SIFA 9.12 Excessive charges
Principle 6 (Customer's interests) requires a firm to pay due regard to the interests of its customers and treat them fairly. The purpose of COB 5.6 is to ensure that the charges a firm makes to its private customers are not excessive. The obligations to disclose to a private customer the charges a firm intends to make are set out in COB 4.3 and COB 5.7.
How do you ensure that you do not charge customers excessively?
COB 5.6.4 G says that you should consider the following to decide whether a charge is excessive:
- how your charges for products or services compare to similar ones in the market;
- to what extent the charges made are an abuse of the trust that your customer has placed in your firm; and
- the nature and extent of the disclosure of the charges to your private customers.
Where is the relevant section in the Handbook?
The following sections of the Handbook are relevant:
- COB 5.6 sets out the general requirements;
- there is a special provision for charges in respect of designated investments that are not readily realisable (COB 5.6.5 R);
- COB 4.3 (Disclosing information about services, fees and commission - packaged products); and
- COB 5.7 (Disclosure of charges, remuneration and commission).
The following sections are also relevant: |
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'Inducements' - Chapter 9.4 |
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'Depolarisation' - Chapter 9.7 |
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'Disclosing charges, remuneration and commission' - Chapter 9.13 |
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PRIN 2.1 in the Handbook |
If you do mortgage and general insurance business you should also refer to MOGI 2.10 and GIGI 3. |
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