Related provisions for COBS 13.5.4

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COBS 13.4.1RRP
1 A key features illustration must include appropriate charges information, information about any interest that will be paid to clients on money held within a personal pension scheme bank account5 and, if it is a packaged product which is not a financial instrument:(1) must include a standardised deterministic projection;(2) the projection and charges information must be consistent with each other so that:66(a) the same intermediate growth rate and assumptions about regular contributions
COBS 13.4.2RRP
When the rules in this chapter require a key features illustration to be prepared, it must not take the form of a generic key features illustration:33(1) unless 3there are reasonable grounds for believing that it3 will be sufficient to enable a retail client to make an informed decision about whether to invest; or3(2) if it is part of a3direct offer financial promotion which contains a personal recommendation; or33(3) if a personal pension scheme or a stakeholder pension scheme
COBS 13.4.3GRP
A generic key features illustration3is unlikely to be sufficient to enable a retail client to make an informed decision about whether to invest if the premium or investment returns on the product will be materially affected by the personal characteristics of the investor. 3
COBS 13.4.4RRP
There is no requirement under COBS 13.4.1 R5 to include a projection in a key features illustration:(1) for a single premiumlife policy bought as a pure investment product, a product with benefits that do not depend on future investment returns or any other product if it is reasonable to believe that a retail client will not need one to be able to make an informed decision about whether to invest; or(2) if the product is a life policy that will be held in a CTF or sold with basic
COBS 13.4.5GRP
Although there may be no obligation to include a projection in a key features illustration, where a firm chooses to include one, the projection must follow the appropriate requirements, as outlined in this section, or for financial instruments under COBS 4.6.7 R.
COBS 4.7.1RRP
(1) Subject to (3) and (4), a firm must ensure that a direct offer financial promotion that is addressed to, or disseminated in such a way that it is likely to be received by, a retail client contains:(a) such of the information referred to in the rules on information disclosure (COBS 6.1.4 R, COBS 6.1.6 R, COBS 6.1.7 R, COBS 6.1.9 R, COBS 14.3.2 R, COBS 14.3.3 R, COBS 14.3.4 R and COBS 14.3.5 R) as is relevant to that offer or invitation; and[Note: article 29(8) of the MiFID
COBS 4.7.4GRP
In order to enable a client to make an informed assessment of a relevant investment or relevant business, a firm may wish to include in a direct offer financial promotion:(1) a summary of the taxation of any investment to which it relates and the taxation consequences for the average member of the group to whom it is directed or by whom it is likely to be received;1(2) a statement that the recipient should seek a personal recommendation if he has any doubt about the suitability
COBS 4.7.5AGRP
4COBS 4.13.2 R (Marketing communications relating to UCITS schemes or EEA UCITS schemes) and COBS 4.13.3 R (Marketing communications relating to feeder UCITS) contain additional disclosure requirements for firms in relation to marketing communications (other than key investor information) that concern particular investment strategies of a UCITS scheme or EEA UCITS scheme.
COBS 4.7.6RRP
(1) 2A firm must not communicate or approve a direct offer financial promotion:(a) relating to a warrant or derivative;(b) to or for communication to a retail client; and(c) where the firm will not itself be required to comply with the rules on appropriateness (see COBS 10);unless the firm has adequate evidence that the condition in (2) is satisfied.(2) The condition is that the person who will arrange or deal in relation to the derivative or warrant will comply with the rules
COBS 4.7.7RRP
(1) 5Unless permitted by COBS 4.7.8 R, a firm must not communicate or approve a direct-offer financial promotion relating to a non-readily realisable security to or for communication to a retail client without the conditions in (2) and (3) being satisfied.(2) The first condition is that the retail client recipient of the direct-offer financial promotion is one of the following:(a) certified as a ‘high net worth investor’ in accordance with COBS 4.7.9 R;(b) certified as a ‘sophisticated
COBS 4.7.8RRP
5A firm may communicate or approve a direct-offer financial promotion relating to a non-readily realisable security to or for communication to a retail client if:(1) the firm itself will comply with the suitability rules (COBS 9) in relation to the investment promoted; or(2) the retail client has confirmed before the promotion is made that they are a retail client of another firm that will comply with the suitability rules (COBS 9) in relation to the investment promoted; or(3)
COBS 4.7.9RRP
5A certified high net worth investor, a certified sophisticated investor or a self-certified sophisticated investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the terms set out in the applicable rule listed below, substituting “non-readily realisable securities” for “non-mainstream pooled investments”:(1) certified high net worth investor: COBS 4.12.6 R;(2) certified sophisticated investor:
COBS 4.7.10RRP

5A certified restricted investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the following terms:

“RESTRICTED INVESTOR STATEMENT

I make this statement so that I can receive promotional communications relating to non-readily realisable securities as a restricted investor. I declare that I qualify as a restricted investor because:

(a)

in the twelve months preceding the date below, I have not invested more than 10% of my net assets in non-readily realisable securities; and

(b)

I undertake that in the twelve months following the date below, I will not invest more than 10% of my net assets in non-readily realisable securities.

