: articles 19(2) and (5) of the IDD]

3The fee disclosure requirement extends to all such fees that may be charged during the life of a policy.

[Note: article 19(3) of the IDD]

1. (1)

   2This rule applies to a firm that offers an investment service with another service or product or as part of a package or as a condition of the same agreement or package.

2. (2)

   The firm must inform the client whether it is possible to buy the different components separately and must provide information on the costs and charges of each component.

3. (3)

   If the agreement or package is offered to a retail client, the firm must:

   1. (a)

      inform that retail client if the risks resulting from the agreement or package are likely to be different from the risks associated with the components when taken separately; and

   2. (b)

      provide that retail client with an adequate description of the different components of the agreement or package and the way in which its interaction modifies the risks.

[Note: article 24(11) of MiFID]

3When offering a non-insurance ancillary product or service as part of a package or the same agreement with a life policy, a firm must:

1. (1)

   inform the client whether it is possible to buy the different components separately and, if so, must provide the client with an adequate description of:

   1. (a)

      the different components;

   2. (b)

      where applicable, any way in which the risk or insurance coverage resulting from the agreement or package differs from that associated with the components taken separately; and

2. (2)

   provide the client with separate evidence of the costs and charges of each component.

[Note: article 24(1) and (2) of the IDD]

3When offering a life policy ancillary to and as part of a package or in the same agreement with a non-insurance product or service, a firm must offer the client the option of buying the non-insurance goods or services separately.

3 COBS 6.1ZA.16BR does not apply where the non-insurance product or service is any of the following:

1. (1)

   investment services or activities; or

2. (2)

   a credit agreement as defined in point 3 of article 4 of the MCD which is:

   1. (a)

      an MCD credit agreement; or

   2. (b)

      an exempt MCD credit agreement; or

   3. (c)

      a CBTL credit agreement; or

   4. (d)

      a credit agreement referred to in articles 72G(3B) and (4) of the Regulated Activities Order; or

3. (3)

   a payment account as defined in regulation 2(1) of the Payment Accounts Regulations.

[Note: article 24(3) of the IDD]

3 COBS 6.1ZA.16AR to COBS 6.1ZA.16CR do not prevent the distribution of insurance products which provide coverage for various types of risks (multi-risk insurance policies).

[Note: article 24(5) of the IDD]

1. (1)

   3A firm must provide a client with the information required by COBS 6.1ZA.7AR, COBS 6.1ZA.10AR and COBS 6.1ZA.15AR in good time before the provision of the insurance distribution activity concerned unless otherwise provided by this rule.

2. (2)

   A firm may instead provide that information immediately after starting to provide the insurance distribution activity concerned 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 communication which prevented the firm from doing so; and

   2. (b)

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

3Where this section requires an insurance distributor to provide information to clients in relation to a life policy it must do so in accordance with COBS 7.4 (Means of communication to clients), unless COBS 6.1ZA.18AR(2) applies.

[Note: article 23 of the IDD]

1. (1)

   3A firm carrying on insurance distribution activities must notify a client in good time about any material change to the information provided in relation to an insurance distribution activity 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)

   2A firm must make available to a client, who has used or intends to use a firm’s services, information necessary for the identification of the compensation scheme if the firm is a participant firm4.

2. (2)

   The information under (1) must include the amount and scope of the cover offered by the compensation scheme4.

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 United Kingdom4.

[Note: article 10(1) and (2) of the Investor Compensation Directive]

1. (1)

   1This section applies to a firm which makes personal recommendations to retail clients in relation to retail investment products, pension transfers, pension conversions, pension opt-outs 1912or P2P agreements.

   1111
2. (2)

   This section does not apply to a firm giving advice, or providing services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme.2

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

4This section does not apply to a firm when it makes a personal recommendation to a retail client in relation to a Holloway sickness policy, provided that the Holloway policy special application conditions are met.

This section does not apply if the retail client is outside the United Kingdom except to the extent that the service provided is advising on conversion or transfer of pension benefits19.

Except as specified in this section,19 a firm must:

1. (1)

   only be remunerated for the personal recommendation (and any other related services provided by the firm) by adviser charges; and

2. (2)

   not solicit or accept (and ensure that none of its associates solicits or accepts) any other commissions, remuneration or benefit of any kind in connection with the firm’s business of advising16 or any other related services16, regardless of whether it intends to refund the payments or pass the benefits on to the retail client; and

3. (3)

   not solicit or accept (and ensure that none of its associates solicits or accepts) adviser charges in relation to the retail client'sretail investment product or P2P agreement12which are paid out or advanced by another party over a materially different time period, or on a materially different basis, from that in or on which the adviser charges are recovered from the retail client.

