Related provisions for COBS 19.4.13

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COBS 3.5.1RRP
A professional client is a client that is either a per se professional client or an elective professional client. [Note: article 4(1)(10)3 of MiFID]
COBS 3.5.2RRP
Each of the following is a per se professional client unless and to the extent it is an eligible counterparty or is given a different categorisation under this chapter:(1) an entity required to be authorised or regulated to operate in the financial markets. The following list includes all authorised entities carrying out the characteristic activities of the entities mentioned, whether authorised in the UK or a third country5:(a) a credit institution;(b) an investment firm;(c)
COBS 3.5.2ARRP
[deleted]312222
COBS 3.5.3RRP
A firm may treat a client other than a local public authority or municipality3 as an elective professional client if it complies with (1) and (3) and, where applicable, (2):(1) the firm undertakes an adequate assessment of the expertise, experience and knowledge of the client that gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the client is capable of making his own investment decisions and understanding the risks involved (the
COBS 3.5.4RRP
If the client is an entity, the qualitative test should be performed in relation to the person authorised to carry out transactions on its behalf. [Note: fourth paragraph of section II.1 of annex II to MiFID]
COBS 3.5.5GRP
The fitness test applied to managers and directors of relevant firms5 is an example of the assessment of expertise and knowledge involved in the qualitative test. [Note: fourth paragraph of section II.1 of annex II to MiFID]
COBS 3.5.6RRP
Before deciding to accept a request for re-categorisation as an elective professional client a firm must take all reasonable steps to ensure that the client requesting to be treated as an elective professional client satisfies the qualitative test and, where applicable, the relevant3 quantitative test. [Note: second paragraph of section II.2 of annex II to MiFID]
COBS 3.5.7GRP
An elective professional client should not be presumed to possess market knowledge and experience comparable to a per se professional client [Note: second paragraph of section II.1 of annex II to MiFID]
COBS 3.5.8GRP
Professional clients3 are responsible for keeping the firm informed about any change that could affect their current categorisation. [Note: fourth paragraph of section II.2 of annex II to MiFID]
COBS 3.5.9RRP
(1) If a firm becomes aware that a client no longer fulfils the initial conditions that made it eligible for categorisation as an elective professional client , the firm must take the appropriate action.(2) Where the appropriate action involves re-categorising that client as a retail client, the firm must notify that client of its new categorisation. [Note: fourth paragraph of section II.2 of annex II to MiFID3]
COBS 9.2.1RRP
(1) A firm must:3(a) take reasonable steps to ensure that a personal recommendation, or a decision to trade, is suitable for its client; and3(b) ensure that any life policy proposed is consistent with the client’s insurance demands and needs.3(2) When making the personal recommendation or managing his investments, the firm must obtain the necessary information regarding the client's:(a) knowledge and experience in the investment field relevant to the specific type of designated
COBS 9.2.2RRP
(1) A firm must obtain from the client such information as is necessary for the firm to understand the essential facts about him and have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of managing:(a) meets his investment objectives;(b) is such that he is able financially to bear any related investment risks consistent with his investment
COBS 9.2.3RRP
The information regarding a client’s knowledge and experience in the investment field includes, to the extent appropriate to the nature of the client, the nature and extent of the service to be provided and the type of product or transaction envisaged, including their complexity and the risks involved, information on:(1) the types of service, transaction and designated investment with which the client is familiar;(2) the nature, volume, frequency of the client’s transactions in
COBS 9.2.4RRP
A firm must not encourage a client not to provide information for the purposes of its assessment of suitability.2
COBS 9.2.5RRP
A firm is entitled to rely on the information provided by its clients unless it is aware that the information is manifestly out of date, inaccurate or incomplete.2
COBS 9.2.6RRP
If a firm does not obtain the necessary information to assess suitability, it must not make a personal recommendation to the client or take a decision to trade for him.2
COBS 9.2.7GRP
Although a firm may not be permitted to make a personal recommendation or take a decision to trade because it does not have the necessary information, its client may still ask the firm to provide another service such as, for example, to arrange a deal or to deal as agent for the client. If this happens, the firm should ensure that it receives written confirmation of the instructions. The firm should also bear in mind the client's best interests rule and any obligation it may have
COBS 9.2.8RRP
[deleted]2
COBS 9.2.9RRP
(1) When recommending a small friendly societylife policy, a firm, for the purpose of assessing suitability, need only obtain details of the net income and expenditure of the client and his dependants.(2) A friendly societylife policy is small if the premium:(a) does not exceed £50 a year; or(b) if payable weekly, £1 a week.(3) The firm must keep for five years a record of the reasons why the recommendation is considered suitable.
COBS 4.5.1RRP
(1) Subject to (2) and (3), this section applies to a firm in relation to:(a) the provision of information in relation to its designated investment business; and(b) the communication or approval of a financial promotion;where such information or financial promotion is addressed to, or disseminated in such a way that it is likely to be received by, a retail client.(2) This section does not apply to a firm communicating in relation to its MiFID, equivalent third country or optional
COBS 4.5.2RRP
A firm must ensure that information:(1) includes the name of the firm;(2) is accurate and always gives a fair and prominent indication of any relevant risks when referencing6 any potential benefits of relevant business or a relevant investment6; (3) is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to whom it is directed, or by whom it is likely to be received;6(4) does not disguise, diminish or obscure important items,
COBS 4.5.3GRP
The name of the firm may be a trading name or shortened version of the legal name of the firm, provided the retail client can identify the firm communicating the information.
COBS 4.5.4GRP
In deciding whether, and how, to communicate information to a particular target audience, a firm should take into account the nature of the product or business, the risks involved, the client's commitment, the likely information needs of the average recipient, and the role of the information in the sales process.
COBS 4.5.5GRP
When communicating information, a firm should consider whether omission of any relevant fact will result in the6 information being insufficient, unclear, unfair or misleading. When considering whether a fact should be included in the communication or omitted from it, a firm should bear in the mind the guidance in COBS 4.2.2G to provide information which is appropriate and proportionate.7