Net assets for these purposes do not include:

(a)

the property which is my primary residence or any money raised through a loan secured on that property;

(b)

any rights of mine under a qualifying contract of insurance; or

(c)

any benefits (in the form of pensions or otherwise) which are payable on the termination of my service or on my death or retirement and to which I am (or my dependants are), or may be entitled.

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me to seek advice from an authorised person who specialises in advising on non-readily realisable securities.

Signature:

Date:”

COBS 15.5.1RRP
In this chapter: (1) references to a consumer include the trustees of an occupational pension scheme and the trustees or operator of a personal pension scheme or stakeholder pension scheme; and(2) any contract with such persons is to be treated as a non-distance contract.
COBS 15.5.2RRP
This chapter applies as modified to the extent necessary for it to be compatible with any enactment.
COBS 15.5.3GRP
For example:(1) the Child Trust Fund Regulations contain provisions relevant to cancellation rights; in particular they provide that any uninvested sums held in connection with a CTF should be held in a designated bank account; and the effect of conditions 4(a) and (b) in regulation 5 of the Child Trust Fund Regulations (applicable to non-HMRC allocated CTF) is that a CTF opened by way of distance contract has a cancellable management agreement in all cases and the CTF cannot
COBS 15.5.4GRP
When a consumer cancels a distance contract under this chapter, his notice may also operate to cancel any attached contract which is also a distance financial services contract unless the consumer gives notice that cancellation of the main contract is not to operate to cancel the attached contract (see regulation 12 of the Distance Marketing Regulations). Where relevant, this should be disclosed to the consumer along with other information on cancellation.
COBS 15.5.5GRP
This chapter does not act to cancel distance contracts entered into by an appointed representative or where applicable, by a tied agent,1 as principal such as a distance contract to provide advisory services, but the Distance Marketing Regulations (regulations 9 to 13, see regulation 4(3)) may have this effect.
COBS 15.5.6GRP
Where a life policy or unit bought on opening or transferring an ISA is cancellable, the right to cancel, or substitute right to withdraw, applies to the entire arrangement. For example, a maxi-ISA comprising a life policy in the stocks and shares component and a cash component would be cancellable as a whole with a cancellation period of 30 calendar days. However, a firm is free to give the consumer the option of cancelling individual components separately with the same cancellation
COBS 4.9.1RRP
(1) 4Subject to (2) and (3), this section applies to a firm in relation to the communication or approval of a financial promotion that relates to the business of an overseas person.4(2) This section does not apply to a firm in relation to its MiFID or equivalent third country business.(3) 4If a communication relates to a firm's business that is not MiFID or equivalent third country business, this section does not apply:4(a) to the extent that it is an excluded communication;(b)
COBS 4.9.3RRP
A firm must not communicate or approve a financial promotion which relates to a particular relevant investment or relevant business of an overseas person, unless:(1) the financial promotion makes clear which firm has approved or communicated it and, where relevant, explains:(a) that the rules made under the Act for the protection of retail clients do not apply;(b) the extent and level to which the compensation scheme will be available, or if the scheme will not be available, a
COBS 4.9.4RRP
A firm may only2communicate or approve a financial promotion to enter into a life policy with a person who is:22(1) an authorised person; or(2) an exempt person who is exempt in relation to effecting or carrying out contracts of insurance of the class to which the financial promotion relates; or(3) an overseas long-term insurer that is entitled under the law of its home country or territory to carry on there insurance business of the class to which the financial promotion rel
COBS 4.9.5RRP
A financial promotion for an overseas long-term insurer, which has no establishment in the United Kingdom, must include:(1) the full name of the overseas long-term insurer, the country where it is registered, and, if different, the country where its head office is situated;(2) a prominent statement that 'holders of policies issued by the company will not be protected by the Financial Services Compensation Scheme if the company becomes unable to meet its liabilities to them'; and(3)
COBS 4.9.6RRP
A financial promotion for an overseas long-term insurer which is authorised to carry on long-term insurance business in any country or territory listed in paragraph (c) of the Glossary definition of overseas long-term insurer must also include:(1) the full name of any trustee of property of any description which is retained by the overseas long-term insurer in respect of the promoted contracts;(2) an indication whether the investment of such property (or any part of it) is managed
COBS 4.9.7RRP
If a financial promotion relates to a life policy with an overseas long-term insurer but does not name the overseas long-term insurer by giving its full name or its business name:(1) it must include the following prominent statement: "This financial promotion relates to an insurance company which does not, and is not authorised to, carry on in any part of the United Kingdom the class of insurance business to which this promotion relates. This means that the management and solvency
COBS 4.8.1RRP
This section applies to a firm in relation to the communication of 3a financial promotion that is not in writing, but it does not apply:(1) to the extent that the financial promotion is an excluded communication;(2) if the financial promotion is image advertising;(3) if the financial promotion is a non-retail communication;1(4) [deleted]22(5) to the extent that the financial promotion relates to a pure protection contract that is a long-term care insurance contract.1
COBS 4.8.2RRP
A firm must not make a cold call unless:(1) the recipient has an established existing client relationship with the firm and the relationship is such that the recipient envisages receiving cold calls; or(2) the cold call relates to a generally marketable packaged product which is not:(a) a higher volatility fund; or(b) a life policy with a link (including a potential link) to a higher volatility fund; or(3) the cold call relates to a controlled activity to be carried on by an authorised
COBS 4.8.3RRP
A firm must not communicate a solicited or unsolicited financial promotion that is not in writing, to a client3 outside the firm's premises, unless the personcommunicating it:(1) only does so at an appropriate time of the day;(2) identifies himself and the firm he represents at the outset and makes clear the purpose of the communication;(3) clarifies if the client would like to continue with or terminate the communication, and terminates the communication at any time that the
