Related provisions for DISP App 1.6.4
1 - 20 of 80 items.
Circumstances that a firm should consider include how the customer will be protected in the event of:(1) the failure of a reversion provider, home purchase provideror SRB agreement provider;2(2) the transfer of a reversion provider's, home purchase provider's or SRB agreement provider's2 interest (or the interest the provider would have had, had it not nominated a third party to hold it) in the property to a third party; (3) other dealings by a reversion provider,home purchase
The steps that a firm might take in order to protect its customer's interests will depend on a number of factors, including the nature and structure of the home purchase plan, home reversion plan or regulated sale and rent back agreement2 and the jurisdiction in which the property is situated. If it is not possible to achieve reasonable protection (for example, due to impediments under a particular legal system) then a firm should not enter into, arrange or administer the pla
(1) In the FSA's4 view, a customer's interests will include:4(a) protection of the customer's rights under the plan, in particular the right to occupy the property throughout its term;(b) protection of any interest (legal or beneficial) that the customer retains, acquires or is intended to acquire in the property, including the expectation that such interests will be unencumbered by third party interests; 4(c) that, where a customer pays sums under a home purchase plan towards
4In the light of MCOB 2.6A.5BR (1)(c), and in accordance with Principle 6, a firm should not seek to prevent a tenant in Northern Ireland from ending the tenancy on less than the agreed notice period (not exceeding three months in accordance with MCOB 2.6A.5BR (1)(c)), where the notice is given in the first six months of the tenancy.
A firm is unlikely, for example, to be treating its customer fairly in relation to termination of a home purchase plan, home reversion plan or regulated sale and rent back agreement2if:(1) the grounds on which it may terminate all or part of a plan or agreement2 are unduly wide, or on which a customer may terminate are unduly narrow; or(2) the customer is not given appropriate notice of termination.
A firm is also unlikely to be treating its customer fairly if, upon termination of an agreement under a home purchase plan, home reversion plan or regulated sale and rent back agreement,2 the customer does not receive (net of any reasonable sums payable by the customer):(1) in the case of a home reversion plan or regulated sale and rent back agreement2 where the customer retains a beneficial interest in the property, the value of that beneficial interest; or(2) in the case of
A firm is unlikely, for example, to be treating a reversion occupier or SRB agreement seller2 fairly if:(1) the reversion occupier or SRB agreement seller2 is obliged to maintain the property to a standard which exceeds the standard that the property is in when the home reversion plan or regulated sale and rent back agreement2 commences;(2) the reversion occupier or SRB agreement seller2 is not entitled to, or is not given, reasonable notice of an inspection, or the inspection
(1) A valuer may be considered competent if he is a suitably qualified member of a professional body.(2) A valuer may be considered independent if:(a) the customer can choose the valuer subject to the firm objecting on reasonable grounds and to the valuer being competent;(b) he owes a duty of care to the customer in valuing the property; and(c) the customer has an appropriate remedy against him under a complaints procedure which allows the complaint to be referred to an independent
A firm must take reasonable steps to ensure that, when a home reversion plan or regulated sale and rent back agreement2 ends and the customer retains a beneficial interest in the property:(1) the property is sold within a reasonable period of time; and(2) the best price that might reasonably be obtained is paid.
It is recognised that a balance has to be struck between the need to sell the property as soon as possible, and other factors, such as market conditions, which may prompt the delay of the sale. Legitimate reasons for deferring action might include the expiry of a period when a grant is repayable on re-sale, or the discovery of a title defect that needs to be remedied if the optimal selling price is to be achieved.
A person may enter into a home reversion plan or regulated sale and rent back agreement2 as provider or agreement provider2 without being regulated by the FSA (or an exempt person) if the person does not do so by way of business (see PERG 14.5). If a firmarranges or makes arrangements2 for such a person to enter into a home reversion plan or regulated sale and rent back agreement2 as provider or agreement provider, the firm will be responsible for ensuring that the reversion occupier's
A firm must take all reasonable steps to obtain, when executing orders, the best possible result for its clients taking into account the execution factors. [Note: article 21(1) of MiFID and article 25(2) first sentence of the UCITS implementing Directive]2[Note: The Committee of European Securities Regulators (CESR) has issued a Question and Answer paper on best execution under MiFID. This paper also incorporates the European Commission's response to CESR's questions regarding
2A management company must, in relation to each UCITS scheme or EEA UCITS scheme it manages, act in the best interests of the scheme when executing decisions to deal on its behalf in the context of the management of its portfolio, and COBS 11.2.1 R applies in relation to all such decisions.[Note: article 25(1) of the UCITS implementing Directive]
If a firm provides a quote to a client and that quote would meet the firm's obligations to take all reasonable steps to obtain the best possible result for its clients if the firm executed that quote at the time the quote was provided, the firm will meet those same obligations if it executes its quote after the client accepts it, provided that, taking into account the changing market conditions and the time elapsed between the offer and acceptance of the quote, the quote is not
The obligation to deliver the best possible result when executing client orders applies in relation to all types of financial instruments. However, given the differences in market structures or the structure of financial instruments, it may be difficult to identify and apply a uniform standard of and procedure for best execution that would be valid and effective for all classes of instrument. Best execution obligations should therefore be applied in a manner that takes into account
Where a firm executes an order on behalf of a retail client, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which must include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.