COBS 4.5.6RRP
6If information compares relevant business, relevant investments, or persons who carry on relevant business, a firm must ensure that the comparison is meaningful and presented in a fair and balanced way
COBS 4.5.7RRP
(1) If any information refers to a particular tax treatment, a firm must ensure that it prominently states that the tax treatment depends on the individual circumstances of each client and may be subject to change in future.6(2) This rule applies in relation to a financial promotion except6 to the extent that it relates to66a pure protection contract that is a long-term care insurance contract6.
COBS 4.5.8RRP
(1) A firm must ensure that information contained in a financial promotion is consistent with any information the firm provides to a retail client in the course of carrying on designated investment business6.6(2) This rule does not apply to a financial promotion to the extent that it relates 6a pure protection contract that is a long-term care insurance contract.
COBS 4.5.9GRP
4Examples of information about relevant risks (COBS 4.5.2R) that a firm should give a retail client in relation to an innovative finance ISA include:(1) an explanation of the tax consequences if:(a) the innovative finance component is a P2P agreement that is not repaid; and (b) an operator of an electronic system in relation to lending which facilitates a P2P agreement fails;(2) the procedure for, timing and tax consequences of:(a) withdrawing a P2P agreement from the innovative
COBS 4.5.10GRP
4Operators of electronic systems in relation to lending and firms which advise on P2P agreements should also have regard to the guidance in COBS 14.3.7AG and COBS 14.3.7BG regarding the types of information they should provide to clients to explain the specific nature and risks of P2P agreements.
COBS 19.5.1RRP
This section applies to:3(1) a firm which operates a relevant scheme in which there are at least two relevant policyholders; or3(2) a firm which offers or has decided to offer a pathway investment.3
COBS 19.5.2RRP
A firm (Firm A) must establish an IGC, unless:3(1) Firm A has established a governance advisory arrangement in accordance with COBS 19.5.3R; or3(2) another firm in Firm A’s group has already established an IGC under this section, and Firm A has made arrangements with that IGC to cover a relevant scheme operated by Firm A or a pathway investment offered by Firm A.3
COBS 19.5.3RRP
(1) If a firm considers it appropriate, it may establish a governance advisory arrangement instead of an IGC, having regard to:3(a) for a relevant scheme operator, the size, complexity and nature of the relevant scheme it operates; or3(b) for a pathway firm, the size of the take up, or expected size of the take up, complexity and nature of the pathway investment.3(2) If a firm has decided to establish a governance advisory arrangement rather than an IGC, this section (other than
COBS 19.5.4GRP
(1) Firms with large or complex relevant schemes should establish an IGC. For the purposes of this section, a firm may determine whether it has large relevant schemes by reference to:(a) the number of relevant policyholders in relevant schemes; (b) the funds under management in relevant schemes; and(c) the number of employers contributing to relevant schemes.(2) Examples of features that might indicate complex schemes include: (a) schemes that are operated on multiple information
COBS 19.5.5RRP
A firm must include, as a minimum, the following requirements in its terms of reference for an IGC:(1) the IGC will act solely in the interests of:3(a) relevant policyholders and any other members or clients a firm asks the IGC to consider; or3(b) pathway investors;3(2) the IGC will assess the ongoing value for money for relevant policyholders delivered by a relevant scheme particularly, though not exclusively, through assessing the three factors in (a) to (c) below, taking into
COBS 19.5.6GRP
(1) An IGC is expected to act in the interests of relevant policyholders or pathway investors3 both individually and collectively. Where there is the potential for conflict between individual and collective interests, the IGC should manage this conflict effectively. An IGC is not expected to deal directly with complaints from individual policyholders or pathway investors3. (2) The primary focus of an IGC should be the interests of relevant policyholders or pathway investors in
COBS 19.5.7RRP
A firm must:(1) take reasonable steps to ensure that the IGC acts and continues to act in accordance with its terms of reference;(2) take reasonable steps to provide the IGC with all information reasonably requested by the IGC in good time3 for the purposes of carrying out its role;(3) provide the IGC with sufficient resources as are reasonably necessary to allow it to carry out its role independently;(4) have arrangements to ensure that the views of relevant policyholders or
COBS 19.5.8GRP
(1) A firm should consider allocating responsibility for the management of the relationship between the firm and its IGC to a person at the firm holding an FCAsignificant-influence function or designated senior management function2.(2) A firm should fund independent advice for the IGC if this is necessary and proportionate.(3) A firm should not unreasonably withhold from the IGC information that would enable the IGC to carry out its duties in the IGC’s remit of review3. (3A)
COBS 19.5.9RRP
(1) A firm must take reasonable steps to ensure that the IGC has sufficient collective expertise and experience to be able to make judgements on the matters in the IGC’s remit of review3.(2) A firm must recruit independent IGC members through an open and transparent recruitment process.(3) A firm must appoint members to the IGC so that:(a) the IGC consists of at least five members, including an independent Chair and a majority of independent members; (b) IGC members are bound
COBS 19.5.10GRP
(1) The effect of COBS 19.5.9R (3)(b) is that employees of the firm who serve on an IGC should be subject to appropriate contractual terms so that, when acting in the capacity of an IGC member, they are free to act within the terms of reference of the IGC without conflict with other terms of their employment. In particular, when acting as an IGC member, an employee will be expected to act solely in the interests of relevant policyholders or pathway investors3 and should be able
COBS 19.5.11RRP
The firm, in appointing independent IGC members, must determine whether such a member is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, that member’s judgement.
COBS 19.5.12GRP
(1) An IGC member is unlikely to be considered independent if any of the following circumstances exist:(a) the individual is an employee of the firm or of a company within the firm'sgroup or paid by them for any role other than as an IGC member, including participating in the firm's share option or performance-related pay scheme;(b) the individual has been an employee of the firm or of another company within the firm'sgroup within the five years preceding his appointment to the
COBS 4.12.3RRP
(1) 3A firm must not communicate or approve an invitation or inducement to participate in, acquire, or underwrite a non-mainstream pooled investment where that invitation or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail client. (2) The restriction in (1) is subject to COBS 4.12.4 R and does not apply to units in unregulated collective investment schemes, which are subject to a statutory restriction on promotion in section
COBS 4.12.4RRP
  1. (1)

