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GEN 4.1 Application

Who? What?

GEN 4.1.1 R RP

1This chapter applies to every firm and with respect to every regulated activity, except that:

  1. (1)

    for an incoming ECA provider, this chapter does not apply when the firm is acting as such;

  2. (2)

    for an incoming EEA firm which has permission only for cross-border services and which does not carry on regulated activities in the United Kingdom, this chapter does not apply;

  3. (3)

    for an incoming firm not falling under (1) or (2), this chapter does not apply to the extent that the firm is subject to equivalent rules imposed by its Home State;

    2
  4. (4)

    for a UCITS qualifier, this chapter does not apply; and2

  5. (5)

    only GEN 4.5 (Statements about authorisation and regulation by the FSA) applies in relation to MiFID or equivalent third country business and only where that MiFID or equivalent third country business is not business falling within paragraph 2 (Transactions between an MTF operator and its users), 3 (Transactions concluded on an MTF) or 4 (Transactions concluded on a regulated market) of Part 1 of COBS 1 Annex 1.32

    33

Where?

GEN 4.1.2 R RP

GEN 4.3 (Letter disclosure) applies in relation to activities carried on from an establishment maintained by the firm (or by its appointed representative) in the United Kingdom, subject to GEN 4.3.4 R (Exception: insurers).

GEN 4.1.3 R RP

GEN 4.4 (Business for private customers from non-UK offices) applies in connection with a regulated activity carried on from an establishment of the firm (or its appointed representative) that is not in the United Kingdom.

GEN 4.1.4 R RP

3 GEN 4.5 (Statements about authorisation and regulation by the FSA) applies in relation to activities carried on from an establishment maintained by the firm (or by its appointed representative) in the United Kingdom, provided that, in the case of the MiFID business of an EEAMiFID investment firm, it only applies to business conducted within the territory of the United Kingdom.

GEN 4.2 Purpose

GEN 4.2.1 G RP

The purpose of this chapter is to build upon 8Principle 7 (Communications with clients), which requires a firm to pay due regard to the information needs of its clients. This chapter requires the provision of appropriate minimum information about the identity of the regulator that authorised a firm. It also governs the way in which a firm may describe its regulation by the FSA.8 This assists in the achievement of the regulatory objectives of consumer protection, public awareness and market confidence.

8 8
GEN 4.2.1A G

8 PRIN 1.1.3 G , states that in applying the Principles with respect to accepting deposits and issuingelectronic money, the FSA will proceed only in a prudential context. That limitation does not apply to this chapter.

GEN 4.2.2 G RP

There are other pre-contract information requirements outside this chapter, including:

  1. (1)

    for financial promotions, inthe financial promotion rules;5

    5
  2. (2)

    for designated investment business, inCOBS 8 (Client agreements), COBS 5 (Distance Communications), COBS 6 (Information about the firm, its services and remuneration), COBS 13 and 14 (which relate to product information)5 and CASS (Client assets);

    5
  3. (3)

    for non-investment insurance contracts3, distance communication requirements in ICOBS 3, initial disclosure requirements in ICOBS 4, disclosures relating to client needs and advice in ICOBS 5 and product information requirements in ICOBS 6;

    3377
  4. (4)

    for electronic commerce activities carried on from an establishment in the United Kingdom, in COBS 5.2, ICOBS 3.27and MCOB 2.8;6 and1

    67
  5. (5)

    for regulated mortgage contracts and home purchase plans, initial disclosure requirements 4in MCOB 44, pre-application disclosure requirements in MCOB 5,4 and disclosure at the offer stage in MCOB 64;4 and12

    44
  6. (6)

    for equity release transactions, initial disclosure requirements in MCOB 8.4, pre-application disclosure requirements in MCOB 9.4 and disclosure at the offer stage in MCOB 9.5

    44

GEN 4.3 Letter disclosure

Disclosure in letters to retail clients4

GEN 4.3.1 R RP

A firm must take reasonable care to ensure that every letter (or electronic equivalent) which it or its employees send to a retail client4, with a view to or in connection with the firm carrying on a regulated activity, includes the disclosure in GEN 4 Annex 1 R.1

4
GEN 4.3.1A G RP

4Where a letter covers both activities to which this section6applies and activities to which this section6does not apply, the firm should comply with the rules in this chapter in relation to the business to which it applies. An example would be where a letter covers business for which the FSA is the competent authority under the Insurance Mediation Directive5 and under MiFID.

