Related provisions for MCOB 1.2.9B

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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 3.5.6RRP
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 3.7.1RRP
A firm must allow a professional client or an eligible counterparty to request re-categorisation as a client that benefits from a higher degree of protection. [Note: second paragraph of article 30(2)1 of, and the second paragraph of section I of annex II to, MiFID1]
COBS 3.7.2GRP
It is the responsibility of a professional client or eligible counterparty to ask for a higher level of protection when it deems it is unable to properly assess or manage the risks involved. [Note: third paragraph of section I and fourth paragraph of section II.2 of annex II to MiFID1]
COBS 3.7.3RRP
[deleted]1
COBS 3.7.5RRP
(1) If, in relation to MiFID or equivalent third country business a per se professional client1 requests treatment as a retail client, the client will be classified as a retail client if it enters into a written agreement with the firm to the effect that it will not be treated as a professional client or eligible counterparty for the purposes of the applicable conduct of business regime.(2) This agreement must specify the scope of the re-categorisation, such as whether it applies
DISP 1.1A.1RRP
1This section: (1) applies to the MiFID complaints of a MiFID investment firm and does not apply to complaints that are not MiFID complaints; (2) also applies to the MiFID complaints of a third country investment firm received from a retail client or an elective professional client but does not apply to complaints that are not MiFID complaints; and (3) applies certain other provisions in DISP 1 to such complaints.
DISP 1.1A.5GRP
In contrast to the other provisions in DISP 1 which generally apply to complaints from eligible complainants, subject to DISP 1.1A.6R: (1) the obligations in this section that apply to the MiFID complaints of MiFID investment firms, apply to complaints from “clients” as defined in the UK provisions which implemented2MiFID (which includes retail clients, professional clients and (in relation to eligible counterparty business) eligible counterparties; and(2) the obligations in
DISP 1.1A.6RRP
(1) Only the provisions in this section marked “UK”2 and DISP 1.1A.39R apply to a MiFID complaint received from a retail client, professional client or an eligible counterparty that is not an eligible complainant.(2) But where the retail client, professional client or eligible counterparty is also an eligible complainant, all of the provisions in this section apply.
DISP 1.1A.7RRP

The table below sets out how DISP 1.1A applies to MiFID complaints relating to:

  1. (1)

    the activities of a MiFID investment firm carried on from an establishment in the United Kingdom; and2

  2. (2)

    the equivalent business of a third country investment firm where the complaint is received from a retail client or an elective professional client.2

  3. (3)

    [deleted]2

  4. (4)

    [deleted]2

Table: Application of DISP 1.1A to the MiFID business of firms in the UK, and the equivalent business of third country investment firms2

(1) Provision

(2) Provision applies to the MiFID business of a firm carried on from an establishment in the UK?

(3) Provision applies to the equivalent third country business of a third country investment firm where the complaint is received from a retail client or an elective professional client?

2

2

1.1A.10UK2

Yes

Yes

2

2

1.1A.11R

Yes

Yes

2

2

1.1A.12UK2

Yes

Yes

2

2

1.1A.13UK2

Yes

Yes

2

2

1.1A.14G

Yes

Yes

2

2

1.1A.15G

Yes

Yes

2

2

1.1A.16UK2

Yes

Yes

2

2

1.1A.17UK2

Yes

Yes

2

2

1.1A.18UK2

Yes

Yes

2

2

1.1A.19G

Yes

Yes

2

2

1.1A.20R

Yes

Yes

2

2

1.1A.21G

Yes

Yes

2

2

1.1A.22R

Yes

Yes

2

2

1.1A.23R

Yes

Yes

2

2

1.1A.24UK2

Yes

Yes

2

2

1.1A.25UK2

Yes

Yes

2

2

1.1A.26R

Yes

Yes

2

2

1.1A.27G

Yes

Yes

2

2

1.1A.28R

Yes

Yes

2

2

1.1A.29UK2

Yes

Yes

2

2

1.1A.30UK2

Yes

Yes

2

2

1.1A.31R

Yes

Yes

2

2

1.1A.32G

Yes

Yes

2

2

1.1A.33G

Yes

Yes

2

2

1.1A.34G

Yes

Yes

2

2

1.1A.35R

Yes

Yes

2

2

1.1A.36R

Yes

Yes

2

2

1.1A.37UK2

Yes

Yes

2

2

1.1A.38UK2

Yes

Yes

2

2

1.1A.39R

Yes

Yes

2

2

1.1A.40R

Yes

Yes

2

2

1.1A.41G

Yes

Yes

2

2

1.1A.42R

No

No

2

2

Notes

(1) [deleted]2

(2) This table should be read in conjunction with the rules and guidance in DISP 1.1A.1R to DISP 1.1A.6R.