For the purposes of ensuring that a firm obtains the best possible result for the client when executing a retail client order in the absence of specific client instructions, the firm should take into consideration all factors that will allow it to deliver the best possible result in terms of the total consideration, representing the price of the financial instrument and the costs related to execution. Speed, likelihood of execution and settlement, the size and nature of the order,
A firm's execution policy should determine the relative importance of each of the execution factors or establish a process by which the firm will determine the relative importance of the execution factors. The relative importance that the firm gives to those execution factors must be designed to obtain the best possible result for the execution of its client orders. Ordinarily, the FSA would expect that price will merit a high relative importance in obtaining the best possible
A firm must establish and implement effective arrangements for complying with the obligation to take all reasonable steps to obtain the best possible result for its clients. In particular, the firm must establish and implement an order execution policy to allow it to obtain, for its client orders, the best possible result in accordance with that obligation. [Note: article 21(2) of MiFID and article 25(3) first paragraph of the UCITS implementing Directive]2
(1) When establishing its execution policy, a firm should determine the relative importance of the execution factors, or at least establish the process by which it determines the relative importance of these factors, so that it can deliver the best possible result to its clients.(2) In order to give effect to that policy, a firm should select the execution venues that enable it to obtain on a consistent basis the best possible result for the execution of client orders.(3) A firm
A firm must, when providing the service of portfolio management or, for a management company, collective portfolio management,2 comply with the obligation to act in accordance with the best interests of its clients when placing orders with other entities for execution that result from decisions by the firm to deal in financial instruments on behalf of its client. [Note: article 45(1) of MiFID implementing Directive and article 26(1) of the UCITS implementing Directive]2
In order to comply with the obligation to act in accordance with the best interests of its clients when it places an order with, or transmits an order to, another entity for execution, a firm must:[Note: article 45(3) of the MiFID implementing Directive and article 26(1) of the UCITS implementing Directive]2(1) take all reasonable steps to obtain the best possible result for its clients taking into account the execution factors. The relative importance of these factors must be
For the purposes of identifying the types of conflict of interest that arise, or may arise, in the course of providing a service and whose existence may entail a material risk of damage to the interests of a client, a common platform firm and a management company5 must take into account, as a minimum, whether the firm or a relevant person, or a person directly or indirectly linked by control to the firm:(1) is likely to make a financial gain, or avoid a financial loss, at the
The circumstances which should be treated as giving rise to a conflict of interest cover cases where there is a conflict between the interests of the firm or certain persons connected to the firm or the firm'sgroup and the duty the firm owes to a client; or between the differing interests of two or more of its clients, to whom the firm owes in each case a duty. It is not enough that the firm may gain a benefit if there is not also a possible disadvantage to a client, or that one
A common platform firm and a management company5 must keep and regularly update a record of the kinds of service or activity carried out by or on behalf of that5firm in which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen or, in the case of an ongoing service or activity, may arise.[Note:article 23 of MiFID implementing Directiveand article 20(1) of the UCITS implementing Directive]55
A firm must maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest as defined in SYSC 10.1.3 R from constituting or giving rise to a material risk of damage to the interests of its clients.[Note: article 13(3) of MiFID]3
(1) If arrangements made by a firm under SYSC 10.1.7 R to manage conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of a client will be prevented, the firm must clearly disclose the general nature and/or sources of conflicts of interest to the client before undertaking business for the client.3(2) The disclosure must:(a) be made in a durable medium; and(b) include sufficient detail, taking into account the nature
(1) The conflicts of interest policy must include the following content:(a) it must identify in accordance with SYSC 10.1.3 R and SYSC 10.1.4 R, by reference to the specific services and activities carried out by or on behalf of the common platform firm or management company,5 the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more clients; and(b) it must specify procedures to be followed
