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BCOBS 2.1 Purpose and Application: Who and what?

BCOBS 2.1.1 G

1 Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. Principle 7 requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading. This chapter reinforces these requirements by requiring a firm to pay regard to the information needs of bankingcustomers when communicating with, or making a financial promotion to, them and to communicate information in a way that is clear, fair and not misleading.

BCOBS 2.1.2 R

In addition to the general application rule (BCOBS 1.1.1 R), this chapter applies to the communication, or approval for communication, to a person in the United Kingdom of a financial promotion of a retail banking service unless it can lawfully be communicated by an unauthorised person without approval.

BCOBS 2.1.3 R

This chapter applies to a firm:

  1. (1)

    communicating with a bankingcustomer in relation to accepting deposits;

  2. (2)

    communicating a financial promotion that is not an excluded communication; or

  3. (3)

    approving a financial promotion.

BCOBS 2.2 The fair, clear and not misleading rule

BCOBS 2.2.1 R

A firm must take reasonable steps to ensure that a communication or a financial promotion is fair, clear and not misleading.

BCOBS 2.2.2 G

The fair, clear and not misleading rule applies in a way that is appropriate and proportionate taking into account the means of communication and the information that it is intended to convey. So a communication addressed to a banking customer who is not a consumer may not need to include the same information, or be presented in the same way, as a communication addressed to a consumer.

BCOBS 2.2.3 G

The rules in SYSC 3 (Systems and Controls) and SYSC 4 (General organisational requirements) require a firm to put in place systems and controls or policies and procedures in order to comply with the rules in COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Systems and controls and approving and communicating financial promotions) and this chapter of BCOBS.

BCOBS 2.2.4 G

Section 397 (Misleading statements and practices) of the Act creates a criminal offence relating to certain misleading statements and practices.

BCOBS 2.2.5 G

1A communication or a financial promotion should not describe a feature of a product or service as "guaranteed", "protected" or "secure", or use a similar term unless:

  1. (1)

    that term is capable of being a fair, clear and not misleading description of it; and

  2. (2)

    the firm communicates all of the information necessary, and presents that information with sufficient clarity and prominence, to make the use of that term fair, clear and not misleading.

BCOBS 2.3 Other general requirements for communications and financial promotions

BCOBS 2.3.1 R

A firm must ensure that each communication made to a banking customer and each financial promotioncommunicated or approved by the firm:

  1. (1)

    includes the name of the firm;

  2. (2)

    is accurate and, in particular, does not emphasise any potential benefits of a retail banking service without also giving a fair and prominent indication of any relevant risks;

  3. (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; and

  4. (4)

    does not disguise, diminish or obscure important information, statements or warnings.

BCOBS 2.3.2 G

The name of the firm may be a trading name or shortened version of the legal name of the firm, provided the banking customer can identify the firm communicating the information.

BCOBS 2.3.3 G

In deciding whether, and how, to communicate information to a particular target audience, a firm should take into account the nature of the retail banking service, the banking customer's likely or actual commitment, the likely information needs of a reasonable recipient, and the role of the communication or financial promotion in the sales process.

BCOBS 2.3.4 G

If a communication or a financial promotion names the FSA as the regulator of a firm and refers to matters not regulated by the FSA, the firm should ensure that the communication or financial promotion makes clear that those matters are not regulated by the FSA.

BCOBS 2.3.5 G

When communicating information, a firm should consider whether omission of any relevant fact will result in information given to the banking customer being insufficient, unclear, unfair or misleading.

BCOBS 2.3.6 G

The Credit Institutions (Protection of Deposits) Regulations 1995 may apply in relation to communications with a banking customer.

BCOBS 2.3.7 R

If a communication or a financial promotion compares a retail banking service with one or more other retail banking service (whether or not provided by the firm), the firm must ensure that the comparison is meaningful and presented in a fair and balanced way.

BCOBS 2.3.8 R

If a communication or a financial promotion in relation to a retail banking service refers to a particular tax treatment or rate of interest payable, a firm must ensure that a prominent statement that the tax treatment or the rate of interest payable:

  1. (1)

    depends on the individual circumstances of each banking customer; and

  2. (2)

    may be subject to change in the future;

is either included in that communication or financial promotion, or provided to the banking customer on paper or in another durable medium in good time before the banking customer is bound by the contract for that retail banking service.

BCOBS 2.3.9 G

When designing a financial promotion, a firm may find it helpful to take account of the British Bankers' Association/Building Societies Association Code of Conduct for the Advertising of Interest Bearing Accounts.