COBS 15.3.1RRP
If a consumer exercises his right to cancel he must, before the expiry of the relevant deadline, notify this following the practical instructions given to him. The deadline shall be deemed to have been observed if the notification, if in a durable medium available and accessible to the recipient, is dispatched before the deadline expires. [Note: article 6 (6) of the Distance Marketing Directive]
COBS 15.3.2RRP
A consumer need not give any reason for exercising his right to cancel. [Note: article 6(1) of the Distance Marketing Directive]
COBS 15.3.3GRP
The firm should accept any indication that the consumer wishes to cancel as long as it satisfies the conditions for notification. In the event of any dispute, unless there is clear written evidence to the contrary, the firm should treat the date cited by the consumer as the date when the notification was dispatched.
COBS 15.3.4RRP
The firm must make adequate records concerning the exercise of a right to cancel or withdraw and retain them:(1) indefinitely in relation to a pension transfer, pension opt-out or FSAVC;(2) for at least five years in relation to a life policy, pension contract, personal pension scheme or stakeholder pension scheme; and(3) for at least three years in any other case.
COBS 10.5.1GRP
A service should be considered to be provided at the initiative of a client (see COBS 10.4.1 R (1)(a)1) unless the client demands it in response to a personalised communication from or on behalf of the firm to that particular client which contains an invitation or is intended to influence the client in respect of a specific financial instrument or specific transaction. [Note: recital 30 to MiFID]
COBS 10.5.2GRP
A service can be considered to be provided at the initiative of a client notwithstanding that the client demands it on the basis of any communication containing a promotion or offer of financial instruments made by any means that by its very nature is general and addressed to the public or a larger group or category of clients. [Note: recital 30 to MiFID]
COBS 10.5.3GRP
(1) Communications to the world at large, such as those in newspapers or on billboards, are likely to be by their very nature general and therefore not personalised communications.(2) Communications addressed to a client (such as, for example, an email, a telephone call or a letter), may or may not be personalised depending on the content.(3) A communication is not personalised solely because it contains the name and address of the client or because a mailing list has been filtered.(4)
COBS 10.5.5GRP
The circumstances in which valuation systems will be independent of the issuer (see COBS 10.4.1 R (3)(b)) include where they are overseen by a depositary that is regulated as a provider of depositary services in a EEA State. [Note: recital 61 to the MiFID implementing Directive]
COBS 12.3.1RRP
This section applies to a firm that produces or disseminates non-independent research. [Note: article 24(2) of the MiFID implementing Directive]
COBS 12.3.2RRP
A firm which produces or disseminates non-independent research must ensure that it:(1) is clearly identified as a marketing communication; and(2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it:(a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and(b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
COBS 12.3.3RRP
The financial promotion rules apply to non-independent research as though it were a marketing communication. [Note: article 24(2) of the MiFID implementing Directive]
COBS 12.3.4GRP
In accordance with SYSC 10, a firm will be expected to take reasonable steps to identify and manage conflicts of interest which may arise in the production of non-independent research. Situations where conflicts of interest can arise include:(1) relevant persons trading in financial instruments that are the subject of non-independent research which they know the firm has published or intends to publish before clients have had a reasonable opportunity to act on it (other than when
COBS 3.1.2GRP
This chapter relates to parts of the Handbook whose application depends on whether a person is a client, a retail client, a professional client or an eligible counterparty. However, it does not apply to the extent that another part of the Handbook provides for a different approach to client categorisation. For example, a separate approach to client categorisation is set out in the definition of a retail client for a firm that gives basic advice2.
COBS 3.1.3RRP
The sections in this chapter on general notifications (COBS 3.3) and policies, procedures and records (COBS 3.8) do not apply in relation to a firm that is neither:(1) conducting designated investment business; nor(2) in the case of MiFID or equivalent third country business providing an ancillary service that does not constitute designated investment business.
COBS 3.1.4RRP
If a firm conducts business for a client involving both:(1) MiFID or equivalent third country business; and(2) other regulated activities subject to this chapter;it must categorise that client for such business in accordance with the provisions in this chapter that apply to MiFID or equivalent third country business.
COBS 3.1.5GRP
(1) For example, the requirement concerning mixed business will apply if a MiFID investment firm advises a client on whether to invest in a scheme or a life policy. This is because the former is within the scope of MiFID and the latter is not. In such a case, the MiFIDclient categorisation requirements prevail.(2) The requirement does not apply where the MiFID or equivalent third country business is provided separately from the other regulated activities. Where this is the case,
COBS 10.1.1RRP
1This chapter applies to a firm which provides investment services in the course of MiFID or equivalent third country business other than making a personal recommendation and managing investments.
COBS 10.1.2RRP
This chapter applies to a firm which arranges or deals in relation to a non-readily realisable security,2derivative or a warrant with or for a retail client and the firm is aware, or ought reasonably to be aware, that the application or order is in response to a direct offer financial promotion.
COBS 10.1.3RRP
This chapter applies to a firm which assesses appropriateness on behalf of another MiFID investment firm so that the other firm may rely on the assessment under COBS 2.4.4 R (Reliance on other investment firms: MiFID and equivalent business).
COBS 10.1.4GRP
A firm that is carrying on a regulated activity on a non-advised basis, whether or not the rules in this chapter apply to its activities, should also consider whether other rules in COBS apply. For example, a firm carrying on insurance mediation activity in relation to a life policy that does not involve the provision of advice, should have regard to COBS 7 (Insurance mediation).
COBS 15.2.1RRP