DISP 1.1A.39RRP
The complaints reporting rules also apply to the MiFID complaints of a firm, except that the relevant parts of the report which the firm must provide to the FCA under DISP 1.10.1R must, in relation to MiFID complaints, include information about such complaints received from retail clients, professional clients, and (where relevant) eligible counterparties rather than eligible complainants.
COBS 3.3.1RRP
[deleted]21
COBS 3.3.2GRP
This chapter requires a firm to allow a client to request re-categorisation as a client that benefits from a higher degree of protection (see COBS 3.7.1 R). A firm must therefore notify a client that is categorised as a professional client or an eligible counterparty of its right to request a different categorisation whether or not the firm will agree to such requests. However, a firm need only notify a client of a right to request a different categorisation involving a lower
COBS 3.4.1RRP
A retail client is a client who is not a professional client or an eligible counterparty. [Note: article 4(1)(11)1 of MiFID]
COBS 3.4.2RRP
If a firm provides services relating to a CTF (except for a personal recommendation relating to a contribution to a CTF), the firm'sclient is a retail client even if it would otherwise be categorised as a professional client or an eligible counterparty under this chapter.
MCOB 4.8A.2GRP
Subject to certain limited exceptions, where the rules in MCOB 4.8A apply to a firm they restrict execution-only sales (which term is defined to include variations of existing contracts) to cases where:(1) there is no spoken or other interactive dialogue between the firm and the customer during the sale; or(2) if there is spoken or other interactive dialogue between the firm and the customer during the sale:(a) the customer is a high net worth mortgage customer; or(b) the customer
MCOB 4.8A.9RRP
(1) MCOB 4.8A.7 R does not apply where the customer is a high net worth mortgage customer.(2) MCOB 4.8A.7R (3) does not apply where the customer is a professional customer or the loan is solely for a business purpose.
MCOB 4.8A.13GRP
(1) If a firm wishes to be able to apply the exception in MCOB 4.8A.9 R for a high net worth mortgage customer, it should first consider the provision in MCOB 1.2.9C R (Requirement for evidence before treating a loan as being solely for business purposes, or a customer as a high net worth mortgage customer or a professional customer).(2) Where a firm's business model is such that it does not offer advice on regulated mortgage contracts to particular customers, it should ensure
MCOB 4.8A.17RRP
[deleted]4
CASS 7.10.9GRP
The 'opt out' provisions provide a firm with the option of allowing a professional client to choose whether their money is subject to the client money rules (unless the firm is conducting insurance distribution activity10).
CASS 7.10.10RRP
Subject to CASS 7.10.12 R, money is not client money when a firm (other than a sole trader) holds that money on behalf of, or receives it from, a professional client, other than in the course of insurance distribution activity10, and the firm has obtained written acknowledgement from the professional client that:(1) money will not be subject to the protections conferred by the client money rules;(2) as a consequence, this money will not be segregated from the money of the firm
CASS 7.10.12RRP
Money is not client money if a firm, in respect of designated investment business which is not an investment service or activity, an ancillary service, a listed activity or insurance distribution activity10:(1) holds it on behalf of or receives it from a professional client who is not an authorised person; and (2) has sent a separate written notice to the professional client stating the matters set out in CASS 7.10.10 R (1) to CASS 7.10.10 R (3).
CASS 7.10.13GRP
When a firm undertakes a range of business for a professional client and has separate agreements for each type of business undertaken, the firm may treat client money held on behalf of the client differently for different types of business; for example, a firm may, under CASS 7.10.10 R or CASS 7.10.12 R, elect to segregate client money in connection with securities transactions and not segregate (by complying with CASS 7.10.10 R or CASS 7.10.12 R) money in connection with contingent
PERG 8.37.2GRP
Regulations 49 and 50 place restrictions on an AIFMmarketing an AIF. These regulations provide that the following types of AIFM may not market the following types of an AIF in the UK unless the conditions summarised below are met.(1) The conditions that need to be met vary depending on whether the AIF falls within regulation 57(1) or not. An AIF falls within this regulation if it is: (a) a feeder AIF that is a UK AIF, a Gibraltar AIF or an EEA AIF, the master AIF of which is
PERG 8.37.12GRP
Regulation 48 (Marketing under the designation SEF” and “RVECA”3 ) provides that regulations 49 to 51 do not apply to the marketing of an AIF under the designation SEF” and “RVECA”3. To be designated as such the AIFM of the AIF is required to apply for registration of the AIF with its Home State under the EuSEF regulation or the EuVECA regulation (and in the UK make a notification under regulation 14 (Notification of new funds under the EuSEF Regulation or the EuVECA Regulation)).
PERG 8.37.14GRP
(1) Regulation 46 (Application of the financial promotion and scheme promotion restrictions) provides that where a person may market an AIF under regulation 49, 50 or 51:(a) to the extent that such marketing falls within section 21(1) (restrictions on financial promotion) or 238(1) (restrictions on promotion) of the Act, the person may market the AIF to a retail client only if the person does so without breaching the restriction in that section; and(b) to the extent that any activity
COBS 9.1.5RRP
If the firm makes a personal recommendation to a professional client to take out a life policy which is not an insurance-based investment product5, this chapter applies, but4 only those rules which implemented6 the requirements of the IDD5.
COBS 9.1.7GRP
[deleted]5
MCOB 4.2.1GRP
(1) This chapter amplifies Principle 6 (Customers' interests), Principle 7 (Communications with clients) and Principle 9 (Customers: relationships of trust). 1(2) The purpose of this chapter is to ensure that:(a) customers are adequately informed about the range2 of home finance transactions available from firms and the basis of their remuneration;21212(b) where advice is given, it is suitable for the customer.2(c) 2the firm provides advice whenever it makes a sale during which
COBS 9.5.1GRP
A3firm to which SYSC 9 applies 3is required to keep orderly records of its business and internal organisation (see SYSC 9, General rules on record-keeping). Other firms are 3 required to take reasonable care to establish and maintain such systems and controls as are appropriate to their 3business (see SYSC 3, Systems and controls). The records may be expected to reflect the different effect of the rules in this chapter depending on whether the client is a retail client or a professional
COBS 11.2.6RRP
When executing a client order, a firm must take into account the following criteria for determining the relative importance of the execution factors:(1) the characteristics of the client including the categorisation of the client as retail or professional;(2) the characteristics of the client order;(3) the characteristics of financial instruments that are the subject of that order; and4(4) the characteristics of the execution venues to which that order can be directed.42(5) [deleted]4instrument
COBS 11.2.9GRP
A firm's execution policy should determine the relative importance of each of the execution factors or establish a process by which the firm will determine the relative importance of the execution factors. The relative importance that the firm gives to those execution factors must be designed to obtain the best possible result for the execution of its client orders. Ordinarily, the FCA would expect that price will merit a high relative importance in obtaining the best possible
CASS 7A.2.6ARRP
(1) 7Before a firm ceases to treat a balance of client money in a notional pool as client money by transferring it to itself under CASS 7.17.2R(5) it must:(a) (subject to paragraph (2)) attempt to distribute the balance to the relevant client or transfer it to another person for safekeeping on behalf of the client in accordance with CASS 7A.2.4R (Pooling and distribution or transfer); (b) (subject to paragraph (3)) take reasonable steps to notify any client in respect of whom
CASS 7A.2.6CERP
(1) 7Reasonable steps in CASS 7A.2.6AR(1)(b) include the following course of conduct:(a) determining, as far as reasonably possible, the correct contact details for the relevant client;(b) for a client for whom the firm has evidence that it was a professional client for the purposes of the client money rules at the time of the primary pooling event:(i) writing to the client at the last known address either by post or by electronic mail:(A) to inform it of the firm’s intention
MCOB 1.2.9ERRP
7A firm must not treat a customer as being a professional customer for the purposes of MCOB unless it has credible evidence that the customer satisfies the definition.
COBS 18.5.13RRP
(1) A small authorised UK AIFM of an unauthorised AIF or a residual CIS operator6 need not provide a periodic statement:6(a) (i) to an investor in the fund6 who is a retail client ordinarily resident outside the United Kingdom; or6(ii) to an investor in the fund6 who is a professional client; if the investor6 has so requested or the firm6 has taken reasonable steps to establish that the investor6 does not wish to receive it; or6666(b) if it would duplicate a statement to be provided
COBS 18.5.15ERP