6A firm and its associates may:

1. (1)

   solicit and accept a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1A.4 R if:

   1. (a)

      the personal recommendation was made on or before 30 December 2012;

   2. (b)

      the solicitation and acceptance of the commission, remuneration or benefit of any kind was permitted by the rules in force on 30 December 2012;

   3. (c)

      the contract under which the right to receive the commission, remuneration or benefit of any kind was entered into on or before 30 December 2012;

   4. (d)

      the terms of that contract as at 30 December 2012 included the right to receive the commission, remuneration or benefit of any kind; and

   5. (e)

      the retail client enters into the transaction in respect of which the personal recommendation was given within a reasonable time of the personal recommendation being given; and

2. (2)

   enter into an arrangement under which the right to receive the commission, remuneration or benefit of any kind in (1) is transferred to that firm or its associate.

11A firm and its associates may solicit and accept a commission, remuneration or benefit of any kind from a discretionary investment manager in the circumstances in COBS 6.1A.4 R if:

1. (1)

   the firm or its associates recommended the discretionary investment manager to a retail client on or before 30 December 2012;

2. (2)

   the solicitation and acceptance of the commission, remuneration or benefit of any kind was permitted by the rules in force on 30 December 2012;

3. (3)

   the contract under which the right to receive the commission, remuneration or benefit of any kind was entered into on or before 30 December 2012;

4. (4)

   the terms of that contract as at 30 December 2012 included the right to receive the commission, remuneration or benefit of any kind; and

5. (5)

   the retail client agreed an investment mandate with the discretionary investment manager within a reasonable time of the recommendation to use the discretionary investment manager being made.

6If a retail client chooses to become a client of a firm and that firm or its associate enters into an arrangement in COBS 6.1A.4AR (2), the firm must:

1. (1)

   before the arrangement is entered into, disclose to the retail client that the transfer of the commission, remuneration or benefit of any kind will be requested by the firm or its associate;

2. (2)

   throughout the period during which the firm or its associate receives the commission, remuneration or benefit of any kind, provide the retail client with an ongoing service; and

3. (3)

   as soon as reasonably practicable after it makes the disclosure in (1):

   1. (a)

      disclose to the retail client, as a cash amount or percentage of funds under management, the amount of the commission, remuneration or benefit of any kind it expects to receive and any it has received; and

   2. (b)

      provide the retail client with a description of the ongoing service it will provide to the retail client in accordance with (2).

19A firm may receive an employer or trustee funded pension advice charge.

1. (1)

   15For the purposes of COBS 6.1A.4R(2), a firm or its associate may solicit or accept minor non-monetary benefits which meet the requirements of:

   1. (a)

      COBS 2.3A.15R, in relation to the provision of investment services; or

   2. (b)

      paragraph (2)17, in relation to other business.

2. (2)

   An acceptable minor non-monetary benefit is one which:

   1. (a)

      is clearly disclosed prior to the provision of the relevant service to the client, which the firm may describe in a generic way;

   2. (b)

      is capable of enhancing the quality of service provided to the client;

   3. (c)

      is of a scale and nature that it could not be judged to impair the firm’s compliance with its duty to act honestly, fairly and professionally in the best interests of the client;

   4. (d)

      is reasonable, proportionate and of a scale that is unlikely to influence the firm’s behaviour in any way that is detrimental to the interests of the relevant client; and

   5. (e)

      consists of:

      1. (i)

         information or documentation relating to a specific retail investment product or a service provided in the course of carrying on related designated investment business, that is generic in nature or personalised to reflect the circumstances of an individual client;

      2. (ii)

         written material from a third party that is commissioned and paid for by a corporate issuer or potential issuer to promote a new issuance by the company, or where the third party firm is contractually engaged and paid by the issuer to produce such material on an ongoing basis, provided that the relationship is clearly disclosed in the material and that the material is made available at the same time to any firms wishing to receive it, or to the general public;

      3. (iii)

         participation in conferences, seminars and other training events on the benefits and features of a specific retail investment product or a service provided in the course of carrying on related designated investment business; and

      4. (iv)

         hospitality of a reasonable de minimis value, such as food and drink during a business meeting or a conference, seminar or other training events mentioned under (iii).

      5. (v)

         research relating to an issue of shares, debentures, warrants or certificates representing certain securities by an issuer, which is:

         1. (A)

            produced:

            (1) prior to the issue being completed; and

            (2) by a person that is providing underwriting or placing services to the issuer on that issue; and

         2. (B)

            made available to prospective investors in the issue; or

      6. (vi)

         research that is received so that the firm may evaluate the research provider’s research service, provided that:

         1. (A)

            it is received during a trial period that lasts no longer than three months;

         2. (B)

            no monetary or non-monetary consideration is due (whether during the trial period, before or after) to the research provider for providing the research during the trial period;

         3. (C)

            the trial period is not commenced with the research provider within 12 months from the termination of an arrangement for the provision of research (including any previous trial period) with the research provider; and

         4. (D)

            the firm makes and retains a record of the dates of any trial period accepted under this rule, as well as a record of how the conditions in (A) to (C) were satisfied for each such trial period.