6 6
GEN 4.3.2 G

For a UK domestic firm, the required disclosure in GEN 4 Annex 1 R is "Authorised and regulated by the Financial Services Authority".

GEN 4.3.3 G RP
  1. (1)

    GEN 4.3.1 R (Disclosure in letters to retail clients4) covers letters delivered by hand, sent by post and sent by fax and also electronic mail, but not text messages, account statements, business cards or compliment slips (used as such).

    4
  2. (2)

    GEN 4.3.1 R (Disclosure in letters to retail clients4) applies in relation to letters sent by any of the firm's employees, which includes its appointed representatives and their employees.

    4
  3. (3)

    Firms are likely to find it convenient to include the required disclosure in their letterhead.

Exception: insurers

GEN 4.3.4 R RP

GEN 4.3.1 R (Disclosure in letters to retail clients4) does not apply in relation to:

4
  1. (1)

    general insurance business if:

    1. (a)

      the State of the risk is an EEA State other than the United Kingdom; or

    2. (b)

      the State of the risk is outside the EEA and the client is not in the United Kingdom when the contract of insurance is entered into; or

  2. (2)

    long-term insurance business if:

    1. (a)

      the client is habitually resident in an EEA State other than the United Kingdom; or

    2. (b)

      the client is habitually resident outside the EEA and is not present in the United Kingdom when the contract of insurance is entered into.

Exception: authorised professional firms

GEN 4.3.5 R RP

For an authorised professional firm, GEN 4.3.1 R (Disclosure in letters to retail clients4) does not apply with respect to its non-mainstream regulated activities.

4

Exception: use of third party processors in home finance and insurance mediation activities2

GEN 4.3.6 R RP
  1. (1)

    1Where a firm has outsourced activities to a third party processor other than advising on life policies3, GEN 4.3.1 R does not apply to that third party processor when acting as such, so long as the outsourcing firm ensures that the third party processor and its employees comply with that rule as if it was the firm and they were employees of the firm.

  2. (2)

    Where an appointed representative has outsourced insurance mediation activities other than advising on life policies3 or home finance mediation activities2to a third party processor, GEN 4.3.1 R does not apply to that third party processor when acting as such, so long as the appointed representative's principal ensures that the third party processor and its employees comply with that rule as if it was the appointed representative and they were the employees of the appointed representative.

    32
  3. (3)

    Where an appointed representative of a firm is carrying on:

    1. (a)

      insurance mediation activities other than advising on life policies3; or

      3
    2. (b)

      home finance mediation activities;2

      2

    which have been outsourced to it by the firm, GEN 4.3.1 R does not apply to the firm when the appointed representative is carrying on the outsourced activities, so long as the firm ensures that the appointed representative and its employees comply with that rule as if it was the firm and they were employees of the firm.

GEN 4.4 Business for retail clients from non-UK offices3

GEN 4.4.1 R RP
  1. (1)

    If, in any communication:

    1. (a)

      made to:2

      22
      1. (i)

        2(in relation to a non-investment insurance contract) aconsumer4;

        4
      2. (ii)

        2(in relation to a home finance transaction) a customer; or

      3. (iii)

        2(in all other cases) a retail client3; and

        3
    2. (b)

      in connection with a regulated activity carried on from an establishment of the firm (or its appointed representative) that is not in the United Kingdom;

    the firm indicates that it is an authorised person, it must also, where relevant, and with equal prominence, give the information in (2) in writing.

  2. (2)

    The information required is that in some or all respects the regulatory system applying will be different from that of the United Kingdom. The firm may also indicate the protections and complaints or compensation arrangements available under another relevant system of regulation.

  3. (3)

    A firm need not provide the information required by (1) if it has already provided it in writing to the customer2to whom the communication is made.

