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Status: You are viewing the version of the handbook as on 2007-10-31.

COB 2.1 Clear, fair and not misleading communication

Application

COB 2.1.1R
  1. (1)

    This section applies to a firm when it communicates information to a customer in the course of, or in connection with, its designated investment business.

  2. (2)

    This section does not apply to a firm when it communicates a financial promotion in circumstances in which COB 3 (Financial promotion) applies to the firm.

Purpose

COB 2.1.2G

The purpose of this section is to restate, in slightly amended form, and as a separate rule, the part of Principle 7 (Communications with clients) that relates to communication of information. This enables a customer, who is a private person, to bring an action for damages under section 150 of the Act to recover loss resulting from a firm communicating information, in the course of designated investment business, in a way that is not clear or fair, or is misleading.

Clear, fair and not misleading communication

COB 2.1.3R

When a firm communicates information to a customer, the firm must take reasonable steps to communicate in a way which is clear, fair and not misleading.

COB 2.1.4G

When considering the requirements of COB 2.1.3 R, a firm should have regard to the customer's knowledge of the designated investment business to which the information relates.

COB 2.1.5G

COB 2.1 embraces all communications with customers, for example: client agreements, periodic statements, financial reports, telephone calls and any correspondence which is not a financial promotion to which COB 3 (Financial promotion) applies. Firms should note the requirements of COB 3.8.4 R relating to non-real timefinancial promotions and COB 3.8.22 R relating to real timefinancial promotions.