7‘Related service(s)’ for the purposes of COBS 6.1A includes:

1. (1)

   arranging or executing a transaction which has been recommended to a retail client by the firm, an associate or another firm in the same group or conducting administrative tasks associated with that transaction; or

2. (2)

   managing a relationship between a retail client (to whom the firm provides personal recommendations on retail investment products, pension transfers, pension conversions, pension opt-outs19 or P2P agreements) 12and a discretionary investment manager or providing a service to such a client in relation to the investments managed by such a manager; or7

3. (3)

   7recommending a discretionary investment manager to a retail client (to whom the firm provides personal recommendations or other services in relation to11retail investment products, pension transfers, pension conversions, pension opt-outs19 or P2P agreements).12

   11

If the firm or its associate is the retail investment product provider, platform service provider14 or operator of an electronic system in relation to lending12, the firm must ensure that the level of its adviser charges is at least reasonably representative of the cost of the14 services associated with making the personal recommendation (and related services).

A firm must determine and use an appropriate charging structure for calculating its adviser charge for each retail client.

A firm must not use a charging structure which conceals the amount or purpose of any of its adviser charges from a retail client.

9A firm must not make a personal recommendation to a retail client in relation to a retail investment product or P2P agreement12if it knows, or ought to know, that:

1. (1)

   the product’s charges,12 the platform service provider's charges or the operator of the electronic system in relation to lending’s charges 12are 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 product’s charges or other payments are maintained by the retail investment product provider or operator of the electronic system in relation to lending12at a level such that a cash rebate, other than a cash rebate permitted by COBS 6.1B.7A R or10COBS 6.1E.10R (2), is payable to the retail client.

A firm must disclose its charging structure to a retail client in writing, in good time before making the personal recommendation (or providing related services) or commencement of the abridged advice process19.

1. (1)

   19Where the services to be provided in COBS 6.1A.17R include full pension transfer or conversion advice (other than where the only safeguarded benefit involved is a guaranteed annuity rate), the disclosure required under COBS 6.1A.17R must include a personalised charges communication.

2. (2)

   The personalised charges communication in (1) must include the following:

   1. (a)

      the expected amounts payable (in cash terms) for the full pension transfer or conversion advice, and, where applicable, any advice on investments (whether by the firm or any other firm) in connection with the retail client’s pension transfer or pension conversion;

   2. (b)

      where the firm is subject to the ban on contingent charging rules (see COBS 19.1B) (Ban on contingent charging)) because the client does not fall within one of the exceptions in COBS 19.1B.9R, a statement that the amount of charges payable in relation to full pension transfer or conversion advice is the same whether or not the advice is to transfer or convert or to remain in their ceding arrangement;

   3. (c)

      the estimated amount of the monthly charge (in cash terms) for ongoing advice and/or services (whether provided by the firm or any other firm) in the first year following the transfer or conversion, assuming that funds remain invested with no growth but taking into account the cost of initial advice;

   4. (d)

      whether and the extent to which the charges in the first year are lower than the charges anticipated in subsequent years;

   5. (e)

      if the charges are significantly lower in the first year compared to subsequent years, the firm must indicate the amount of the monthly charge (in cash terms) in subsequent years until the point at which the charges are no longer expected to vary significantly from year to year; and

   6. (f)

      where relevant, a statement that the expected amounts payable in (a) do not include any amounts that may be payable by the client for any related advice or services they may receive that fall outside the UK regulatory regime.

3. (3)

   Where the firm (or any other firm) offers different types of ongoing advice and/or services with different charging structures, the firm must include in the personalised charges communication, the charges for each type of ongoing advice and/or service it offers.

4. (4)

   Where a firm has reasonable grounds to believe that it is not subject to the ban on contingent charging rules (see COBS 19.1B) because the client falls within one of the exceptions in COBS 19.1B.9R:

   1. (a)

      the reasons why the firm considers that the client falls within one of the exceptions, and including a description of the evidence relied on by the firm in support;

   2. (b)

      the amounts payable (in cash terms) if the firm’s recommendation is for the client not to transfer or not to convert their pension, and the amounts payable (including any amounts recoverable by the firm (or any other firm) as part of ongoing charges) if the advice is to transfer or to convert; and

   3. (c)

      a statement that:

      1. (i)

         the reasons set out in (4a) may change after further analysis of the client’s circumstances; and

      2. (ii)

         if after further analysis of the client’s circumstances, the firm determines that it is subject to the ban on contingent charging rules because the client does not fall within one of the exceptions in COBS 19.1B.9R, then the amount of charges payable in relation to full pension transfer or conversion advice is the same whether or not the advice is to transfer or convert or to remain in their ceding arrangement.

19Where the services to be provided in COBS 6.1A.17R include abridged advice, the firm must disclose to the client in writing the amounts payable (in cash terms) in each of the following situations:

1. (1)

   the firm gives abridged advice and a personal recommendation not to transfer or convert their pension;

2. (2)

   the firm starts the abridged advice process but is unable to take a view on whether it is in the client’s best interests to transfer or convert without undertaking full pension transfer or conversion advice; and

3. (3)

   the firm gives abridged advice followed by full pension transfer or conversion advice .