A consumer has a right to cancel any of the following contracts with a firm:

Cancellable contract

Cancellation period

Supplementary provisions

Life and pensions:

• a life policy (including a pension annuity, a pension policy or within a wrapper)

• a contract to join a personal pension scheme or a stakeholder pension scheme

• a pension contract

• a contract for a pension transfer

• a contract to vary an existing personal pension scheme or stakeholder pension scheme by exercising, for the first time, an option to make income withdrawals

,

30 calendar days

For a life policy effected when opening or transferring a wrapper, the 30 calendar day right to cancel applies to the entire arrangement

For a contract to buy a unit in a regulated collective investment scheme within a pension wrapper, the cancellation right for 'non-life/pensions (advised but not at a distance)' below may apply

Exemptions may apply (see COBS 15 Annex 1 )

Cash deposit ISAs:

• a contract for a cash deposit ISA

14 calendar days

Exemptions may apply (see COBS 15 Annex 1 )

Non-life/pensions (advised but not at a distance): a non-distance contract ...

• to buy a unit in a regulated collective investment scheme (including within a wrapper or pension wrapper)

• to open or transfer a child trust fund (CTF)

• to open or transfer an ISA

• for an Enterprise Investment Scheme

2

14 calendar days

These rights arise only following a personal recommendation of the contract (by the firm or any other person).2

For a unit bought when opening or transferring a wrapper or pension wrapper, the 14 calendar day right to cancel applies to the entire arrangement.2

Exemptions may apply (see COBS 15 Annex 1 ).2

Non-life/pensions (at a distance): a distance contract, relating to ...

accepting deposits

designated investment business

issuing electronic money3

14 calendar days

Exemptions may apply (see COBS 15 Annex 1 )

[Note: article35 of the Consolidated Life Directive, article 6(1) of the Distance Marketing Directive]