5A management company, when identifying the types of conflict of interests for the purposes of SYSC 10.1.4 R, must take into account:(1) the interests of the firm, including those deriving from its belonging to a group or from the performance of services and activities, the interests of the clients and the duty of the firm towards the UCITS scheme or EEA UCITS scheme it manages; and(2) where it manages two or more UCITS schemes or EEA UCITS schemes, the interests of all of them.[Note:
5A management company must be structured and organised in such a way as to minimise the risk of a UCITS scheme's, EEA UCITS scheme's or client's interests being prejudiced by conflicts of interest between the management company and its clients, between two of its clients, between one of its clients and a UCITS scheme or an EEA UCITS scheme, or between two such schemes.[Note: articles 12(1)(b) and 14(1)(d) of the UCITS Directive]
A firm must not pay or accept any fee or commission, or provide or receive any non-monetary benefit, in relation to designated investment business or, in the case of its MiFID or equivalent third country business, another ancillary service, carried on for a client other than:(1) a fee, commission or non-monetary benefit paid or provided to or by the client or a person on behalf of the client; or(2) a fee, commission or non-monetary benefit paid or provided to or by a third party
(1) 1In relation to the sale of packaged products, the table on reasonable non-monetary benefits (COBS 2.3.15 G) indicates the kind of benefits which are capable of enhancing the quality of the service provided to a client and, depending on the circumstances, are capable of being paid or received without breaching the client's best interests rule. However, in each case, it will be a question of fact whether these conditions are satisfied. (2) The guidance in the table on reasonable
A number of the rules in this section require a firm to take into account its regulatory duty to treat customers fairly. In this section, references to such a duty are to a firm's duty to pay due regard to the interests of its customers and to treat them fairly (see Principle 6 in PRIN). This duty is owed to both policyholders and potential policyholders.
In the actuarial valuation under INSPRU 1.2.7 R, a firm must use methods and prudent assumptions which:(1) are appropriate to the business of the firm;(2) are consistent from year to year without arbitrary changes (see INSPRU 1.2.11 G);(3) are consistent with the method of valuing assets (see GENPRU 1.3);(4) include appropriate margins for adverse deviation of relevant factors (see INSPRU 1.2.12 G);(5) recognise the distribution of profits (that is, emerging surplus) in an appropriate
For the purpose of 3INSPRU 1.2.28R (1)(c)3, benefits payable include:(1) all guaranteed benefits including guaranteed surrender values and paid-up values;(2) vested, declared and allotted bonuses to which the policyholder is entitled;(3) all options available to the policyholder under the terms of the contract; and(4) discretionary benefits payable in accordance with the firm's regulatory duty to treat its customers fairly.
All cash flows are to be valued using prudent assumptions in accordance with generally accepted actuarial practice. Cash flows may be omitted from the valuation calculations provided the reserves obtained as a result of leaving those cash flows out of the calculation are not less than would have resulted had all cash flows been included (see INSPRU 1.2.22R (2)(b)2). Provision for future expenses in respect of with-profits insurance contracts (excluding accumulating with-profits
An additional provision for diseases covered by INSPRU 1.2.60G (5)(c) may be needed, in particular for unit-linked policies. In determining whether such a provision is needed a firm may take into consideration any ability to increase product charges commensurately (provided that such increase does not infringe on its regulatory duty to treat its customers fairly), but a provision would still be required for the period until such an increase could be brought into effect.
For the purposes of INSPRU 1.2.79R (2) and INSPRU 1.2.85 R, future surplus Future surplus may only be offset against future reinsurance cash outflow in respect of surplus on non-profit insurance contracts and the charges or shareholder transfers arising as surplus from with-profits insurance contracts. Such charges and transfers may only be allowed for to the extent consistent with the regulatory duty of the firm to treat its customers fairly.
Principle 6 (Customers' interests) requires a firm to pay due regard to the interests of its customers and treat them fairly. A firm may not exclude the duties it owes or the liabilities it has to a customer under the regulatory system. It may exclude other duties and liabilities only if it is reasonable for it to do so.