A firm must not use an adviser charge which is structured to be payable by the retail client over a period of time unless (1) or (2) applies:

1. (1)

   the adviser charge is in respect of an ongoing service for the provision of personal recommendations or related services and:

   1. (a)

      the firm has disclosed that service along with the adviser charge; and6

   2. (b)

      the retail client is provided with a right to cancel the ongoing service, which must be reasonable in all the circumstances, without penalty and without requiring the retail client to give any reason; or6

2. (2)

   the adviser charge relates to a retail investment product or a pension transfer, pension conversion or pension opt-out19 or arrangement with an operator of an electronic system in relation to lending12 for which an instruction from the retail client for regular payments is in place and the firm has disclosed that no ongoing personal recommendations or service will be provided.3

6If a retail client exercises his right to cancel an ongoing service, the firm must clearly disclose to the retail client whether charges for other services provided by the firm, such as custody services, will continue to be payable by the retail client.

If COBS 6.1A.22R(1) or (2) do not apply, a firm may not offer credit to a retail client for the purpose of paying adviser charges unless this would be in the best interests of the retail client.

1. (1)

   A firm must agree with and disclose to a retail client the total adviser charge payable to it or any of its associates by a retail client.

2. (2)

   A disclosure under (1) must:

   1. (a)

      be in cash terms19 (or convert non-cash terms into illustrative cash equivalents);

   2. (b)

      be as early as practicable;

   3. (c)

      be in a durable medium or through a website (if it does not constitute a durable medium) if the website conditions are satisfied; and

   4. (d)

      if there are payments over a period of time, include the amount and frequency of each payment due, the period over which the adviser charge is payable and the implications for the retail client if the retail investment product or arrangement with the operator of an electronic system in relation to lending12is cancelled before the adviser charge is paid and, if there is no ongoing service, the sum total of all payments.

A firm must keep a record of:

1. (1)

   its charging structure;

2. (2)

   the total adviser charge payable by each retail client; and

3. (3)

   if the total adviser charge paid by a retail client has varied materially from the charge indicated for that service in the firm's charging structure, the reasons for that difference.

1. (1)

   1This section applies to:24

   1. (a)

      a firm which is a retail investment product provider; 11

      4
   2. (b)

      in relation to COBS 6.1B.9 R, COBS 6.1B.10 G and COBS 6.1B.11 G, a platform service provider; 11and

      4
   3. (c)

      11a firm which is an operator of an electronic system in relation to lending;

   in circumstances where a retail client receives a personal recommendation in relation to a retail investment product or P2P agreement11 and also where a retail investment product transaction is executed by a platform service provider and no personal recommendation has been made.104

2. (2)

   This section does not apply to a retail investment product provider in circumstances where a firm gives advice or provides services to an employer in connection with a group personal pension scheme or group stakeholder pension scheme.2

This section does not apply to a firm when a retail client receives basic advice in accordance with the basic advicerules.

3This section does not apply to a firm in circumstances where a retail client receives a personal recommendation in relation to one of7 the firm'sHolloway sickness policies,7 provided that the Holloway policy special application conditions are met.

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

1. (1)

   12Except as specified in COBS 6.1B.5AR, a firm must not offer or pay (and must ensure that none of its associates offers or pays) any commissions, remuneration or benefit of any kind to another firm, or to any other third party for the benefit of that firm, in connection with that firm’sbusiness of advising13 (or any related services), except those that facilitate the payment of adviser charges from a retail client’s investments in accordance with this section.

2. (2)

   Paragraph (1) does not apply to minor non-monetary benefits which meet the requirements of:

   1. (a)

      COBS 2.3A.19R, in connection with the provision of investment services; or

   2. (b)

      COBS 6.1A.5AR(2), in connection with other business.

5A firm and its associates may:

1. (1)

   offer and pay a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1B.5 R if:

   1. (a)

      the personal recommendation was made on or before 30 December 2012;

   2. (b)

      the offer and payment was permitted by the rules in force on 30 December 2012;

   3. (c)

      the contract under which the right to receive the commission, remuneration or benefit of any kind was entered into on or before 30 December 2012;

   4. (d)

      the terms of that contract as at 30 December 2012 included the right to receive the commission, remuneration or benefit of any kind; and

   5. (e)

      the retail client enters into the transaction in respect of which the personal recommendation was given within a reasonable time of the personal recommendation being given; and

2. (2)

   enter into an arrangement under which the right to receive the commission, remuneration or benefit of any kind in (1) is transferred to another firm or its associate.