COBS 15.2.2GRP
(1) If the same transaction attracts more than one right to cancel, the firm should apply the longest cancellation period applicable.(2) A firm may provide longer or additional cancellation rights voluntarily, but if it does these should be on terms at least as favourable to the consumer as those in this chapter, unless the differences are clearly explained.(3) If the right to cancel applies to a wrapper or pension wrapper and underlying investments, the firm may give the consumer
COBS 15.2.3RRP
The cancellation period begins:(1) either from the day of the conclusion of the contract, except in respect of contracts relating to life policies where the time limit will begin from the time when the consumer is informed that the contract has been concluded; or(2) from the day on which the consumer receives the contractual terms and conditions and any other pre-contractual information required under this sourcebook, if that is later than the date referred to above. [Note: article35
COBS 15.2.4GRP
If a firm does not give a consumer the required information about the right to cancel and other matters, the contract remains cancellable and the consumer will not be liable for any shortfall.
COBS 15.2.5RRP
(1) The firm must disclose to the consumer:(a) in good time before or, if that is not possible, immediately after the consumer is bound by a contract that attracts a right to cancel or withdraw; and(b) in a durable medium;the existence of the right to cancel or withdraw, its duration and the conditions for exercising it including information on the amount which the consumer may be required to pay, the consequences of not exercising it and practical instructions for exercising
COBS 18.11.1RRP
1COBS applies to an authorised professional firm, except that its application in relation to non-mainstream regulated activities and financial promotion is modified as set out below.
COBS 18.11.2RRP
COBS does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, except that:(1) the fair, clear and not misleading rule applies;(2) the financial promotion rules apply as modified below;(3) COBS 7 (Insurance mediation) applies but only if the designated professional body of the firm does not have rules approved by the FCA under section 332(5) of the Act that implement articles 12 and 13 of the Insurance Mediation Directive and that
COBS 18.11.3RRP
The financial promotion rules do not apply to an authorised professional firm in relation to the communication of a financial promotion if:(1) the firm's main business is the practice of its profession (see IPRU(INV) 2.1.2R(3));(2) the financial promotion is made for the purposes of and incidental to the promotion or provision by the firm of its professional services or its non-mainstream regulated activities; and(3) the financial promotion is not communicated on behalf of another
COBS 18.11.4GRP
The rules on approvingfinancial promotions continue to apply.
COBS 20.3.1RRP
(1) A firm must:(a) establish and maintain the PPFM according to which its with-profits business is conducted (or, if appropriate, separate PPFM for each with-profits fund); and(b) retain a record of each version of its PPFM for five years.(2) A firm'swith-profits principles must:(a) be enduring statements of the standards it adopts in managing with-profits funds; and(b) describe the business model it uses to meet its duties to with-profits policyholders and to respond to longer-term
COBS 20.3.4RRP
A firm'sPPFM must cover the issues set out in the table in COBS 20.3.6 R.
COBS 20.3.5RRP
A firm'sPPFM must cover any matter that has, or it is reasonably foreseeable may have, a significant impact on the firm's management of with-profits funds, including but not limited to:(1) any requirements or constraints that apply as a result of previous dealings, including previous business transfer schemes; and(2) the nature and extent of any shareholder commitment to support the with-profits fund.
COBS 20.3.6RRP

Table: Issues to be covered in PPFM

Subject

Issues

(1)

Amount payable under a with-profits policy

(a)

Methods used to guide determination of the amount that is appropriate to pay individual with-profits policyholders, including:

(i)

the aims of the methods and approximations used;

(ii)

how the current methods, including any relevant historical assumptions used and any systems maintained to deliver results of particular methods, are documented; and

(iii)

the procedures for changing the current method or any assumptions or parameters relevant to a particular method.

(b)

Approach to setting bonus rates.

(c)

Approach to smoothing maturity payments and surrender payments, including:

(i)

the smoothing policy applied to each type of with-profits policy;

(ii)

the limits (if any) applied to the total cost of, or excess from, smoothing; and

(iii)

any limits applied to any changes in the level of maturity payments between one period to another.

(2)

Investment strategy

Significant aspects of the firm's investment strategy for its with-profits business or, if different, any with-profits fund, including:

(a)

the degree of matching to be maintained between assets relevant to with-profits business and liabilities to with-profits policyholders and other creditors;

(b)

the firm's approach to assets of different credit or liquidity quality and different volatility of market values;

(c)

the presence among the assets relevant to with-profits business of any assets that would not normally be traded because of their importance to the firm, and the justification for holding such assets; and

(d)

the firm's controls on using new asset or liability instruments and the nature of any approval required before new instruments are used.

(3)

Business risk

The exposure of the with-profits business to business risks (new and existing), including the firm's:

(a)

procedures for deciding if the with-profits business may undertake a particular business risk;

(b)

arrangements for reviewing and setting a limit on the scale of such risks; and

(c)

procedures for reflecting the profits or losses of such business risks in the amounts payable under with-profits policies.

(4)

Charges and expenses

(a)

The way in which the firm applies charges and apportions expenses to its with-profits business, including, if material, any interaction with connected firms.

(b)

The cost apportionment principles that will determine which costs are, or may be, charged to a with-profits fund and which costs are, or may be, charged to the other parts of its business of its shareholders.

(5)

Management of inherited estate

Management of any inherited estate and the uses to which the firm may put that inherited estate.

(6)

Volumes of new business and arrangements on stopping taking new business

If a firm'swith-profits fund is accepting new with-profits business, its practice for review of the limits on the quantity and type of new business and the actions that the firm would take if it ceased to take on new business of any significant amount.

(7)

Equity between the with-profits fund and any shareholders

The way in which the interests of with-profits policyholders are, or may be, affected by the interests of any shareholders of the firm.

COBS 20.3.7GRP
The table in COBS 20.3.8 G sets out guidance on how various information relevant to some of the issues covered in a firm'sPPFM (COBS 20.3.6 R) might be split between with-profits principles and with-profits practices. This is an example of the matters a firm should address in its with-profits principles and with-profits practices and is not exhaustive. A firm should consider carefully the scope and content of its PPFM as appropriate.
COBS 20.3.8GRP

Table: Guidance on with-profits principles and practices

Reference to PPFM issues (COBS 20.3.6R)

With-profits principles

With-profits practices

(1) Amount payable under a with-profits policy

General

(a) Circumstances under which any historical assumptions or parameters, relevant to methods used to determine the amount payable, may be changed;