    2
GEN 4.4.2 G

[deleted]5

4 5

GEN 4.5 Statements about authorisation and regulation by the FSA

Application

GEN 4.5.1 R RP

1This section applies to a firm:

  1. (1)

    communicating with a customer; or

  2. (2)

    communicating or approving a financial promotion other than:

    1. (a)

      a financial promotion that would benefit from an exemption in the Financial Promotion Order if it were communicated by an unauthorised person;

    2. (b)

      a promotion of an unregulated collective investment scheme that would breach section 238(1) of the Act if made by an authorised person (firms may not communicate or approve such promotions).

GEN 4.5.2 G RP

GEN 4.5.1 R (1) does not apply to a firm when communicating with an eligible counterparty. However, misleading statements by a firm in such a communication may involve a breach of Principle 7 (Communications with clients) or section 397 (Misleading statements and practices) of the Act, as well as giving rise to private law actions for misrepresentation.

The duty

GEN 4.5.3 R RP

A firm must not indicate or imply that it is authorised by the FSA in respect of business for which it is not so authorised.

GEN 4.5.4 R RP

A firm must not indicate or imply that it is regulated or otherwise supervised by the FSA in respect of business for which it is not regulated by the FSA.

GEN 4.5.5 G RP

SUP 13A Annex 1 provides guidance on the application of the Handbook to an incoming EEA firm.

GEN 4.5.6 G RP
  1. (1)

    Neither an incoming EEA firm nor an incoming Treaty firm is authorised by the FSA when acting as such.

  2. (2)

    It is likely to be misleading for a firm that is not authorised by the FSA to state or imply that it is so authorised. It is also likely to be misleading for a firm to state or imply that a client will have recourse to the Financial Ombudsman Service or the FSCS where this is not the case.

  3. (3)

    As well as potentially breaching the requirements in this section, misleading statements by a firm may involve a breach of Principle 7 (Communications with clients) or section 397 (Misleading statements and practices) of the Act, as well as giving rise to private law actions for misrepresentation.

GEN 4 Annex 1 Statutory status disclosure

R

Type of firm

Required disclosure (Note 5)

(1)

UK domestic firm; or overseas firm (which is not an incoming firm)

"Authorised and regulated by the Financial Services Authority" (Note 1)

(2)

Incoming firm without a top-up permission

(a) 2"Authorised by [name of Home State regulator]

or 2

(b) "Authorised by [name ofHome State regulator] and subject to limited regulation by the Financial Services Authority. Details about the extent of our regulation by the Financial Services Authority are available from us on request" 2

(Notes 1, 2, 2a and 3) 2

(3)

Incoming firm with a top-up permission

"Authorised by [name of Home State regulator] and authorised and subject to limited regulation by the Financial Services Authority. Details about the extent of our authorisation and regulation by the Financial Services Authority are available from us on request"2

(Notes 1, 2 and 3)

2

(4)

Appointed representative of a firm

"[Name of appointed representative] is an appointed representative of [name of firm] which is [then continue with the required disclosure of the firm]"

(Note 4)

(5)

Society of Lloyd's

"Authorised under the Financial Services and Markets Act 2000"

Note 1 = A firm must use the formulation "Financial Services Authority" and not the abbreviated formulation "FSA".

Note 2 = An incoming firm is free to translate the name of its Home State regulator into English if it wishes. In doing so, it must ensure that the State in which the regulator is based is clear.

Note 2a = An incoming firm without a top-up permission may make either disclosure (a) or disclosure (b) unless it otherwise indicates or implies to the customer that it is regulated or supervised by the FSA , in which case it must make disclosure (b). 2

Note 3 = If a firm offers to make details about the extent of its authorisation or regulation by the FSA available on request and a customer requests such details, it must provide those details in a way that is clear, fair and not misleading. 2

Note 4 = If the appointed representative has more than one principal, the disclosure must relate to the principal or principals responsible for the regulated activity or activities concerned.

Note 5 = Any firm listed in this table is permitted to add words to the relevant required disclosure statement but only if the firm has taken reasonable steps to satisfy itself that the presentation of its statutory status will, as a consequence, remain fair, clear and not misleading 1 and be likely to be understood by the average member of the group to whom it is directed or by whom it is likely to be received 2 . For example, an authorised professional firm may wish to make it clear that it is also regulated by its professional body.

1