A firm must:

1. (1)

   take reasonable steps to ensure that its retail investment product charges or its charges as an operator of an electronic system in relation to lending11are not structured so that they could mislead or conceal from a retail client the distinction between those charges and any adviser charges payable in respect of its retail investment products or investments in P2P agreements made through the system of which it is the operator of an electronic system in relation to lending; 11

   9
2. (2)

   not include in any marketing materials in respect of its retail investment products, the service it offers as an operator of an electronic system in relation to lending11 or facilities for collecting adviser charges any statements about the appropriateness of levels of adviser charges that a firm could charge in making personal recommendations or providing related services in relation to its retail investment products or investments through the system in relation to which it is the operator of an electronic system in relation to lending11 ; and9

   9
3. (3)

   9not defer, discount or rebate retail investment product charges or its charges as an operator of an electronic system in relation to lending11in a way that offsets or may appear to offset any adviser charges or platform charges that are payable, including by maintaining retail investment product charges or its charges as an operator of an electronic system in relation to lending11at a level such that a cash rebate, other than a cash rebate permitted by COBS 6.1B.7A R or10COBS 6.1E.10R (2), is payable to the retail client.

10A retail investment product provider may maintain retail investment product charges at a level such that a cash rebate is payable to the retail client if:

1. (1)

   the retail investment product transaction was agreed on or before 5 April 2014 and executed within a reasonable time of that agreement; and

2. (2)

   the retail client's right to receive the cash rebate arose on or before 5 April 2014; and

3. (3)

   on or after 6 April 2014 no change is made to that product, or, where there is such a change on or after 6 April 2014, only in relation to the unchanged part of that product.

COBS 6.1B.7 R does not prevent a firm from offering a promotional discount to a retail client in the form of extra units or additional investment, but a9firm that offers to facilitate, directly or through a third party, the payment of adviser charges, including6 by means of a platform service must:4

1. (1)

   obtain and validate instructions from a retail client in relation to an adviser charge;

2. (2)

   offer sufficient flexibility in terms of the adviser charges it facilitates; and

3. (3)

   not pay out or advance adviser charges to the firm to which the adviser charge is owed over a materially different time period, or on a materially different basis to that in which it recovers the adviser charge from the retail client (including paying any adviser charges to the firm that it cannot recover from the retail client).

1. (1)

   1This section applies to a firm that gives advice, or provides services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme.

2. (2)

   Without prejudice to (1), this section does not apply to a firm that makes a personal recommendation to a retail client in relation to a retail investment product.

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

In this section ‘giving advice, or providing services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme’ includes:

1. (1)

   giving advice or assistance to an employer on the operation of such a scheme;

2. (2)

   taking, or helping the employer to take, the steps that must be taken to enable an employee of the employer to become a member of such a scheme; and

3. (3)

   giving advice to an employee, pursuant to an agreement between the employer and the adviser, about the benefits that are, or might be, available to the employee if he is, or if he becomes, a member of such a scheme.

Except as specified in COBS 6.1C.5A R,4COBS 6.1C.5B R and COBS 6.1C.5C R4,3 a firm must:

1. (1)

   only be remunerated for giving advice, or providing services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme by consultancy charges or by a fee payable by the employer;

2. (2)

   not solicit or accept (and ensure that none of its associates solicits or accepts) any other commissions, remuneration or benefit of any kind in relation to that advice, or those services, regardless of whether it intends to refund the payments or pass the benefits on to the group personal pension scheme or group stakeholder pension scheme; and

3. (3)

   not solicit or accept (and ensure that none of its associates solicits or accepts) consultancy charges which are paid out or advanced by another party over a materially different time period, or on a materially different basis, from that in or on which the consultancy charges are recovered from the relevant group personal pension scheme or group stakeholder pension scheme.

3A firm and its associates may, except in relation to a qualifying scheme: 4

1. (1)

   solicit and accept a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1C.5 R if:

   1. (a)

      the employer’s part of the relevant scheme was established on or before 30 December 2012; and

   2. (b)

      the solicitation and acceptance of the commission, remuneration or benefit of any kind was permitted by the rules in force on 30 December 2012; and

2. (2)

   enter into an arrangement under which the right to receive the commission, remuneration or benefit in (1) is transferred to that firm or its associate.

3If an employer chooses to appoint a firm to provide advice or services in connection with a group personal pension scheme or a group stakeholder pension scheme and that firm or its associate enters into an arrangement in COBS 6.1C.5AR (2), the firm must:

1. (1)

   before the arrangement is entered into, disclose to the employer that the transfer of the commission, remuneration or benefit of any kind will be requested by the firm or its associate;

2. (2)

   throughout the period during which the firm or its associate receives the commission, remuneration or benefit of any kind, provide the employer with an ongoing service; and

3. (3)

   as soon as reasonably practicable after it makes the disclosure in (1):

   1. (a)

      disclose to the employer the basis and amount of the commission, remuneration or benefit of any kind it expects to receive and any it has received; and

   2. (b)

      provide the employer with a description of the ongoing service it will provide to the employer in accordance with (2).

4In connection with a qualifying scheme, a firm may only solicit or accept consultancy charges from an operator of a qualifying scheme if the operator has confirmed that express agreement has been given by members of that scheme under COBS 19.6.4 R.