General

(e) For each major class of with-profits policy, methods establishing the main assumptions or parameters that decide the output of methods that determine the amount payable;

(f) Degree of approximation allowed when assumptions or parameters are applied across generations of with-profits policyholders or across different types or classes of with-profits policies;

(g) Formality with which the methods, parameters or assumptions used are documented;

(h) Target range, or target ranges, that have been set for maturity payments;

(i) Factors likely to be regarded as relevant to address policyholders' interests or security when determining excess surplus; and

Investment return, expenses or charges and tax

(j) How investment return, expenses or charges and tax are brought into account and how the impact of those items is determined on the amount payable. In particular:

  • any distinctions made in recognising the investment return from a subset of the total assets of a with-profits fund;
  • whether expenses are apportioned between all the policies in a with-profits fund or apportioned in some other way;
  • the relationship between the liability to tax attributed to a with-profits fund and the tax that the firm imputes to determine the amount payable;
  • impact on the amount payable of any attributed liability to tax of a with-profits fund as a result of the firm making a transfer to shareholders; and
  • how any other items are brought into account.

Bonus rates

(b) General aims in setting bonus rates and the constraints to which the firm may be subject in changing economic circumstances;

(c) How the range of with-profits policies or generations of with-profits policies over which the firm believes a single bonus rate would be appropriate is determined and the circumstances under which it believes a new bonus series would be necessary; and

Bonus rates

(k) Current approach to setting bonus rates, including the weight given to recent economic experience. For final bonus rates, the description should include any distinctions made between with-profits policies that remain in force until contractual dates, or dates on which no market value reduction applies (for example, maturity or retirement dates) and policies that are surrendered or transferred at other dates;

(l) Frequency at which bonus rates are re-set or expected to be re-set and the circumstances under which changes in the economic environment would cause the time between re-setting to change;

(m) Maximum amount by which annual bonuses would alter if annual bonus rates were reset;

(n) Approach to setting any interim bonus rates before the next declaration of annual bonus rates;

(o) Relationship or interaction between final bonus rates and any market value reductions, if both can apply at the same time;

(p) How final bonus rates influence the value of with-profits policies that have formulaic surrender or transfer bases (for example, older conventional policies rather than unitised policies); and

Smoothing

(d) Statement as to whether smoothing is intended to be neutral over time.

Smoothing

(q) Any differences in approach for:

(2) Investment strategy

(a) How the types, classes or mix of assets are determined; and

(b) Strategy in respect of derivatives and other instruments.

(c) Whether and to what extent there is hypothecation of assets;

(d) Period between formal reviews of investment strategy;

(e) Approach to investment in different asset classes, and assets of different credit or liquidity quality, including assets not normally traded; and

(f) Details of any external support available to the with-profits fund and how this affects the investment strategy.

(3) Business risk

(a) Where a firm explicitly excludes business risk from a class of with-profits policies but there are residual risks, clarification where these risks such as guarantee and smoothing costs are borne; and

(b) Define where compensation costs from a business risk would be borne.

(c) Current limits which apply to the taking on of business risk; and

(d) Whether and to what extent particular generations of with-profits policyholders or classes of with-profits policies bear or might bear particular business risks, including for example, crystallised or contingent guarantees to other classes of policyholders or whether the out-turn from all business risk is pooled across all with-profits policies.

(4) Charges and expenses

(a) Factors that would drive any change to the basis on which the firm applies charges to or apportions its actual expenses amongst with-profits policies, or exercises any discretion to apply charges to particular with-profits policies.

(b) Charges currently applied and the expenses currently apportioned to major classes of with-profits policies;

(c) Relationship between the firm's actual charges and expenses, as applied to determine the amounts payable under with-profits policies, and the charges and expenses borne by the with-profits fund;

(d) Circumstances under which expenses will be charged to the with-profits fund at an amount other than cost, and the reasons why; and

(e) Interval for reviewing any arrangements for out-sourced services, including those provided by connected parties, giving a broad indication of the terms for termination.

(5) Management of inherited estate

(a) Preferred size or scale of inherited estate and implications for the values of the with profits policies; and

(b) Any existing division of the inherited estate between with-profits funds; and

(c) Any constraints on the freedom to deal with the inherited estate as a result of previous dealings.

(d) How the inherited estate is used, for example, in meeting costs;

(e) Whether the investment strategy for the inherited estate differs from the rest of the with-profits fund; and

(f) Any current guidelines in place as to the size or scale of the inherited estate or as to how and over what time period the inherited estate would be managed, if it becomes too large or too small.

(6) Equity between the with-profits fund and any shareholders

(a) Arrangements for, and any changes to, profit sharing between shareholders and with-profits policyholders.

(b) Current basis on which profit between with-profits policyholders and shareholders is divided; and

(c) Whether the pricing of any policies being written, and particular policies open to new business, appear to be significantly and systematically reducing the inherited estate if the shareholder transfer is taken into account.

