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ECO 1.2 Provision of essential information to consumers

Requirement to provide essential information

ECO 1.2.1R

Before entering into a contract with a UK ECA recipient who is a consumer, an incoming ECA provider must supply the recipient with essential information in English relevant to the contract.

ECO 1.2.2G

ECO 1.2.1 R requires an incoming ECA provider to provide a consumer with essential information, as envisaged by the E-Commerce Directive. ECO 1.2.6 E and ECO 1.2.7 E suggest that an incoming ECA provider should meet this requirement in one of two ways:

  1. (1)

    ECO 1.2.6 E gives an incoming ECA provider the option of complying with relevant UK Host State requirements relating to the provision of essential information; or

  2. (2)

    alternatively, ECO 1.2.7 E allows an incoming ECA provider to comply with requirements imposed by its country of origin which correspond to those of the United Kingdom.

Exceptions: insurance

ECO 1.2.3R

ECO 1.2.1 R does not apply to an insurer with respect to insurance business, where the activity:

  1. (1)

    is carried on by an insurer which has received official authorisation in accordance with article 6 of the First Life Directive or the First Non-Life Directive; and

  2. (2)

    falls within the scope of the Insurance Directives;

but the insurer must instead comply with ECO 1.3.1 R.

Exceptions: deposits,4 and re-insurance

ECO 1.2.4R
  1. (1)

    ECO 1.2.1 R does not apply to an incoming ECA provider1 with respect to an electronic commerce activity relating to:

    1. (a)

      a deposit (other than a cash deposit ISA); or

    2. (b)

      (if ECO 1.2.3 R does not apply) or reinsurance contract;

      4

    but, instead, the incoming ECA provider must comply with (2).

  2. (2)

    before entering into a contract with a UK ECA recipient who is a consumer, an incoming ECA provider must indicate to the recipient whether the contract falls within the jurisdiction of:

    1. (a)

      any dispute resolution scheme operating in the EEA; and

    2. (b)

      in the case of services within (1)(b), any compensation scheme operating in the EEA;

    and, if either or both of (a) and (b) apply, must identify each such scheme.

ECO 1.2.5G
4
  1. (1)

    ECO 1.2.4 R (2)(b) does not require a deposit-taking incoming ECA provider to mention a deposit guarantee scheme, but its Home State will require it to do so in accordance with the Deposit Guarantee Directive.4

  2. (2)

    ECO 1.2.4 R does not require an incoming ECA provider carrying on electronic commerce activities in relation to non-investment insurance contracts to mention a dispute resolution service or a compensation scheme, but its country of origin will require it to do so in accordance with the Distance Marketing Directive.4

Exceptions: regulated mortgage contracts2

ECO 1.2.5AR

2ECO 1.2.1 R does not apply to an incoming ECA provider with respect to an electronic commerce activity which relates to a regulated mortgage contract.3

Exception: activities (other than insurance) from EEA States which have implemented the DMD2

ECO 1.2.5BR

2ECO 1.2.1 R does not apply to an incoming ECA provider with respect to an electronic commerce activity, if the following conditions are satisfied:3

  1. (1)

    the activity is not insurance business which:

    1. (a)

      satisfies the conditions in ECO 1.2.3 R; and

    2. (b)

      is carried on by an insurer; and

  2. (2)

    the EEA State from which the activity is provided has implemented the DMD with the result that the obligations provided for by the DMD are applied when the incoming ECA provider is carrying on the activity from an establishment in that State with a UK ECA recipient in the United Kingdom.

Provision of essential information to consumers: UK requirements

ECO 1.2.6E
  1. (1)

    In order to comply with ECO 1.2.1 R, before entering into a contract with a UK ECA recipient who is a consumer, an incoming ECA provider should comply with the following UK requirements:

    1. (a)

      in every case where COB 6.2 (Provision of key features or simplified prospectus5) or COB 6.4 (Product disclosure: special situations) would require the provision of key features, provide the information identified in the rules listed in ECO 1.2.9 E;

      5
    2. (b)

      when it communicates a specific non-real time financial promotion which is an incoming electronic commerce communication, ECO 1.2.10 E and ECO 1.2.11 E (Essential information: specific non-real time financial promotions which are incoming electronic commerce communications);1

    3. (c)

      when it communicates a direct offer financial promotion which is an incoming electronic commerce communication, provide the information identified in the rules listed in ECO 1.2.12 E; and1

    4. (d)

      where relevant, ECO 1.2.13 E and ECO 1.2.14 E (Essential information: direct offer financial promotion of higher risk products).

  2. (2)

    The requirements in (1)(a) and (c) only apply to the extent that they would apply to a firm carrying on business from an establishment in the United Kingdom with or for the UK ECA recipient.

  3. (3)

    The requirements in (1)(b) apply subject to the exemptions in COB 3.2.5 R (exemptions) (but disregarding any exemption which applies purely because the promotion is an incoming electronic commerce communication).1

Provision of essential information to consumers: country of origin requirements

ECO 1.2.7E

If an incoming ECA provider engages in conduct which is in conformity with provisions:

  1. (1)

    corresponding to the UK requirements set out in ECO 1.2.6 E (1); and

  2. (2)

    made by a body or authority in an EEA State other than the United Kingdom;

that conduct is to be treated as conduct in conformity with those UK requirements.

Effect of compliance with ECO 1.2.6 E (UK requirements) or ECO 1.2.7 E (country of origin requirements)

ECO 1.2.8E
  1. (1)

    Compliance with ECO 1.2.6 E (1), directly or through engaging in conduct as set out in ECO 1.2.7 E, may be relied on as tending to establish compliance with ECO 1.2.1 R.