    3The restriction in COBS 4.12.3 R does not apply if the promotion falls within an exemption in the table in (5) below in accordance with (3)13.

  2. (2)

    A firm13 may communicate an invitation or inducement to participate in an unregulated collective investment scheme without breaching the restriction on promotion in section 238 of the Act if the promotion falls within an exemption in the table in (5) below in accordance with (3)13.

  3. (3)

    A promotion falls within an exemption in the table in (5) below if13:

    1. (a)

      it is made to or directed at only those recipients whom the firm has taken reasonable steps to establish are persons in the middle column of the table; and13

    2. (b)

      where the third column of the table refers to the need for a preliminary assessment of suitability, that assessment is undertaken before the promotion is made to or directed at the recipient13.

  4. (4)

    A firm may rely on more than one exemption in relation to the same invitation or inducement.

  5. (5)

    Title of Exemption

    Promotion to:

    Promotion of a non-mainstream pooled investment which is:

    1. Replacement products and rights issues

    A person who already participates in, owns, holds rights to or interests in, a non-mainstream pooled investment that is being liquidated or wound down or which is undergoing a rights issue. [See Note 1.]

    1. A non-mainstream pooled investment which is intended by the operator or manager to absorb or take over the assets of that non-mainstream pooled investment, or which is being offered by the operator or manager of that non-mainstream pooled investment as an alternative to cash on its liquidation;

    or

    2. Securities offered by the existing non-mainstream pooled investment as part of a rights issue.

    2. Certified high net worth investors

    An individual6 who meets the requirements set out in COBS 4.12.6 R, or a person (or persons) legally empowered to make investment decisions on behalf of such individual6.

    Any non-mainstream pooled investment the firm considers is likely to be suitable for that individual6, based on a preliminary assessment of the client's profile and objectives.

    [See COBS 4.12.5G (2).]

    3. Enterprise and charitable funds

    A person who is eligible to participate or invest in an arrangement constituted under:

    (1) the Church Funds Investment Measure 1958;

    (2) section 96 5or 100 of the Charities Act 2011;

    (3) section 25 of the Charities Act (Northern Ireland) 1964;

    (4) the Regulation on European Venture Capital Funds (‘EuVECAs’) or the RVECA Regulation (‘RVECAs’)1112; or

    (5) the Regulation on European Social Entrepreneurship Funds (‘EuSEFs’) or the SEF Regulation (‘SEFs’)1112.

    Any non-mainstream pooled investment which is such an arrangement.

    4. Eligible employees

    An eligible employee, that is, a person who is:

    (1) an officer;

    (2) an employee;

    (3) a former officer or employee; or

    (4) a member of the immediate family of any of (1) - (3), of an employer which is (or is in the same group as) the firm, or which has accepted responsibility for the activities of the firm in carrying out the designated investment business in question.

    1. A non-mainstream pooled investment, the instrument constituting which:

    A. restricts the property of the non-mainstream pooled investment, apart from cash and near cash, to:

    (1) (where the employer is a company) shares in and debentures of the company or any other connected company; [See Note 2.]

    (2) (in any case), any property, provided that the non-mainstream pooled investment takes the form of:

    (i) a limited partnership, under the terms of which the employer (or connected company) will be the unlimited partner and the eligible employees will be some or all of the limited partners; or

    (ii) a trust which the firm reasonably believes not to contain any risk that any eligible employee may be liable to make any further payments (other than charges) for investment transactions earlier entered into, which the eligible employee was not aware of at the time he entered into them; and

    B. (in a case falling within A(1) above) restricts participation in the non-mainstream pooled investment to eligible employees, the employer and any connected company.

    2. Any non-mainstream pooled investment, provided that the participation of eligible employees is to facilitate their co-investment:

    (i) with one or more companies in the same group as their employer (which may include the employer); or

    (ii) with one or more clients of such a company.

    5. Members of the Society of Lloyd’s

    A person admitted to membership of the Society of Lloyd's or any person by law entitled or bound to administer his affairs.

    A scheme in the form of a limited partnership which is established for the sole purpose of underwriting insurance business at Lloyd's.

    6. Exempt persons

    An exempt person (other than a person exempted only by section 39 of the Act (Exemption of appointed representatives)) if the financial promotion relates to a regulated activity in respect of which the person is exempt from the general prohibition.

    Any non-mainstream pooled investment.

    7. Non-retail clients

    An eligible counterparty or a professional client.

    Any non-mainstream pooled investment in relation to which the client is categorised as a professional client or eligible counterparty.

    [See Note 4.]