Table: Periodic statements

This table belongs to COBS 18.5.12 E.

Periodic statements

Suitable intervals

(1)

A periodic statement should be provided at least:

(a)

six-monthly; or

(b)

once in any other period, not exceeding 12 months, which has been mutually agreed between the firm and the investor in the fund.6

6

Adequate information

(2)

(a)

A periodic statement should contain:

(i)

(A)

The information set out in the table of general contents of a periodic statement;

(B)

where the portfolio of the fund6 includes uncovered open positions in contingent liability investments, the additional information in the table listing the contents of a periodic statement (see COBS 18.5.18 E6) in respect of contingent liability investments; or

66

(ii)

such information as an investor6 who is a retail client ordinarily resident outside the United Kingdom, or a professional client, has on his own initiative agreed with the firm6 as adequate.

66

(b)

[deleted]13
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 4.12.13GRP
(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
SYSC 6.1.4ARRP
(1) 4A firm which is not a common platform firm or management company8 and which carries on designated investment business with or for retail clients or professional clients must allocate to a director or senior manager the function of:(a) having responsibility for oversight of the firm's compliance; and(b) reporting to the governing body in respect of that responsibility.(2) In SYSC 6.1.4A R (1) compliance means compliance with the rules in:(a) COBS (Conduct of Business sourcebook);(b)
CASS 10.3.1RRP
A firm must include, as applicable, within its CASS resolution pack the records required under:(1) CASS 6.3.2A R1 (safe custody assets: appropriateness of the firm’s selection of a third party);1(1A) CASS 6.3.6AR (third party rights over client assets);3(2) CASS 6.4.3 R (firm’s use of safe custody assets);(3) CASS 6.6.2 R and CASS 6.6.3 R (safe custody assets held for each client);11(4) CASS 6.6.6 R1 (client agreements: firm’s right to use);1(4A) CASS 6.6.8 R (internal custody