  2. (2)

    Contravention of ECO 1.2.6 E (1) (including failure to engage in conduct as set out in ECO 1.2.7 E) may be relied on as tending to establish contravention of ECO 1.2.1 R.

ECO 1.2.9E

Provision of essential information to consumers: key features. This table belongs to ECO 1.2.6 E (1)(a)

COB rule

Description

COB 6.5.15

Projections: an example

COB 6.5.19 R (1)

Projections: an example

COB 6.5.19 R (3)

Projections: an example

COB 6.5.40 R (1)(a) and COB 6.5.40 R (1)(c)

Further information for life policies, key features 5schemes, insurance or equity ISAs, PEPs or stakeholder pension schemes

COB 6.5.40 R (3)

Further information for life policies, key features 5schemes, insurance or equity ISAs, PEPs or stakeholder pension schemes

COB 6.5.40 R (4)(a) - (g), (i) - (p)

Further information for life policies, key features 5schemes, insurance or equity ISAs, PEPs or stakeholder pension schemes

COB 6.5.40 R (5)(a) - (b), (d) - (g)

Further information for life policies, key features 5schemes, insurance or equity ISAs, PEPs or stakeholder pension schemes

COB 6.5.40 R (6)

Further information for life policies, key features 5schemes, insurance or equity ISAs, PEPs or stakeholder pension schemes

COB 6.5.42 R (3) - (10), (12) - (14)

Information requirements for cash deposit ISAs, friendly society tax-exempt policies, traded life policies and broker funds

COB 6.5.43 R

Friendly society tax exempt policies

COB 6.5.44 R

Traded life policies

Provision of essential information to consumers: specific non-real time financial promotions which are incoming electronic commerce communications1

ECO 1.2.10E

An incoming ECA provider should ensure, when it communicates a specific non-real time financial promotion which is an incoming electronic commerce communication1 to a UK ECA recipient who is a consumer, that the financial promotion includes:

  1. (1)

    a description of:

    1. (a)

      the main features of the product or service;

    2. (b)

      the total price to be paid by the consumer under the contract, including all related fees, charges and expenses or, if this cannot be given, the basis for the calculation of the price;

    3. (c)

      any risks associated with the specific features of the contract; and

  2. (2)

    the name and address or contact point of the person with whom the consumer would enter into a contract.

ECO 1.2.11E

An incoming ECA provider should ensure, when it communicates a specific non-real time financial promotion which is an incoming electronic commerce communication1 to a UK ECA recipient who is a consumer, that any essential information provided to the consumer about the past performance of specified investments or of a firm includes, where relevant to the contract, a statement to the effect that past performance should not be seen as an indication of future performance.

ECO 1.2.12E

Provision of essential information to consumers in direct offer financial promotions. This Table belongs to ECO 1.2.6 E (1)(c)

COB rule

Description

COB 3.9.6 R (1), as regards the information in COB App 1.1.1 R(6) and (7)3

Required information for certain direct offer financial promotions3

COB 3.9.12 R (1)

Execution-only dealing services

COB 3.9.15 R (1)

Investments which can fluctuate in value

COB 3.9.18 R

Life policies

COB 3.9.6 R (1), as regards the information in COB App 1.1.1 R(17)3

Cancellation rights

COB 3.9.23 R

Charges for regulated collective investment schemes

Provision of essential information to consumers: direct offer financial promotion of higher risk products

ECO 1.2.13E
  1. (1)

    An incoming ECA provider should ensure, when it communicates a direct offer financial promotion which is an incoming electronic commerce communication1 relating to:

    1. (a)

      an unregulated collective investment scheme; or

    2. (b)

      a derivative; or

    3. (c)

      a warrant; or

    4. (d)

      a broker fund;

    that the UK ECA recipient, if a consumer, is provided with the essential information set out in the table in ECO 1.2.14 E, in the case of an unregulated collective investment scheme, (2) in the case of a derivative, (3) in the case of a warrant and (4) in the case of a broker fund.

  2. (2)

    An incoming ECA provider should ensure that the essential information required by (1) is included in the direct offer financial promotion in a manner that will bring it to the attention of the consumer.

ECO 1.2.14E

Provision of essential information to consumers: direct offer financial promotion of higher risk products. This table belongs to ECO 1.2.13 E

Product

Essential information required

(1) Unregulated collective investment schemes

Information about risks associated with the specific features of the contract, in particular that:

(i) the product is not regulated and may have a complex structure;

(ii) it may not be possible for the consumer to redeem his units or shares within a reasonable time after purchase;

(iii) the redemption price may not directly reflect the value of the underlying assets; and

(iv) consequently, the risks associated with this product are such that it may be difficult for the consumer to assess the benefits and drawbacks of the product.

(2) Derivatives (including spread bets)

Information about risks associated with the specific features of the contract, in particular that:

(i) the value of the investment may change significantly at short notice;

(ii) it may expose the consumer to the risk of a loss greater than the amount originally invested (if this is the case);

(iii) it may expose the consumer to the risk of losing the entire amount invested (if this is the case); and

(iv) consequently, the risks associated with this instrument are such that it may be difficult for the consumer to assess the benefits and drawbacks of the product.

(3) Warrants

Information about risks associated with the specific features of the contract, in particular that:

(i) the value of the investment may change significantly at short notice;

(ii) it may expose the consumer to the risk of losing the entire amount invested (if this is the case); and

(iii) consequently, the risks associated with this product are such that it may be difficult for the consumer to assess the benefits and drawbacks of the investment.

(4) Broker funds

Information about risks associated with the specific features of the contract, in particular that:

(i) broker funds are potentially complex and risky products;

(ii) in particular, the charges may be complex and give rise to conflicts of interest; and

(iii) consequently, the risks associated with this product are such that it may be difficult for the consumer to assess the benefits and drawbacks of the product.