    8. Certified sophisticated investors

    An individual6 who meets the requirements set out in COBS 4.12.7 R, including an individual who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm'sclient6.

    Any non-mainstream pooled investment.

    9. Self-certified sophisticated investors

    An individual6 who meets the requirements set out in COBS 4.12.8 R, including an individual who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm'sclient6.

    Any non-mainstream pooled investment the firm considers is likely to be suitable for that client, based on a preliminary assessment of the client's profile and objectives.

    [See COBS 4.12.5G (2)]

    10. Solicited advice

    Any person.

    Any non-mainstream pooled investment, provided the communication meets all of the following requirements:

    (a) the communication only amounts to a financial promotion because it is a personal recommendation on a non-mainstream pooled investment;

    (b) the personal recommendation is made following a specific request by that client for advice on the merits of investing in the non-mainstream pooled investment; and

    (c) the client has not previously received a financial promotion or any other communication from the firm (or from a person connected to the firm) which is intended to influence the client in relation to that non-mainstream pooled investment. [See Note 3.]

    11. Excluded communications

    Any person.

    Any non-mainstream pooled investment, provided the financial promotion is an excluded communication.[See COBS 4.12.12G, COBS 4.12.13G and COBS 4.12.13AG14.]

    12. [deleted]11

    13. US persons

    A person who is classified as a United States person for tax purposes under United States legislation or who owns a US qualified retirement plan.

    Any investment company registered and operated in the United States under the Investment Company Act 1940.

    The following Notes explain certain words and phrases used in the table above.

    Note 1

    Promotion of non-mainstream pooled investments to a category of person includes any nominee company acting for such a person.

    Note 2

    A company is 'connected' with another company if:

    • they are both in the same group; or
    • one company is entitled, either alone or with another company in the same group, to exercise or control the exercise of a majority of the voting rights attributable to the share capital, which are exercisable in all circumstances at any general meeting of the other company or of its holding company.

    Note 3

    A person is connected with a firm if it acts as an introducer or appointed representative for that firm or if it is any other person, regardless of authorisation status, who has a relevant business relationship with the firm.

    Note 4

    In deciding whether a promotion is permitted under the rules of this section or under section 238 of the Act, firms may use the client categorisation regime that applies to business other than MiFID or equivalent third country business. (This is the case even if the firm will be carrying on a MiFID activity at the same time as or following the promotion.)
COBS 4.12.5GRP
(1) 3Where a firm communicates any promotion of a non-mainstream pooled investment in the context of advice, it should have regard to and comply with its obligations under COBS 9 or 9A (as applicable)10. Firms should also be mindful of the appropriateness requirements in COBS 10 and 10A10 which apply to a wide range of non-advised services.(2) (a) The effect of COBS 4.12.4R(3)(b) is that where a13firm13 wishes to rely on exemptions 2 (certified high net worth investors) or11
COBS 4.12.6RRP
3A certified high net worth 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:“HIGH NET WORTH INVESTOR STATEMENTI make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as
COBS 4.12.7RRP
A certified sophisticated investor is an individual:(1) who has a written certificate signed within the last 36 months by a firm confirming he has been assessed by that firm as sufficiently knowledgeable to understand the risks associated with engaging in investment activity in non-mainstream pooled investments; and(2) 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:“SOPHISTICATED INVESTOR
COBS 4.12.8RRP
3A 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 following terms:“SELF-CERTIFIED SOPHISTICATED INVESTOR STATEMENTI declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:(i) I can receive promotional communications made by a person
COBS 4.12.9GRP
(1) 3A firm which wishes to rely on any of the certified high net worth investor exemptions (see Part I of the Schedule to the Promotion of Collective Investment Schemes Order, Part I of Schedule 5 to the Financial Promotions Order and COBS 4.12.6 R) should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should take reasonable steps to ascertain that the retail client does, in fact, meet the income and net assets criteria
COBS 4.12.10GRP
(1) 3A firm which is asked to or proposes to assess and certify a retail client as a certified sophisticated investor (see article 23 of the Promotion of Collective Investment Schemes Order, article 50 of the Financial Promotions Order and COBS 4.12.7 R) should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should carry out that assessment with due skill, care and diligence, having regard to the generally complex nature
COBS 4.12.11GRP
(1) 3A firm which wishes to rely on any of the self-certified sophisticated investor exemptions (see Part II of the Schedule to the Promotion of Collective Investment Schemes Order, Part II of Schedule 5 to the Financial Promotions Order and COBS 4.12.8 R) should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should consider whether the promotion of the non-mainstream pooled investment is in the interests of the client
COBS 4.12.12GRP
(1) 3A firm which wishes to rely on one of the one-off promotion exemptions provided by the Promotion of Collective Investment Schemes or the Financial Promotion Order to promote a non-mainstream pooled investment to a retail client should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should consider whether the promotion of the non-mainstream pooled investment is in the interests of the client and whether it is fair
COBS 4.12.13GRP
(1) 3A firm which wishes to rely on the excluded communications exemption in COBS 4.12.4R (5) to promote units in a qualified investor scheme to a retail client should have regard to its duties under the Principles and the client's best interests rule. (2) As explained in COLL 8.1, qualified investor schemes are intended only for professional clients and retail clients who are sophisticated investors. Firms should note that, in the FCA's view, promotion of units in a qualified
COBS 4.12.14GRP
7In this section: (1) any requirement that a document is signed may be satisfied by an electronic signature or electronic evidence of assent; and(2) any references to writing should be construed in accordance with GEN 2.2.14R and its related guidance provisions.
COBS 18.6.1RRP
1This section applies to a firm when it carries on Lloyd's market activities.
COBS 18.6.2RRP
Only COBS 3 (Client categorisation) and the financial promotion rules apply when a firm is carrying out Lloyd's market activities.
COBS 18.6.3GRP
Firms are reminded that syndicate business plans may be used in ways that bring them within the definition of a financial promotion.
COBS 18.6.4RRP
When a firm is carrying on Lloyd's market activities, any reference in COBS to the term:(1) designated investment is to be taken to include the following specified investments:(a) the underwriting capacity of a Lloyd's syndicate;(b) membership of a Lloyd's syndicate; and (c) rights to or interests in the specified investments in (a) or (b);(2) designated investment business is to be taken to include the following regulated activities:(a) advising on syndicate participation at
COBS 18.6.5GRP
Whilst COBS has limited application to Lloyd's market activities, firms conducting Lloyd's market activities are reminded that they are required to comply with the Principles.
COBS 13.6.1RRP
1A firm that agrees to facilitate3 the payment of an adviser charge or consultancy charge, or an increase in such a charge, from a new or3 in-force packaged product, must prepare sufficient information for the retail client to be able to understand the likely effect of that facilitation, in good time before it takes effect2.2
COBS 18.2.1RRP