If the firm or its associate is the group personal pension scheme or group stakeholder pension scheme provider, the firm must ensure that the level of its consultancy charges is at least reasonably representative of the cost associated with giving the advice to the employer in relation to the relevant scheme.

A firm must determine and use an appropriate charging structure for calculating its consultancy charge for each employer.

A firm must not use a charging structure which conceals the amount or purpose of any of its consultancy charges from an employer or an employee.

A firm must disclose its charging structure to an employer in writing, in good time before giving advice, or providing services, to the employer in connection with a group personal pension scheme or group stakeholder pension scheme.

1. (1)

   A firm must agree with and disclose to an employer the total consultancy charge payable to it or any of its associates.

2. (2)

   A disclosure under (1) must:

   1. (a)

      be in cash terms7 (or convert non-cash terms into illustrative cash equivalents);

   2. (b)

      be made as early as practicable and, in any event, before the employer:

      1. (i)

         selects a particular group personal pension scheme or group stakeholder pension scheme for the benefit of its employees; or

      2. (ii)

         if applicable, reviews its group personal pension scheme or group stakeholder pension scheme arrangements;

   3. (c)

      be in a durable medium or through a website (if it does not constitute a durable medium) if the website conditions are satisfied;

   4. (d)

      if there are payments over a period of time, include:

      1. (i)

         the amount and frequency of each payment due; and

      2. (ii)

         the period over which the consultancy charge is payable;

      3. (iii)

         an explanation of the implications for the employer and its employees if an employee leaves the employer’s service; and

      4. (iv)

         an explanation of the implications for the employer and its employees if contributions to the group personal pension scheme or group stakeholder pension scheme are cancelled before the consultancy charge is fully paid.

When an employer asks a firm to provide advice to the employer’s employees, the firm:

1. (1)

   may make a consultancy charge for the cost of preparing and giving advice to each employee who chooses to accept his employer’s offer of advice;

2. (2)

   must not make a consultancy charge for the cost of preparing or giving advice to an employee who chooses not to accept the offer of advice;

3. (3)

   (if the firm prepares generic advice to be given to more than one employee) must not make more than one consultancy charge for preparing that advice.

5A 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 or her employer’s group personal pension scheme and/or group stakeholder pension scheme, inform the employee:

1. (1)

   that the firm will be providing a personal recommendation on a group personal pension scheme and/or group stakeholder pension scheme 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 group stakeholder pension scheme provided by the employer or the recommendation will also cover other products; and

3. (3)

   that the employee will have to pay an adviser charge (if applicable) unless the representative is making contact pursuant to an agreement made between the firm and the employer under which the firm is remunerated by consultancy charging or a fee payable by the employer.

A firm must keep a record of:

1. (1)

   its charging structure;

2. (2)

   the consultancy charges payable by each employer and each of the employer’s employees; and

3. (3)

   if the consultancy charge for a particular service has varied materially from that indicated in the firm's charging structure, the reasons for that difference.

This section applies to a firm that is a group personal pension scheme or group stakeholder pension scheme provider, but only if the firm providing the relevant scheme (or another firm) gives advice, or provides services, to an employer in connection with that scheme.

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

In this section ‘giving advice, or providing services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme' includes:

1. (1)

   giving advice or assistance to an employer on the operation of such a scheme;

2. (2)

   taking, or helping the employer to take, the steps that must be taken to enable an employee of the employer to become a member of such a scheme; and

3. (3)

   giving advice to an employee, pursuant to an agreement between the employer and the advisor, about the benefits that are, or might be, available to the employee if he is, or if he becomes, a member of such a scheme.

1. (1)

   Except as specified in COBS 6.1D.6A R,1 a firm must not offer or pay (and must ensure that none of its associates offers or pays) any commissions, remuneration or benefit of any kind to another firm, an employee benefit consultant or to any other third party for the benefit of that firm, employee benefit consultant or third party in relation to the sale or purchase of:

   1. (a)

      a group personal pension scheme or group stakeholder pension scheme, whether or not that sale or purchase is accompanied or facilitated by advice given to the purchasing employer or the employer's employees; or

   2. (b)

      an investment, if that sale or purchase is, or was, for the benefit of an occupational pension scheme established as an alternative to a group personal pension scheme or group stakeholder pension scheme.

2. (2)

   Except in connection with a qualifying scheme, paragraph3 (1)(a) does not prevent a firm from making a payment to a third party that has facilitated the payment of a consultancy charge from a group personal pension scheme or group stakeholder pension scheme, provided that that payment is only in respect of that facilitation.

   3
3. (3)

   For the purposes of (1)(b) only, an occupational pension scheme will be established as an alternative to a group personal pension scheme or group stakeholder pension scheme if, in order to meet the most material of its objectives, an employer could reasonably have chosen to establish an occupational pension scheme on the one hand, or a group personal pension scheme or group stakeholder pension scheme on the other, and it chose to establish an occupational pension scheme.

A firm that produces a group personal pension scheme or group stakeholder pension scheme must not offer or make any credit available out of its own funds, and to or for the benefit of another firm, an employee benefit consultant or another third party.