COBS 13.2.1GRP
1When a firm prepares documents or information in accordance with this chapter, the firm should consider the rules on providing product information (COBS 14). Those rules require a firm to provide the product information in a durable medium or via a website that meets the website conditions (if the website is not a durable medium). [Note: article 29(4) of the MiFID implementing Directive]
COBS 13.2.1AGRP
3When a firm prepares documents or information for a life policy, personal pension or stakeholder pension in accordance with this chapter, the firm should: (1) consider the rules on communicating with clients (COBS 4). Those rules require a firm to ensure that a communication is fair, clear and not misleading. In particular, a firm should:(a) take into account its target market's understanding of financial services when preparing documents and information;(b) present information
COBS 13.2.2RRP
A key features document and a key features illustration2must also:(1) (if it is a key features document) 2be produced and presented to at least the same quality and standard as the sales or marketing material used to promote the relevant product;(2) (if it is a key features document) 2display the firm's brand at least as prominently as any other;(3) (if it is a key features document or a key features illustration which does not form an integral part of the key features document)
COBS 13.2.3GRP
The Consolidated Life Directive information can be included in a key features document, a key features illustration2or any other document.
COBS 13.2.4RRP
The documents and information prepared in accordance with the rules in this chapter must not include anything that might reasonably cause a retail client to be mistaken about the identity of the firm that produced, or will produce, the product.
COBS 9.3.1GRP
(1) A transaction may be unsuitable for a client because of the risks of the designated investments involved, the type of transaction, the characteristics of the order or the frequency of the trading.(2) In the case of managing investments, a transaction might also be unsuitable if it would result in an unsuitable portfolio. [Note: recital 57 to the MiFID implementing Directive]
COBS 9.3.2GRP
(1) A series of transactions that are each suitable when viewed in isolation may be unsuitable if the recommendation or the decisions to trade are made with a frequency that is not in the best interests of the client.(2) A firm should have regard to the client's agreed investment strategy in determining the frequency of transactions. This would include, for example, the need to switch a client within or between packaged products. [Note: recital 57 to the MiFID implementing Di
COBS 9.3.3GRP
When a firm is making a personal recommendation to a retail client about income withdrawals or purchase of short-term annuities, it should consider all the relevant circumstances including:(1) the client's investment objectives, need for tax-free cash and state of health;(2) current and future income requirements, existing pension assets and the relative importance of the plan, given the client’s financial circumstances;(3) the client’s attitude to risk, ensuring that any discrepancy
COBS 9.3.4GRP
When considering the suitability of a particular investment product which is linked directly or indirectly to any form of loan, mortgage or home reversion plan, a firm should take account of the suitability of the overall transaction. The firm should also have regard to any applicable suitability rules in MCOB.
COBS 9.3.5GRP
(1) 1Firms should note that section 238 of the Act and COBS 4.12.3 R set out restrictions on the promotion of non-mainstream pooled investments to retail clients.(2) (a) Firms should bear in mind that the provision of advice or information may involve the communication of a financial promotion (see PERG 8). In particular, making a personal recommendation that a client should enter into a non-mainstream pooled investment will generally amount to a financial promotion of that investment
COBS 13.1.1RRP
1A firm must prepare:2(1) a key features document for each packaged product, cash-deposit ISA and cash-deposit CTF it produces2; and2(2) a key features illustration for each packaged product it produces;2in good time before 2those documents have to be provided.
COBS 13.1.2RRP
A firm must prepare the Consolidated Life Directive information for each life policy it effects, in good time before that information has to be provided.in good time before that information has to be provided. [Note: article 36(1) of, and Annex III to, the Consolidated Life Directive]
COBS 13.1.3RRP
A firm is not required to prepare:(1) a document, if another firm has agreed to prepare it; or(2) a key features document for:(a) a unit in a UCITS scheme or3 a simplified prospectus scheme; or(b) a unit in an EEA UCITS scheme which is a recognised scheme; or33(c) a unit in a key features scheme, if it prepares a simplified prospectus, or the information appears with due prominence in another document, instead; or(d) a stakeholder pension scheme, or personal pension scheme that
COBS 13.1.4RRP
A single document prepared for more than one key features scheme or3simplified prospectus scheme may combine more than one key features document, simplified prospectus or EEA simplified prospectus or any combination of them, if the schemes are offered through a platform service4 and the document clearly describes the difference between the schemes.34
COBS 2.2.-1RRP
(1) 1This section applies in relation to MiFID or equivalent third country business.(2) This section applies in relation to other designated investment business carried on for a retail client: (a) in relation to a derivative, a warrant, a non-readily realisable security, a P2P agreement,4 or stock lending activity, but as regards the matters in COBS 2.2.1R (1)(b) only; and (b) in relation to a retail investment product2, but as regards the matters in COBS 2.2.1R (1)(a) and (d)
COBS 2.2.1RRP
(1) A firm must provide appropriate information in a comprehensible form to a client about:(a) the firm and its services;(b) designated investments and proposed investment strategies; including appropriate guidance on and warnings of the risks associated with investments in those designated investments or in respect of particular investment strategies;(c) execution venues; and(d) costs and associated charges;so that the client is reasonably able to understand the nature and risks
COBS 2.2.2GRP
A firm to which the rule on providing appropriate information (COBS 2.2.1 R) applies should also consider the rules on disclosing information about a firm, its services, costs and associated charges and designated investments in COBS 6.1 and COBS 14.
COBS 2.2.3RRP
3A firm, other than a venture capital firm, which is managing investments for a professional client that is not a natural person must disclose clearly on its website, or if it does not have a website in another accessible form:(1) the nature of its commitment to the Financial Reporting Council’s Stewardship Code; or(2) where it does not commit to the Code, its alternative investment strategy.
COBS 20.1.1RRP
1This chapter applies to a firm carrying on with-profits business, except to the extent modified in the following rules.
COBS 20.1.2RRP
(1) The section on the process for reattribution (COBS 20.2.42 R to COBS 20.2.52 G):(a) applies to a firm that is proposing to make a reattribution of its inherited estate;(b) but not if, and to the extent that, it would require the firm to breach, or would prevent the firm from complying with, an order made by a court of competent jurisdiction.(2) If a firm proposes to seek an order from a court of competent jurisdiction that would allow or require it to act in a way that is
COBS 20.1.3RRP
For an EEA insurer:(1) the rules and guidance on treating with-profits policyholders fairly (COBS 20.2.1 G to COBS 20.2.41 G and COBS 20.2.53 R to COBS 20.2.60 G) apply only in so far as responsibility for the matter in question has not been reserved to the firm'sHome State regulator by an EU2 instrument;2(2) COBS 20.3 (Principles and Practices of Financial Management) does not apply;(3) the rule on providing information to with-profits policyholders who are habitually resident
COBS 20.1.4RRP
The following do not apply to a non-directive friendly society:(1) COBS 20.3 (Principles and Practices of Financial Management);3(2) COBS 20.4 (Communications with with-profits policyholders); and3(3) COBS 20.5 (With-profits governance).3
COBS 20.1.5RRP
This chapter does not apply to with-profits business that consists of effecting or carrying out Holloway sickness policies.
COBS 2.1.1RRP
(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.23[Note: article 19(1) of MiFID
COBS 2.1.2RRP
A firm must not, in any communication relating to designated investment business seek to:(1) exclude or restrict; or(2) rely on any exclusion or restriction of;any duty or liability it may have to a client under the regulatory system.
COBS 2.1.3GRP
(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
COBS 2.1.4RRP
3A full-scope UK AIFM and an incoming EEA AIFM branch must, for all AIFs it manages: (1) act honestly, fairly and with due skill care and diligence in conducting their activities;(2) act in the best interests of the AIF it manages or the investors of the AIF it manages and the integrity of the market;(3) treat all investors fairly; and(4) not allow any investor in an AIF to obtain preferential treatment, unless such preferential treatment is disclosed in the relevant AIF'sinstrument
COBS 2.1.5GRP
3Articles 16 to 29 of the AIFMD level 2 regulation provide detailed rules supplementing the relevant provisions of Article 12(1) of AIFMD.
COBS 18.3.1RRP