The provisions of COBS in the table do not apply in relation to any energy market activity or oil market activity 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

COBS 6.2B5

3

Describing advice services

4

4

6.4

Disclosure of charges, remuneration and commission

9.4

Suitability reports

9.6

Special rules for providing basic advice on a stakeholder product

5

5

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 18.2.2GRP

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

COBS

Description

5

Distance communications

7

Insurance distribution6

13

Preparing product information

14.2

Providing product information to clients

15

Cancellation

17

Claims handling for long-term care insurance

18.1

Trustee firms' regime

18.3

Corporate finance business

18.4

Stock lending activity

19

Pensions - supplementary provisions

20

With-profits
COBS 18.2.7RRP
1The duty to provide best execution does not apply where:(1) the firm has agreed with a professional client that it does not owe a duty of best execution to him; or(2) the firm relies on another person to whom it passes a customer order for execution to provide best execution, but only if it has taken reasonable care to ensure that he will do so.
COBS 18.2.8RRP
1To provide best execution, a firm must:(1) take reasonable care to ascertain the price which is the best available for the customer order in the relevant market at the time for transactions of the kind and size concerned; and (2) execute the customer order at a price which is no less advantageous to the customer, unless the firm has taken reasonable steps to ensure that it would be in the customer's best interests not to do so.
COBS 18.2.9ERP
(1) 1In order to take reasonable care to ascertain the price which is the best available, a firm:(a) should disregard any charges and commission made by it or its agents that are disclosed to the customer under COBS 6.1.9 R (Information about costs and associated charges);(b) need not have access to competing exchanges, or to all, or a minimum number of, available price sources; but if a firm can access prices displayed by different exchanges and trading platforms and make a direct
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 11.7.1RRP
A firm that conducts designated investment business must establish, implement and maintain adequate arrangements aimed at preventing the following activities in the case of any relevant person who is involved in activities that may give rise to a conflict of interest, or who has access to inside information as defined in the Market Abuse Regulation3 or to other confidential information relating to clients or transactions with or for clients by virtue of an activity carried out
COBS 11.7.2RRP
For the purposes of this section, the relevant provisions are:(1) the rules article 37(2)(a) and (b) of the MiFID Org Regulation4 on personal transactions undertaken by financial analysts copied out in COBS 12.2.21EU which apply as rules as a result of COBS 12.2.15R4; (2) article 67(3) of the MiFID Org Regulation4 on the misuse of information relating to pending client orders copied out in COBS 11.3.5AEU which applies as a rule as a result of COBS 11.3.1AR4.
COBS 11.7.2AGRP
1The requirements of this section are without prejudice to the prohibition under article 14(c)3 of the Market Abuse Regulation3.
COBS 11.7.3GRP
For the purposes of COBS 11.7.1R (1)(c), any other obligation of the firm under the UK provisions which implemented5MiFID refers to a firm's obligations under the regulatory system that are not owed to a customer5.
COBS 11.7.4RRP
The arrangements required under this section must in particular be designed to ensure that:(1) each relevant person covered by this section is aware of the restrictions on personal transactions, and of the measures established by the firm in connection with personal transactions and disclosure, in accordance with this section;(2) the firm:(a) is informed promptly of any personal transaction entered into by a relevant person, either by notification of that transaction or by other
COBS 11.7.5RRP
This section does not apply to the following kinds of personal transaction:(1) personal transactions effected under a discretionary portfolio management service where there is no prior communication in connection with the transaction between the portfolio manager and the relevant person or other person for whose account the transaction is executed;(2) personal transactions in units or shares in collective undertakings that comply with the conditions necessary to enjoy the rights
COBS 11.7.6RRP
For the purposes of this section, a person who is not:(1) a director, partner or equivalent, manager or appointed representative (or, where applicable, a tied agent) of the firm; or(2) a director, partner or equivalent, or manager of any appointed representative (or where applicable, a tied agent) of the firm;will only be a relevant person to the extent that they are involved in the provision of designated investment business or collective portfolio management services.2
COBS 11.7.7RRP
Where successive personal transactions are carried out on behalf of a person in accordance with prior instructions given by that person, the obligations under this section do not apply:(1) separately to each successive transaction if those instructions remain in force and unchanged; or(2) to the termination or withdrawal of such instructions, provided that any financial instruments which had previously been acquired pursuant to the instructions are not disposed of at the same
COBS 16.4.1RRP
(1) A firm that holds clientdesignated investments or client money for a client must send that client at least once a year a statement in a durable medium of those designated investments or that client money unless:4(a) 4such a statement has been provided in a periodic statement; or(b) 4the firm: (i) 4provides the client with access to an online system, which qualifies as a durable medium, where up-to-date statements of a client’sdesignated investments or client money can be easily
COBS 16.4.2RRP
A firm must include the following information4 in a statement of client assets referred to under this section4: (1) details of all the designated investments or client money held by the firm for the client at the end of the period covered by the statement;(2) the extent to which any clientdesignated investments or client money have been the subject of securities financing transactions; and(3) the extent of any benefit that has accrued to the client by virtue of participation in
COBS 16.4.3RRP
In cases where the portfolio of a client includes the proceeds of one or more unsettled transactions, the information in a statement provided under this section may be based either on the trade date or the settlement date, provided that the same basis is applied consistently to all such information in the statement.4
COBS 16.4.4RRP
A firm which holds designated investments or client money and is managing investments for a client may include the statement under this section in the periodic statement it provides to that client.4
COBS 16.4.5GRP
1In reporting to a client in accordance with this section, a firm should consider whether to provide details of any assets loaned or charged including:(1) which investments (if any) were at the end of the relevant period loaned to any third party and which investments (if any) were at that date charged to secure borrowings made on behalf of the portfolio; and(2) the aggregate of any interest payments made and income received during the period in respect of loans or borrowings
COBS 16.4.6GRP
3Firms subject to either or both the custody chapter and the client money chapter are reminded of the reporting obligations to clients in CASS 9.2 (Prime broker’s daily report to clients) and CASS 9.5 (Reporting to clients on request).
COBS 18.1.1RRP
(1) 1This section applies to the MiFID, equivalent third country or optional exemption business4 carried on by a trustee firm.(2) It does not apply to a trustee firm when acting as:(a) a depositary; or(b)R the trustee of a personal pension scheme or stakeholder pension scheme.
COBS 18.1.2RRP