1A firm and its associates may, except in connection with a qualifying scheme: 3

1. (1)

   offer and pay a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1D.4 R if:

   1. (a)

      the employer’s part of the relevant scheme was established on or before 30 December 2012; and

   2. (b)

      the offer or payment was permitted by the rules in force on 30 December 2012; and

2. (2)

   enter into an arrangement under which the right to receive the commission, remuneration or benefit of any kind in (1) is transferred to another firm or its associate.

A firm must:

1. (1)

   take reasonable steps to ensure that its group personal pension scheme and group stakeholder pension scheme charges are not structured so that they could mislead or conceal from an employer the distinction between those charges and any consultancy charges payable in respect of the scheme; and

2. (2)

   not include in any marketing materials in respect of its group personal pension schemes or group stakeholder pension schemes any statements about the appropriateness of levels of consultancy charges that a firm could charge in giving advice to an employer in relation to a such a scheme.

A firm that offers to facilitate, directly or through a third party, the payment of consultancy charges must:2

1. (1)

   obtain and validate instructions from the relevant employer in relation to the consultancy charge;

2. (2)

   offer sufficient flexibility in terms of the consultancy charges it facilitates;

3. (3)

   not pay out or advance consultancy charges to the firm to which the consultancy charge is owed over a materially different time period, or on a materially different basis to that in which it recovers the consultancy charges from the employee (including paying any consultancy charges to the firm that it cannot recover from the employee); and

4. (4)

   ensure that the consultancy charges levied do not exceed those agreed between the employee’s employer and the relevant adviser (unless the prior written consent of the employee is obtained).

A firm must, in good time, provide an employee with sufficient information on the total consultancy charge payable by the employee.

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

1. (1)

   1A2platform 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.

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.

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 dealingretail investment products for retail clients.

2Other than in COBS 6.1E.6 R, a3platform service provider or its associates may solicit and accept payments from any3firm, 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.

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.

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.

2 COBS 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.

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

1A firm which:

1. (1)

   arranges for retail clients to buy retail investment products or makes personal recommendations to retail clients in relation to retail investment products; and2

   2
2. (2)

   uses a platform service for that purpose;

must take reasonable steps to ensure that it uses a platform service which presents its retail investment products without bias.

1If a client requests a firm (F) to transfer the title to a retail investment product which is held by F directly, or indirectly through a third party, on that client's behalf to another person (P), and F may lawfully transfer the title to that retail investment product to P, F must execute the client's request within a reasonable time and in an efficient manner.

A firm acting as a registrar should carry out a request by F for the re-registration of ownership of a retail investment product to P within a reasonable time.

1 2This section applies to a platform service provider in relation to the transfer, or potential transfer, of a retail client’sunits.

1 2In this section:

1. (1)

   “transfer” means the process of transferring a client’sinvestment from existing arrangements with a platform service provider (“ceding platform”) to separate arrangements with another platform service provider (“receiving platform”), irrespective of whether the assets, rights or interests comprising the investment are themselves transferred, or whether any of them are converted, exchanged, sold and replaced by equivalent assets, rights or interests, or realised as part of the process;

2. (2)

   “available scheme” is a fund in which units are available for investment by the client via both the ceding and the receiving platforms;

3. (3)

   “discounted unit class” is a unit class of an available scheme in respect of which the fund manager is remunerated by a lower level of charges than would otherwise apply to the client’s investment in the available scheme;

4. (4)

   “in-specie transfer” refers to a transfer of the client’sunits which is given effect via re-registration of the ownership of the units, whether or not the transfer also involves a unit class conversion but in any event without the fund manager redeeming the existing units;

5. (5)

   “fund manager” is the operator, or, to the extent not covered by that term, the AIFM of the available scheme; and

6. (6)

   “unit” includes any right to or interest in a unit.

1 2Where a client contacts a platform service provider in connection with a potential transfer of their investment which is, or includes, units, the platform service provider must provide the client with:

1. (1)

   the option of an in-specie transfer of units in an available scheme, provided there are no circumstances outside the control of either the ceding or the receiving platform which would prevent such transfer;

2. (2)

   the option of, as part of the transfer, converting the units in an available scheme into units of a discounted unit class, provided units in such class are available for investment by the client via the receiving platform; and

3. (3)

   sufficient information in good time about the options above, where they are applicable, to enable the client to make an informed decision about what transfer instructions to give.

1 2If the client instructs the platform service provider to proceed with a transfer of units, then:

1. (1)

   the ceding and receiving platforms must take all reasonable steps to give effect to the client’s transfer instructions efficiently and within a reasonable time, including cooperating with and promptly providing each other with information as necessary;

2. (2)

   if the client has chosen an in-specie transfer in accordance with COBS 6.1H.3R(1) and a unit class conversion is required to enable or facilitate such transfer, the ceding platform must request the fund manager to carry out the relevant unit class conversion, and take any other reasonable steps to bring it about; and

3. (3)

   if the client has chosen a discounted unit class in accordance with COBS 6.1H.3R(2), the receiving platform must request the fund manager to carry out, and take any other reasonable steps to bring about, the conversion of the units into the appropriate discounted unit class.