(1) 1A firm must act honestly, fairly and professionally in accordance with the best interests of its client (the client's best interests rule).(2) This rule applies in relation to designated investment business carried on:(a) for a retail client; and(b) in relation to MiFID or equivalent third country business, for any other client.(3) For a management company, this rule applies in relation to any UCITS scheme or EEA UCITS scheme the firm manages.2[Note: article 19(1) of MiFID
(1) In order to comply with the client's best interests rule, a firm should not, in any communication to a retail client relating to designated investment business:(a) seek to exclude or restrict; or(b) rely on any exclusion or restriction of;any duty or liability it may have to a client other than under the regulatory system, unless it is honest, fair and professional for it to do so.(2) The general law, including the Unfair Terms Regulations, also limits the scope for a firm
Principles 6 (Customers' interests), 7 (Communications with clients), 8 (Conflicts of interest), 9 (Customers: relationships of trust) and 10 (Clients' assets) impose requirements on firms expressly in relation to their clients or customers. These requirements depend, in part, on the characteristics of the client or customer concerned. This is because what is "due regard" (in Principles 6 and 7), "fairly" (in Principles 6 and 8), "clear, fair and not misleading" (in Principle
Principles 6, 8 and 9 and parts of Principle 7, as qualified by PRIN 3.4.1 R, apply only in relation to customers (that is, clients which are not eligible counterparties).4 The approach that a firm needs to take regarding categorisation3of clients into customers and eligible counterparties4 will depend on whether the firm is carrying on designated investment business or other activities, as described in PRIN 1.2.3 G and PRIN 1.2.4 G.434
1(1) In relation to the carrying on of designated investment business, a firm's categorisation of a client under the COBS client categorisation chapter (COBS 3) will be applicable for the purposes of Principles 6, 7, 8 and 9.33(2) The person to whom a firm gives basic advice on a stakeholder product will be a retail client for all purposes, including the purposes of Principles 6, 7, 8 and 9.433(3) In relation to carrying on activities other than designated investment business
Under PRIN 3.3.1 R, the territorial application of a number of Principles to a UK MiFID investment firm is extended to the extent that another applicable rule which is relevant to an activity has a wider territorial scope. Under PRIN 3.1.1 R, the territorial application of a number of Principles to an EEAMiFID investment firm is narrowed to the extent that responsibility for the matter in question is reserved to the firm'sHome State regulator. These modifications are relevant
(1) Certain requirements under MiFID are disapplied for:(a) eligible counterparty business;(b) transactions concluded under the rules governing a multilateral trading facility between its members or participants or between the multilateral trading facility and its members or participants in relation to the use of the multilateral trading facility;(c) transactions concluded on a regulated market between its members or participants.(2) Under PRIN 3.1.6 R, these disapplications may
(1) An investment manager must not accept goods or servicesin addition to the execution of its customer orders if it:(a) executes its customer orders through a broker or another person;(b) passes on the broker's or other person'scharges to its customers; and(c) is offered goods or services in return for the charges referred to in (b).(2) This prohibition does not apply if the investment manager has reasonable grounds to be satisfied that the goods or services received in return
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)2 and ancillary activities relating to designated investment business. Any client categorisation2established in relation to such business will be applicable for the purposes of Principles 6, 7, 8 and 9.1222(2) The person to whom a firm gives basic advice2 will be a retail client3 for all purposes including the purposes of
The purpose of MCOB 2.3.2 R(2) is to prevent the requirement in MCOB 2.3.2 R(1) being circumvented by an inducement being given or received by an unregulated associate. There may be circumstances, however, where a firm is able to demonstrate that it could not reasonably have knowledge of an associate giving or receiving an inducement. It should not, however, direct business to another person on the instruction of an associate if this is likely to conflict with the interests of
(1) If a with-profits fund has an excess surplus, and to retain that surplus would be a breach of Principle 6 (Customers' interests), the firm should make a distribution from that with-profits fund.22(2) Compliance with (1) may be relied on as tending to establish compliance with Principle 6 (Customers' interests).(3) Contravention of (1) may be relied on as tending to establish a contravention of Principle 6 (Customers' interests).
(1) MCOB 6 amplifies Principle 6 and Principle 7. The purpose of MCOB 6 is to ensure that a customer receives a clear offer document to enable him to check the features and price of thehome finance transaction1 before he enters into it. The offer document should include an updated and suitably adapted illustration (for a regulated mortgage contract) or financial information statement (for a home purchase plan)1 so that the customer can compare it with the one1 he received before
Territorial application of the Principles
Principle |
Territorial application |
Principles1, 2 and 3 |
in a prudential context, apply with respect to activities wherever they are carried on; otherwise, apply with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the Principle applies with that wider scope in relation to the activity described in that rule. |
applies with respect to activities wherever they are carried on. |
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if the activities have, or might reasonably be regarded as likely to have, a negative effect on confidence in the UK financial system4, applies with respect to activities wherever they are carried on; otherwise, applies with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom. 4 |
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Principles 6, 7, 8, 9 and 10 |
Principle 8, in a prudential context, applies with respect to activities wherever they are carried on; otherwise apply with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the Principle applies with that wider scope in relation to the activity described in that rule. |
applies with respect to activities wherever they are carried on.2 |
(1) Principle 8 requires a firm to manage conflicts of interest fairly, both between itself and its customers and between a customer and another client. This principle extends to soliciting or accepting inducements where this would conflict with a firm's duties to its customers. A firm that offers such inducements should consider whether doing so conflicts with its obligations under Principles 1 and 6 to act with integrity and treat customers fairly.(2) An inducement is a benefit