The provisions of COBS in the table do not apply to a trustee firm to which this section applies:

COBS

Description

26.1A

Adviser charging and remuneration

26.1B

Retail investment product provider requirements relating to adviser charging and remuneration

4

2

4

3

3

6.4

Disclosure of charges, remuneration and commission

4

4

9.6

Special rules for providing basic advice on a stakeholder product

16A.4.54

Guidance on contingent liability transactions

4

4

4

4

4

4
COBS 18.1.3GRP

The provisions of COBS in the table are unlikely to be relevant in relation to a trustee firm to which this section applies:

COBS

Description

5

Distance communications

13

Preparing product information

14.2

Providing product information

15

Cancellation

17

Claims handling for long-term care insurance

18.2

Energy market activity and oil market activity

18.3

Corporate finance business

18.4

Stock lending activity

19

Pensions - supplementary provisions

20

With-profits
COBS 18.1.4GRP
To the extent a rule in COBS applies to a trustee firm, that rule:(1) applies in addition to any duties or powers imposed or conferred upon a trustee by the general law; and(2) does not qualify or restrict the duties or powers that the general law imposes or confers upon a trustee; trustee firms will be under a duty to observe the provisions of their trust instrument; if its provisions conflict with any applicable rule, trustee firms will need to take advice in resolving the
COBS 18.1.5GRP
In considering and reaching decisions as to how applicable rules in COBS apply in the context of a particular trust arrangement, a trustee firm should consider the nature of that arrangement and the provisions of the relevant trust instrument.
COBS 18.1.6GRP
Where an applicable rule in COBS requires the doing of any thing in relation to a client, the trustee firm should consider who, in the context of that rule and having regard to the particular trust arrangement, is the most appropriate person to treat as its client. This might, for example, be the beneficiary, another trustee or the trust, depending on the particular circumstances.
COBS 15.4.1RRP
By exercising a right to cancel, the consumer withdraws from the contract and the contract is terminated.
COBS 15.4.2RRP
(1) This rule applies in relation to a distance contract that is not a life policy, personal pension scheme, cash deposit ISA, cash-only lifetime ISA3 or CTF.(2) When the consumer exercises their3 right to cancel they3 may be required to pay, without any undue delay, for the service actually provided by the firm in accordance with the contract. The performance of the contract may only begin after the consumer has given their3 approval. The amount payable must not:(a) exceed an
COBS 15.4.3RRP
(1) The firm may require the consumer to pay for any loss under a contract caused by market movements that the firm would reasonably incur in cancelling it. The period for calculating the loss shall end on the day on which the firm receives the notification of cancellation.(2) This rule:(a) does not apply for a distance contract or for a contract established on a regular or recurring premium or payment basis; and(b) only applies if the firm has complied with its obligations to
COBS 15.4.4RRP
The firm must, without any undue delay and no later than within 30 calendar days, return to the consumer any sums it has received from him in accordance with the contract2, except for any amount that the consumer may be required to pay under this section. This period shall begin from the day on which the firm receives the notification of cancellation.2 [Note: article 7(4) of the Distance Marketing Directive]
COBS 15.4.5RRP
The firm is entitled to receive from the consumer any sums and/or property he has received from the firm without any undue delay and no later than within 30 calendar days. This period shall begin from the day on which the consumer dispatches the notification of cancellation. [Note: article 7(5) of the Distance Marketing Directive]
COBS 15.4.6RRP
Any sums payable under this section on cancellation of a contract are owed as simple contract debts and may be set off against each other.
COBS 1.1.1RRP
1This sourcebook applies to a firm with respect to the following activities carried on from an establishment maintained by it, or its appointed representative, in the United Kingdom:(1) [deleted]33(2) designated investment business;(3) long-term insurance business in relation to life policies;and activities connected with them.
COBS 1.1.1ARRP

3This sourcebook applies7 to a firm with respect to activities7 carried on in relation to deposits7 from an establishment maintained by it, or its appointed representative, in the United Kingdom only as follows:7

6

7Section / chapter

Application in relation to deposits

(1)

Rules in this sourcebook which implemented9 articles 24, 25, 26, 28 and 30 of MiFID (and related provisions of the MiFID Delegated Directive) (see COBS 1.1.1ADG)9.

