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You are viewing the version of the document as on 2022-01-09.

PRIN 3.4 General

Clients and the Principles

PRIN 3.4.1 R RP

For business other than MiFID or equivalent third country business,7 the only requirement of Principle 7 relating to eligible counterparties3 is that a firm must communicate information to eligible counterparties3 in a way that is not misleading.

3 3
PRIN 3.4.1A G RP

7 Principle 7 applies in full to MiFID or equivalent third country business.

PRIN 3.4.2 R RP

For the purposes of PRIN, a firm intending to carry on, or carrying on, activities that do not involve designated investment business, may treat a client as an eligible counterparty in accordance with PRIN 1 Annex 1 R.2

2
PRIN 3.4.3 G RP
1
  1. (1)

    COBS 3 (Client categorisation)2 applies to a firm intending to conduct, or conducting, designated investment business 2(other than giving basic advice),8ancillary activities relating to designated investment business and to a firm intending to carry on, or carrying on, insurance risk transformation and activities directly arising from insurance risk transformation8. Any client categorisation2established in relation to such business will be applicable for the purposes of Principles 6, 7, 8 and 9.1

    2222
  2. (2)

    The person to whom a firm gives basic advice2 will be a retail client3 for all purposes including the purposes of Principles 6, 7, 8 and 9.1

    23
  3. (3)

    PRIN 3.4.1 R and PRIN 3.4.2 R do not apply with respect to the carrying on of credit-related regulated activities. Client categorisation does not apply in relation to carrying on a credit-related regulated activity. The definitions of client and customer in relation to those regulated activities reflect the modified meaning of “consumer” in articles 36J, 39M and 89E of the Regulated Activities Order, as well as the definitions of “individual” and of “relevant recipient of credit” in that Order.45

  4. (4)

    PRIN 3.4.1R and PRIN 3.4.2R do not apply with respect to the carrying on of regulated claims management activities. Client categorisation does not apply in relation to carrying on a regulated claims management activity.9

  5. (5)

    PRIN 3.4.1R and PRIN 3.4.2R do not apply with respect to the provision of payment services or the issuing of electronic money where it is not a regulated activity. Client categorisation does not apply in relation to carrying on of those activities. The definitions of customer in relation to those activities reflects the scope of the corporate opt out under the Payment Services Regulations. 10

Guarantors etc

PRIN 3.4.3A R RP
  1. (1)

    6Paragraph (2) applies in relation to an individual who:

    1. (a)

      has provided, or is to provide, a guarantee or an indemnity (or both) in relation to a regulated credit agreement, a regulated consumer hire agreement or a P2P agreement; and

    2. (b)

      is not the borrower or the hirer.

  2. (2)

    If the individual is not a customer, they are to be treated as if they were a customer for the purposes of Principles 6 and 7.

  3. (3)

    For the purposes of this rule, a guarantee does not include a legal or equitable mortgage or a pledge.

Actions for damages

PRIN 3.4.4 R RP

A contravention of the rules in PRIN does not give rise to a right of action by a private person under section 138D of the Act (and each of those rules is specified under section 138D(3) of the Act as a provision giving rise to no such right of action).

Reference to "regulators" in Principle 11

PRIN 3.4.5 R RP

Where Principle 11 refers to regulators, this means, in addition to the FCA7, other regulators with recognised jurisdiction in relation to regulated activities, payment services and electronic money10 whether in the United Kingdom or abroad.