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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;5

    2
  5. (5)

    only GEN 4.1 (Application) and5GEN 4.5 (Statements about authorisation and regulation by the appropriate regulator)9 apply5 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 13; and52

    393
  6. (6)

    only GEN 4.1 (Application) and GEN 4.5 (Statements about authorisation and regulation by the appropriate regulator) apply in relation to administering a benchmark.5

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 appropriate regulator9) 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 or the activities of an EEA UCITS management company,4 it only applies to business conducted within the territory of the United Kingdom.

9

GEN 4.2 Purpose

GEN 4.2.1 G RP

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 appropriate regulator.168

16 8 16 8 16 16 11 16
GEN 4.2.1A G

[deleted]9

9
GEN 4.2.1B G RP

16This chapter builds upon Principle 7 (Communications with clients), which requires a firm to pay due regard to the information needs of its clients. This assists in the achievement of the statutory objectives, including the FCA's strategic objective of ensuring that relevant markets function well and the consumer protection and integrity objectives.

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 and COBS 8A14 (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. (2A)

    for PRIIPs, a requirement under the PRIIPs Regulation to provide retail investors (as defined in that Regulation) with a key information document;13

  4. (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
  5. (4)

    for electronic commerce activities carried on from an establishment in the United Kingdom, in COBS 5.2, ICOBS 3.27and MCOB 2.8;61

    6710
  6. (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;412

    4410
  7. (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;4

    41210
  8. (7)

    for regulated sale and rent back agreements, initial disclosure requirements in MCOB 4.11, pre-sale disclosure requirements in MCOB 5.9 and disclosure at the offer stage requirements in MCOB 6.9; and12

    1210
  9. (8)

    for regulated credit agreements, the pre-contract information requirements in the Consumer Credit (Disclosure of Information) Regulations 2010 (SI 2010/1013) and in the Consumer Credit (Disclosure of Information) Regulations 2004 (SI 2004/1481).12

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 (firms that are not PRA-authorised persons) or GEN 4 Annex 1AR (PRA-authorised persons) as applicable15.1

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.

6 6 5 15
GEN 4.3.1B G RP

15An example for GEN 4.3.1A G would be where a letter covers business for which the FCA is the competent authority under the Insurance Mediation Directive and under MiFID.

GEN 4.3.2 G

[deleted]15

15
GEN 4.3.2A G RP

15For a UK domestic firm that is not a PRA-authorised person, the required disclosure in GEN 4 Annex 1 R is "Authorised and regulated by the Financial Conduct Authority".

GEN 4.3.2B G RP

15For a UK domestic firm that is a PRA-authorised person, the required disclosure in GEN 4 Annex 1AR is "Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the7 Prudential Regulation 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.

Exception: credit firms

GEN 4.3.7 R RP

8 GEN 4.3.1 R (Disclosure in letters to retail clients) does not apply to a credit firm (other than a firm with a limited permission) with respect to the activity of entering into a regulated credit agreement as lender to which the Consumer Credit Directive applies, to the extent it would be contrary to the United Kingdom's obligations under an EU instrument.

GEN 4.3.8 G RP

8A credit firm which carries on the activity of entering into a regulated credit agreement as lender , in respect of an agreement 9to which articles 5 and 6 of the Consumer Credit Directive apply is under an obligation to disclose pre-contract information in the form and to the extent required by the Consumer Credit (Disclosure of Information) Regulations 2010 (SI 2010/1013)9. Firms which carry on credit broking may take on the same obligation. A credit firm must also ensure specified information is included in credit agreements to which the Consumer Credit Directive applies 9in the form and to the extent required by the Consumer Credit (Agreements) Regulations 2010 (SI 2010/1014)9.

GEN 4.3.9 G RP

8The effect of GEN 4.3.7 R is that a credit firm in relation to a regulated credit agreement covered by the Consumer Credit Directive does not need to comply with GEN 4.3.1 R in relation to those letters (or electronic equivalents) that accompany the information required under the Regulations referred to in GEN 4.3.8 G.

GEN 4.3.10 G RP

8 Regulated activities covered by a limited permission (see the "relevant credit activities" set out in paragraph 2G of Schedule 6 to the Act) do not fall within the scope of articles 5 and 6 of the Consumer Credit Directive, therefore GEN 4.3.7 R and the guidance related to it are not relevant to those activities.

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 appropriate regulator

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.

4
GEN 4.5.2A G RP

4However, misleading statements by a firm when communicated with an eligible counterparty may involve a breach of Principle 7 (Communications with clients) or Part 7 (Offences relating to financial services) of the Financial Services Act 2012, 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 FCA4 in respect of business for which it is not so authorised.

4
GEN 4.5.3A R RP

4A firm must not indicate or imply that it is authorised by the PRA 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 FCA4 in respect of business for which it is not regulated by the FCA4.

4 4
GEN 4.5.4A R RP

4A firm must not indicate or imply that it is regulated or otherwise supervised by the PRA in respect of business for which it is not regulated by the PRA.

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 FCA or PRA4 when acting as such.

    4
  2. (2)

    It is likely to be misleading for a firm that is not authorised by the FCA or PRA4 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.

    4
  3. (3)

    [deleted]4

    4
GEN 4.5.6A G RP

4As 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 Part 7 (Offences relating to financial services) of the Financial Services Act 2012, as well as giving rise to private law actions for misrepresentation.

GEN 4 Annex 1 Statutory status disclosure

R

This rule applies to firms that are not PRA-authorised persons:

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 Conduct Authority" (Note 1) 5

5

(2)

Incoming firm without a top-up permission

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

or 2

(b) "Authorised by [name of Home State regulator] and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request"5

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

5

(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 Conduct Authority. Details about the extent of our authorisation and regulation by the Financial Conduct Authority are available from us on request"5

(Notes 1, 2 and 3)

2 5

(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

Note 1 = A firm must use the formulation "Financial Conduct Authority" and not the abbreviated formulation "FCA". 5

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 FCA 5 , 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 FCA 5 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. The required disclosure of thefirm is that which would apply were thefirm to make the disclosure under therules applicable to it.5

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, be 3 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.

5 5 5 3 1

GEN 4 Annex 1A Statutory status disclosure (PRA-authorised persons)

R

3This rule applies to firms that are PRA-authorised persons:

Type of firm

Required disclosure (Note 5)

(1)

UK domestic firm

"Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority"

(Note 1)

(2)

overseas firm (which is not an incoming firm)

"[Authorised and regulated by [name of the overseas regulator of the overseas firm in the jurisdiction of that overseas firm's registered office (or, if it has no registered office, its head office)]]. Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request."

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

(3)

Incoming firm without a top-up permission

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

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

(Notes 1, 2, 2a1 and 3)

(4)

Incoming firm with a top-up permission

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

(Notes 1, 21 and 3)

(5)

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)

(6)

Society of Lloyd's

"Authorised under the Financial Services and Markets Act 2000"

Note 1 = A firm must use the formulation "Financial Conduct Authority" or "Prudential Regulation Authority" and not the abbreviated formulation "FCA" or "PRA" respectively.

Note 2 = An incoming firm or overseas firm is free to translate the name of its Home State regulator or overseas 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 FCA or PRA, in which case it must make disclosure (b).

1

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

Note 3a = An overseas firm that is not an incoming firm is only required to disclose its authorisation and/or regulated by an overseas regulator if it is so authorised and/or regulated.

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. The required disclosure of the firm is that which would apply were the firm to make the disclosure under the rules applicable to the firm.

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, be fair, clear and not misleading 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.