A MiFID investment firm, a third country investment firm and a MiFID optional exemption firm when selling, or advising a client in relation to, a structured deposit.

(2)

COBS 4.6 (Past, simulated past and future performance)

Communication or approval of a financial promotion relating to a structured deposit that is addressed to, or disseminated in such a way that it is likely to be received by, a retail client.

(3)

COBS 4.7 (Direct offer financial promotions)

Communication or approval of a financial promotion relating to a cash deposit ISA, cash-only lifetime ISA or cash deposit CTF that is addressed to, or disseminated in such a way that it is likely to be received by, a retail client.

(4)

COBS 4.10 (Systems and controls and approving and communicating financial promotions)

To the extent that other rules in COBS 4 apply.

(5)

COBS 13 (Preparing product information)

Producing a cash-deposit ISA, cash-only lifetime ISA or cash-deposit CTF.

(6)

COBS 14 (Providing product information to clients)

Selling, personally recommending or arranging the sale of a cash-deposit ISA, cash-only lifetime ISA or cash-deposit CTF to a retail client.

(7)

COBS 15 (Cancellation)

A cancellable contract between a consumer and a firm.
COBS 1.1.1BRRP
4COBS 4.4.3 R, COBS 5 (Distance communications), COBS 15.2 (The right to cancel), COBS 15.3 (Exercising a right to cancel), COBS 15.4 (Effects of cancellation) and COBS 15 Annex 1 (Exemptions from the right to cancel) apply to a firm with respect to the activity of issuing electronic money as set out in those provisions.
COBS 1.1.1CRRP
10In addition to the application rules in COBS as relevant, TP firms and Gibraltar-based firms carrying on business from an establishment in the United Kingdom must also comply with the provisions in:(1) COBS 16.6.7AR10 (drawdown pensions: annual statements) and COBS 16.6.8R to COBS 16.6.13G (income withdrawals – annual statements);(2) COBS 19.1010 (Drawdown, investment pathways and cash warnings).(3) COBS TP 210 paragraphs 2.8G to 2.8J (Other Transitional Provisions)
COBS 1.1.1CRRP
[deleted]95777
COBS 1.1.2RRP
The application of this sourcebook7 is modified in COBS 1 Annex 1 according to the activities of a firm (Part 1) and2 its location (Part 2)2.
COBS 1.1.3RRP
The application of this sourcebook7 is also modified in the chapters to this sourcebook for particular purposes, including those relating to the type of firm, its activities or location, and for purposes relating to connected activities.
COBS 1.1.4GRP
Guidance on the application provisions is in COBS 1 Annex 1 (Part 3).
COBS 8.1.1RRP
(1) 1This chapter applies to a firm in relation to designated investment business carried on for a retail client3. (2) [deleted]3(3) But this chapter does not apply to: (a) 3a firm in relation to its MiFID, equivalent third country or optional exemption business; or(b) 3subject to (3A),4 a firm to the extent that it is effecting contracts of insurance in relation to a life policy issued or to be issued by the firm as principal.(3A) COBS 8.1.4R and COBS 8.1.5R apply to a firm carrying
COBS 8.1.2RRP
If a firm carries on designated investment business, other than advising on investments or advising on conversion or transfer of pension benefits, 2with or for a new retail client, the firm must enter into a written basic agreement, on paper or other durable medium, with the client setting out the essential rights and obligations of the firm and the client.3
COBS 8.1.3RRP
(1) A firm must, in good time before a client3 is bound by any agreement relating to designated investment business3 or before the provision of those services, whichever is the earlier, provide that client with:(a) the terms of any such agreement; and(b) the information about the firm and its services relating to that agreement or to those services required by COBS 6.1.4 R, including information on communications, conflicts of interest and authorised status.(2) A firm must provide
COBS 8.1.4RRP
(1) A firm must establish a record that includes the document or documents agreed between it and a client which set out the rights and obligations of the parties, and the other terms on which it will provide services to the client.(2) The record must be maintained for3:(a) [deleted]3(b) unless (c) applies, at least3 the duration of the relationship with the client; or(c) in the case of a record relating to a pension transfer, pension conversion, 2pension opt-out or FSAVC, indefinitely.3[Note:
COBS 8.1.5RRP
For the purposes of this chapter, a firm may incorporate the rights and duties of the parties into an agreement by referring to other documents or legal texts.3[Note: article 30(4) of the IDD]4
COBS 8.1.6GRP
When considering its approach to client agreements, a firm should be aware of other obligations in the Handbook which may be relevant. These include the fair, clear and not misleading rule,3 the rules on disclosure of information to a client before providing services,3 the rules on distance communications (principally in COBS 2.2, 5, 6 and 13) and the provisions on record keeping (principally in SYSC 3, for insurers and managing agents, and SYSC 9, for other firms4.3
COBS 22.2.1RRP
(1) 1The requirements in this section apply to a firm when dealing in or arranging a deal in a mutual society share with or for a retail client in the United Kingdom5 where the retail client is to enter into the deal as buyer.(2) The requirements in this section do not apply if:(a) the firm has taken reasonable steps to ensure that one (or more) of the exemptions in COBS 22.2.4R applies; or(b) the deal relates to the trading of a mutual society share in the secondary market.(3)
COBS 22.2.2RRP
1The firm must give the retail client the following risk warning on paper or another durable medium and obtain confirmation in writing from the retail client that he has read it, in good time before the retail client has committed to buy the mutual society share:“The investment to which this communication relates is a share. Direct investment in shares can be high risk and is very different to investment in deposit accounts or other savings products. In particular, you should
COBS 22.2.3RRP
(1) 1The requirements in (2) and (3) must be met if:(a) the firm is not providing an investment service in the course of MiFID or equivalent third country business; and(b) the retail client is not otherwise receiving a personal recommendation4 on the mutual society share from the firm or another person.(2) The firm must give the retail client the following statement on paper or another durable medium and obtain confirmation in writing from the retail client that he or she2 has
COBS 22.2.4RRP

