Content Options

View Options

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

COB 3.3 Application: where?

Territorial scope

COB 3.3.1 R

This chapter applies to a firm only in relation to:

  1. (1)

    the communication of a financial promotion to a person inside the United Kingdom;

  2. (2)

    the communication of an unsolicited real time financial promotion to a person outside the United Kingdom, unless:

    1. (a)

      it is made from a place outside the United Kingdom; and

    2. (b)

      it is made for the purposes of a business which is carried on outside the United Kingdom and which is not carried on in the United Kingdom; and

  3. (3)

    the approval of a non-real time financial promotion for communication to a person inside the United Kingdom;

subject to COB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation) and COB 3.3.4A R (Exceptions to territorial scope: distance contracts).5

COB 3.3.2 G
  1. (1)

    The application under COB 3.3.1 R is relevant both when a firm communicates a financial promotion itself and when a firm approves a non-real time financial promotion for communication by others. But see also COB 3.3.3 R (2) regarding approvals.

  2. (2)

    The exemptions in COB 3.2.5 R (Application: what?; Exemptions) also incorporate some territorial elements. In particular, the exemption for financial promotions originating outside the United Kingdom (section 21(3) of the Act (Restrictions on financial promotion)) (see COB 3.2.5 R(2) and AUTH App 1.12.2 G (Financial promotions to overseas recipients (article 12)), the exemptions for overseas communicators (see COB 3.2.5 R(3) and AUTH App 1.14.14 G (Overseas communications (articles 30 to 33)) and the exemption for incoming electronic commerce communications (see AUTH App 1.12.38 G (article 20B)). 24

  3. (3)

    3The scope of COB 3 is extended by ECO 2.2.3 R to cover financial promotions which are outgoing electronic commerce communications, subject to the lifting of rules in the derogations to the E-Commerce Directive as set out in ECO 2.

Exceptions to territorial scope: rules without territorial limitation5

COB 3.3.3 R

The following parts of this chapter apply without any territorial limitation, subject to COB 3.3.4A R:5

  1. (1)

    COB 3.11 (Unregulated collective investment schemes);

  2. (2)

    if a firm approves a financial promotion:

    1. (a)

      COB 3.1 to COB 3.5 (Application, General and Purpose);

    2. (b)

      COB 3.8.4 R (1) (Non-real time financial promotions: clear, fair and not misleading);

    3. (c)

      COB 3.12.1 G to COB 3.12.5 G (Approval of financial promotions; No approval of real time financial promotions; Approval of financial promotions when not all the rules apply).

COB 3.3.4 G

There is no need for a financial promotion which is indicated in COB 3.3.1 R to be outside the territorial scope of the application of this chapter to be approved before being communicated by an unauthorised person (because the restriction in section 21 of the Act (Restrictions on financial promotion) does not apply). If a firm nevertheless approves such a financial promotion, it must comply with the rules indicated in COB 3.3.3 R (2). However, a firm must not approve a real time financial promotion (see COB 3.12.2 R).1

Exceptions to territorial scope: distance contracts5

COB 3.3.4A R
  1. (1)

    5Notwithstanding COB 3.3.1 R and COB 3.3.3 R, this chapter, other than the rules in (3), does not apply to a firm when it communicates a financial promotion, if the conditions in (2) are satisfied:

  2. (2)

    The conditions are that:

    1. (a)

      the firm communicates the financial promotion from an establishment maintained by the firm in an EEA State other than the United Kingdom, and not from an establishment maintained by the firm in the United Kingdom or outside the EEA;

    2. (b)

      either that EEA State:

      1. (i)

        has implemented the DMD; or

      2. (ii)

        has obligations in its domestic law corresponding to those provided for by the DMD;

    3. (c)

      the financial promotion relates, exclusively, to a distance contract, for the conclusion of which the obligations provided for by the DMD (or corresponding obligations) are applied by that State; and

    4. (d)

      the firm is a national of an EEA State or a company or firm mentioned in article 48 of the Treaty.

  3. (3)

    The rules which continue to apply, notwithstanding this rule, are:

    1. (a)

      COB 3.8.4 R (Non-real time financial promotions: clear, fair and not misleading; comparisons; restriction of information on compensation);

    2. (b)

      COB 3.8.22 R (1) and (2) (Real time financial promotions);

    3. (c)

      COB 3.9.5 R (Prohibited types of direct offer financial promotion);

    4. (d)

      COB 3.10 (Unsolicited real time financial promotions);

    5. (e)

      COB 3.11 (Unregulated collective investment schemes and qualified investor schemes); and

    6. (f)

      COB 3.13.1 R (Additional requirements for financial promotions for an overseas long-term insurer).

Meaning of "communicated to a person inside or outside the United Kingdom"

COB 3.3.5 R

For the purposes of this chapter:

  1. (1)

    a financial promotion is communicated to a person outside the United Kingdom if it is:

    1. (a)

      made to a person who receives it outside the United Kingdom; or

    2. (b)

      directed only at persons outside the United Kingdom; and

  2. (2)

    a financial promotion is communicated to a person inside the United Kingdom if it is communicated to a person other than as described in (1);

and see COB 3.5.6 R and COB 3.3.6 R which amplify this rule.

Meaning of "directed only at persons outside the United Kingdom"

COB 3.3.6 R
  1. (1)

    If the conditions set out in 4(a), (b), (c) and (d) are met, a financial promotion directed from a place inside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.

  2. (2)

    If the conditions set out in 4(c) and (d) are met a financial promotion directed from a place outside the United Kingdom will be regarded as directed only at persons outside the United Kingdom.

  3. (3)

    In any other case where one or more of the conditions in 4(a) to (e) is met, that fact will be taken into account in determining whether a financial promotion is directed only at persons outside the United Kingdom (but a financial promotion may still be regarded as directed only at persons outside the United Kingdom even if none of these conditions is met).

  4. (4)

    The conditions are that:

    1. (a)

      the financial promotion is accompanied by an indication that it is directed only at persons outside the United Kingdom;

    2. (b)

      the financial promotion is accompanied by an indication that it must not be acted upon by persons in the United Kingdom;

    3. (c)

      the financial promotion is not referred to in, or directly accessible from, any other financial promotion which is made to a person or directed at persons in the United Kingdom by or on behalf ofthe same person;

    4. (d)

      there are in place proper systems and procedures to prevent recipients in the United Kingdom (other than those to whom the financial promotion might otherwise lawfully have been made) engaging in the investment activity to which the financial promotion relates with the person directing the financial promotion, a close relative of his or a member of the same group;

    5. (e)

      the financial promotion is included in:

      1. (i)

        a website, newspaper, journal, magazine or periodical publication which is principally accessed in or intended for a market outside the United Kingdom;

      2. (ii)

        a radio or television broadcast or teletext service transmitted principally for reception outside the United Kingdom.