The provisions of COBS in the table do not apply in respect of any corporate finance business carried on by a firm which is MiFID or equivalent third country business:

COBS

Description

36.1A

Adviser charging and remuneration

36.1B

Retail investment product provider requirements relating to adviser charging and remuneration

36.2A

Describing advice services

6.3

Disclosing information about services, fees and commission - packaged products

6.4

Disclosure of charges, remuneration and commission

9.4

Suitability reports

9.6

Special rules for providing basic advice on a stakeholder product

11.6

Use of dealing commission

211.8

Recording telephone conversations and electronic communications

16.3.9

Guidance on contingent liability transaction

16.5

Quotations for surrender values

16.6

Life insurance contracts - communications to clients

16 Annex 1 R (1) 14

Information to be provided in accordance with COBS 16.2.1 R and 16.3

COBS 18.3.2GRP

The provisions of COBS in the table are unlikely to be relevant to any corporate finance business carried on by a firm which is MiFID or equivalent third country business:

COBS

Description

5

Distance communications, except in relation to distance contracts concluded with consumers

7

Insurance mediation

13

Preparing product information

14.2

Providing product information

15

Cancellation, except cancellation and withdrawal rights in relation to distance contracts concluded with consumers

17

Claims handling for long-term care insurance

18.1

Trustee firms' regime

18.2

Energy market activity and oil market activity

18.4

Stock lending activity

19

Pensions - supplementary provisions

20

With-profits

COBS 18.3.4GRP
COBS 15 (Cancellation) is likely to be of limited application to corporate finance business. Distance contracts concluded with consumers in the course of corporate finance business will be exempt from COBS 15 if the price of the financial service is dependent on fluctuations in the financial market outside the firm's control.