  1. 1Each of the exemptions listed below applies only if the retail client is of the type described for the exemption and provided any additional conditions for the exemption are met.

    2. Title

    Type of retail client

    Additional conditions

    Certified high net worth investor

    (a) An individual who meets the requirements set out in

    COBS 4.12.6R; or

    (b) a person (or persons) legally empowered to make investment decisions on behalf of an individual who meets the earnings or net asset requirements in (a) above.5

    5

    The firm must consider that the mutual society share is likely to be suitable for that individual, based on a preliminary assessment of that individual’s profile and objectives (see COBS 4.12.5G(2)).

    Certified sophisticated investor

    (a) An individual who meets the requirements set out in

    COBS 4.12.7R; or

    (b) an individual who meets the requirements for (a) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm’s client.5

    5

    Not applicable.

    Self-certified sophisticated investor

    (a) An individual who meets the requirements set out in

    COBS 4.12.8R; or

    (b) an individual who meets the requirements for (a) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm’s client.5

    5

    Not applicable.
COBS 22.2.5RRP
(1) 1For the purposes of any assessments or certifications required by the exemptions in COBS 22.2.4R, any references in COBS 4.12 provisions to non-mainstream pooled investments must be read as though they are references to mutual society shares.(2) If the firm is relying on the exemptions for certified high net worth investors, certified sophisticated investors or self-certified sophisticated investors to comply with this section, the statement the investor must sign should
COBS 22.2.6RRP
1A firm which carries on an activity which is subject to this section must comply with the following record-keeping requirements:(1) the person allocated the compliance oversight function in the firm must make a record at or near the time of the activity certifying it complies with the requirements set out in this section;(2) the making of the record required in (1) may be delegated to one or more employees of the firm who report to and are supervised by the person allocated the
COBS 22.2.7GRP
1In this section:(1) any requirement that a document is signed may be satisfied by an electronic signature or electronic evidence of assent; and(2) any references to writing should be construed in accordance with GEN 2.2.14R and its related guidance provisions.
COBS 16.2.1RRP
(1) If a firm has carried out an order in the course of its designated investment business on behalf of a client, it must:(a) promptly provide the client, in a durable medium, with the essential information concerning the execution of the order;(b) in the case of a retail client, send the client a notice in a durable medium confirming the execution of the order and such of the trade confirmation information (COBS 16 Annex 1R) 2as is applicable: (i) as soon as possible and no later
COBS 16.2.2GRP
The requirement concerning orders relating to bonds funding a mortgage loan agreement is unlikely to be relevant to products in the United Kingdom market.
COBS 16.2.3RRP
For the purposes of calculating the unit price in the trade confirmation information, where the order is executed in tranches, the firm may supply the client with information about the price of each tranche or the average price. If the average price is provided, the firm must supply the retail client with information about the price of each tranche upon request.6
COBS 16.2.3AGRP
1In determining what is essential information, a firm should consider including:(1) for transactions in a derivative:(a) the maturity, delivery or expiry date of the derivative;(b) in the case of an option, a reference to the last exercise date, whether it can be exercised before maturity and the strike price;(c) if the transaction closes out an open futures position, all essential details required in respect of each contract comprised in the open position and each contract by
COBS 16.2.4GRP
Where a firm executes an order in tranches, the firm may, where appropriate, indicate the trading time and the execution venue in a way that is consistent with this, such as, "multiple". In accordance with the client's best interests rule, a firm should provide additional information at the client's request.
COBS 16.2.5GRP
In accordance with COBS 2.4.9 R, a firm may dispatch a confirmation to an agent, other than the firm or an associate of the firm, nominated by the client in writing.
COBS 16.2.7RRP
A firm must retain a copy of any confirmation despatched to a client under this section for a period of at least three years6 from the date of despatch.6
COBS 11.4.1RRP
Unless a client expressly instructs otherwise, a firm must, in the case of a clientlimit order in respect of shares admitted to trading on a regulated market or traded on a trading venue2 which is not immediately executed under prevailing market conditions, take measures to facilitate the earliest possible execution of that order by making public immediately that clientlimit order in a manner which is easily accessible to other market participants. [Note: article 28(2)2 of Mi
COBS 11.4.2GRP
In respect of transactions executed between eligible counterparties, the obligation to disclose clientlimit orders should only apply where the counterparty is explicitly sending a limit order to a firm for its execution. [Note: recital 1052 to MiFID]
COBS 11.4.3EURP
[deleted]2
COBS 11.4.4GRP
[deleted]21
COBS 11.4.5RRP
The obligation in COBS 11.4.1R2 to make public a limit order is disapplied in respect of transactions that are2 large in scale compared with normal market as determined under article 4 of MiFIR2. [Note: article 28(2)2 of MiFID]
COBS 11.4.6GRP
[deleted]2