SIFA 9.1 Summary
Our Conduct of Business sourcebook (COB) provides the rules that you must comply with in the conduct of your investment business. If you undertake mortgage and/or general insurance intermediation you will also need to be familiar with the conduct of business source books for mortgages (MCOB) and insurance (ICOB). You may find it helpful to refer to the special guides (MIGI, MOGI, and GIGI).
This part of the Guide covers the conduct of business rules that small personal investment firms will encounter most frequently. These are:
- clear, fair and not misleading communication
- financial promotions
- inducements
- client classification
- terms of business
- depolarisation
- know your customer
- suitability
- assessing your customer's understanding of risk
- information about the firm
- excessive charges
- disclosing charges, remuneration and commission
- projections
- key features
- custody and client money
- basic advice on stakeholder products
Some small personal investment firms will have a wider permission that includes other activities. For these firms other parts of the Handbook will also be relevant but these are not discussed further in the Guide. For example:
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Managing investments: |
COB 7 Dealing and managing |
COB 8 Reporting to customers |
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Holding client money: |
Client Assets Sourcebook (CASS) (but see comments at section 9.16 of the Guide) |
COB 8.1 requires firms to send a written confirmation to clients promptly after each transaction. This requirement will not usually apply to small personal investment firms in view of the exceptions at COB 8.1.6 R.
Exclusion of liability
Under COB 2.5 you must not seek to exclude or restrict any duty or liability you may have to a customer under the regulatory system. This applies whenever you make any written or oral communication to a customer in the course of, or in connection with, designated investment business. COB 2.5 also required you not to exclude or restrict any other duty or liability when you are communicating with a private customer unless it is reasonable to do so. You also need to bear in mind your obligations under the Unfair Terms in Consumer Contracts Regulations 1999.
Reliance on Others
Principle 2 requires you to conduct your business with due skill, care and diligence. COB 2.3 indicates the extent to which you can meet this requirement by relying on others. You may generally rely on another competent person not connected with your firm to provide you with information in writing to meet your own obligations to obtain information, and vice versa. This is providing that you can show that it was reasonable to do so (COB 2.3.5 G provides guidance on when it will be reasonable). You may also send information to a third party (unconnected with the firm) on the instructions of the customer.
'In writing' includes the use of electronic media to make communications (GEN 2.2.14 R). Additional guidance on electronic communication is given at COB 1.8.2 G.