1 2The obligation to request a unit class conversion in COBS 6.1H.4R(2) and (3) only applies to the extent the platform service provider is entitled to request it.

1 2If a platform service provider is unable to give effect to all or part of a client’s transfer instructions, it must contact the client at the earliest opportunity to request further instructions.

1. (1)

   1This section applies to a firm that provides:

   1. (a)

      investment advice in the course of MiFID, equivalent third country or optional exemption business to clients in relation to financial instruments or structured deposits; or

   2. (b)

      investment advice to retail clients in the United Kingdom in relation to financial instruments, structured deposits or other retail investment products; or

   3. (c)

      basic advice to retail clients in the United Kingdom.

1. (1)

   This section does not apply to a firm when it makes a personal recommendation or provides basic advice to an employee, if that recommendation or advice is provided under the terms of an agreement between the firm and that employee’s employer which is subject to the rules on consultancy charges (COBS 6.1C).

2. (2)

   This section does not apply to a firm when it makes a personal recommendation to a retail client in relation to a Holloway sickness policy, provided that the Holloway policy special application conditions are met.

In this section a “relevant product” is:

1. (1)

   where the client is a retail client in the United Kingdom, a financial instrument, structured deposit or other retail investment product; or

2. (2)

   otherwise, a financial instrument or structured deposit.

[Note: article 1(4) of MiFID]

A firm must treat obligations in relation to financial instruments as extending to other retail investment products when complying with the provisions in this section marked “UK”2 in the course of MiFID business with a retail client in the United Kingdom.

In relation to business that is not MiFID business, a firm must comply with provisions in this section marked “UK”2 as if they were rules but:

1. (1)

   reading references to financial instruments as including structured deposits and (if the client is a retail client in the United Kingdom) other retail investment products;

2. (2)

   (for business that is not equivalent business of a third country investment firm or MiFID optional exemption business) the firm need not comply with the following provisions of the MiFID Org Regulation:

   1. (a)

      the requirement in paragraph 2 of article 52(1) of the MiFID Org Regulation (reproduced in COBS 6.2B.32UK2) not to give undue prominence to their independent advice services;

   2. (b)

      the requirement in article 52(4) of the MiFID Org Regulation (reproduced in COBS 6.2B.36UK2) to distinguish the range of financial instruments issued or provided by entities not being closely linked with the firm; and

   3. (c)

      the requirement in article 53(3)(c) of the MiFID Org Regulation (reproduced in COBS 6.2B.29UK2) that a firm does not allow a natural person to provide both independent advice and restricted advice.

If a firm informs a client that it provides independent advice, that firm must assess a sufficient range of relevant products available on the market which must:

1. (1)

   be sufficiently diverse with regard to their:

   1. (a)

      type; and

   2. (b)

      issuers or product providers,

   to ensure that the client’s investment objectives can be suitably met; and

2. (2)

   not be limited to relevant products issued or provided by:

   1. (a)

      the firm itself or by entities having close links with the firm; or

   2. (b)

      other entities with which the firm has such close legal or economic relationships, including contractual relationships, as to present a risk of impairing the independent basis of the advice provided.

   [Note: article 24(7)(a) of MiFID]

COBS 6.2B.11R 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 6.1C.20AR).

A firm which:

1. (1)

   holds itself out to a retail client in the United Kingdom as acting independently; and

2. (2)

   relies upon a single platform service to facilitate the majority of its personal recommendations,

must ensure that, as appropriate, the selection of relevant products made available by the platform service provider is such as to enable the firm to satisfy the requirements of COBS 6.2B.11R.

1. (1)

   A firm must disclose to a client, in good time before the provision of investment advice or basic advice:

   1. (a)

      whether its advice will be:

      1. (i)

         independent advice; or

      2. (ii)

         restricted advice;

   2. (b)

      whether the advice will be based on a broad or more restricted analysis of different types of relevant products; and

   3. (c)

      where the advice will be restricted advice, whether the range will be limited to relevant products issued or provided by entities having close links with the firm or any other legal or economic relationships, such as contractual relationships, so as to present a risk of impairing the independent basis of the advice provided.

[Note: article 24(4)(a)(i) and (ii) of MiFID]

1. (2)

   A firm must include the term “independent advice” or “restricted advice” or both, as relevant, in the disclosure.

1. (1)

   A firm must provide the information required by COBS 6.2B.33R in a comprehensible form in such a manner that the client is reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis.

2. (2)

   That information may be provided in a standardised format.

[Note: article 24(5) of MiFID]

If a firm provides restricted advice and engages in spoken interaction with the retail client, in addition to the disclosure required by COBS 6.2B.33R, a firm must disclose orally in good time before the provision of its investment advice that it provides restricted advice and the nature of that restriction.

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.