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Status: You are viewing the version of the handbook as on 2005-06-30.

COB 1.3 General application: what?

COB 1.3.1R

COB applies to firms with respect to the carrying on of:

  1. (1)

    all regulated activities except:37

    1. (a)

      regulated mortgage activities; or37

    2. (b)

      to the extent that a provision of COB provides for a narrower application; or7;

      37
    3. (c)

      insurance mediation activities in connection with non-investment insurance contracts; and7

  2. (2)

    unregulated activities to the extent specified in any provision of COB.

COB 1.3.2G
  1. (1)

    The approach in COB is to ensure that each rule, or, as appropriate, the rules in a section or part of a section, are applied to firms in respect of particular regulated activities or unregulated activities or, in the case of COB 3 (Financial promotion), in relation to particular kinds of promotion.

  2. (2)

    Most of COB applies in relation to regulated activities, conducted by firms, which fall within the definition of designated investment business. In relation to deposits, COB has limited application, as described in COB 1.11 (Application of COB in relation to deposits).57

  3. (3)

    The scope of the regulated activities to which COB applies is determined by the description of the activity as it is set out in the Regulated Activities Order. Accordingly, a firm will not generally be subject to COB in relation to any aspect of its business activities which fall within an exclusion found in the Regulated Activities Order. The definition of designated investment business includes, however, activities within the exclusion from dealing in investments as principal in article 15 of the Regulated Activities Order (Absence of holding out etc).

  4. (4)

    COB has limited application to Lloyd's related activities as set out in Chapter XIII of Part II of the Regulated Activities Order. Firms are reminded of the provisions of COB 12 (Lloyd's).

  5. (5)

    COB 3 (Financial promotion) applies to a firm which communicates or approves a financial promotion, but see (6);

  6. (6)

    Firms are reminded that COB 3 (Financial promotion) has limited application to a firm carrying on a takeover or related operation. (See COB 3.2.3A R and COB 3.2.5 R)

  7. (7)

    MCOB applies to a firm that carries on regulated mortgage activity.3

  8. (8)

    ICOB applies to a firm in relation to insurance mediation activities in connection with non-investment insurance contracts.7

Application for private customers, intermediate customers, market counterparties and retail customers5

COB 1.3.3G
  1. (1)

    The application of many provisions in COB depends on the classification of the client with whom a firm is conducting business. A client must fall within one of three classifications: private customer, intermediate customer or market counterparty. In COB, the term "customer" refers to private customers and intermediate customers, but not market counterparties. The term "client" covers customers and market counterparties. Where relevant, each of the provisions of COB makes clear whether it applies to activities carried on with or for private customers, intermediate customers or both.8

  2. (2)

    4[deleted]

  3. (3)

    Some rules in COB (mainly those relating to distance contracts) use the term "retail customer" rather than "customer", "private customer" or "intermediate customer". A retail customer is an individual who is acting for purposes which are outside his trade, business or profession.5

Inter-professional business

COB 1.3.4R

Only the following provisions of COB apply with respect to the carrying on of inter-professional business:

  1. (1)

    this chapter;

  2. (2)

    COB 2.4 (Chinese walls);

  3. (3)

    COB 4.1 (Client classification);

  4. (3A)

    COB 5.5 (Information about the firm), except COB 5.5.1 R - COB 5.5.8 G;1

  5. (4)

    COB 7.13 (Personal account dealing).

COB 1.3.5G

Firms are reminded that the definition of inter-professional business does not include:

  1. (1)

    the approval of a financial promotion - COB 3 (Financial promotion) has a limited application in this context (see COB 3.2.3A R and COB 3.2.5 R);

  2. (2)

    4[deleted]

  3. (3)

    offering, giving, soliciting or accepting inducements for the purpose of or in connection with activities falling within the scope of COB 2.2 (Inducements and soft commission) will apply in this context;85

  4. (4)

    corporate finance business;2568

  5. (5)

    concluding a distance contract with a retail customer; or568

  6. (6)

    regulated activities relating to life policies.568