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COB 4 Annex 1 1Exemptions from terms of business requirement

COB 4 Annex 1.1R

1Circumstances in which the terms of business requirement in COB 4.2.5 R does not apply and conditions for using the exemption (R)

This table belongs to COB 4.2.5 R

22

Exempted type of firm or transaction or event:

Conditions for using the exemption:

(1)

Voice telephony communications

(a)

At the beginning of the telephone conversation, the firm must provide the customer with the name of the firm and (if the call is initiated by or on behalf of the firm) the commercial purpose of the call;

(b)

if the customer gives his explicit consent to receiving only limited information about the terms of business, the firm must in good time before the retail customer is bound by a contract or offer on the telephone, provide the customer with at least the following information:2

(i)

the name of the person in contact with the customer and his link with the firm;

(ii)

a description of the main characteristics of the service;

(iii)

the total price to be paid by the customer to the firm for the services, including all related fees, charges and expenses, and all taxes paid through the firm or, where an exact price cannot be indicated, the basis for the calculation of the price enabling the customer to verify it; and notice of the possibility that other taxes or costs may exist that are not paid through the firm or imposed by it;

(iv)

the existence or absence of a right to cancel under COB 6.7 and, where there is such a right, its duration and the conditions for exercising it, including information on the amount which the customer may be required to pay in accordance with COB 6.7.52 R (1)(b), as well as the consequences of not exercising it; and

(v)

that other information is available on request and the nature of that information;

(c)

if the customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the firm must in good time before the retail customer is bound by a contract or offer on the telephone, provide all of the information required by COB App 1 orally to the customer; and2

(d)

in the case of either (b) or (c), the firm must immediately after conclusion of the contract, send the customer a full terms of business

(See also COB 3.8.21 G (Real time financial promotions) and COB 3.10 (Unsolicited real time financial promotions)).

(2)

The service is being provided exclusively by means of distance communication (other than telephone) which does not enable a terms of business to be provided before a contract is concluded

(a)

The service is provided in this way at the customer's request; and

(b)

the firm must send the terms of business to the customer immediately after conclusion of the contract

(3)

The firm has an initial service agreement with the customer

The designated investment business to be conducted is a successive operation or separate operation of the same nature to be performed for the customer under that initial agreement (see COB 1.11.3 R)

(4)

The firm has no initial service agreement with the customer but the designated investment business to be conducted is a successive operation or separate operation of the same nature for the customer (see COB 1.11.3 R)

The firm has performed an operation of the same nature for the customer within the last year

(5)

Life insurer

The firm is effecting a life policy issued or to be issued by it as principal

(6)

Operator of a collective investment scheme

The firm is:

(a)

conducting any designated business as part of scheme management activity; or

(b)

providing any service to the trustee or depositary of the scheme which is not part of the operator's scheme management activity; or

(c)

selling or purchasing as principal units in a scheme except a sale or purchase of units in an unregulated collective investment scheme under a distance contract with a retail customer

(7)

Trustee or depositary

The firm is acting as a trustee of a unit trust or depositary of an ICVC

(8)

Operator of investment trust savings scheme

The firm is:

(a)

bringing about a transaction in the shares of any investment trust that is the subject of the scheme; or

(b)

conducting any designated investment business as part of its activities as such (except a distance contract not within (a) with a retail customer)

(9)

Supplier of a published recommendation

The firm is supplying a published recommendation

(10)

OPS firms who are trustees of an OPS

The firm is carrying on any designated investment business as part of its OPS activity in relation to an occupational pension scheme of which it is trustee

(11)

Advising during preparation of terms of business

The advice on investments or information is provided solely for the purpose of preparing terms of business or entering into a client agreement

(12)

Designated investment business performed after termination of terms of business

The firm is acting for the purposes only of fulfilling any obligations still outstanding under the terms of business

(13)

Execution-only transactions

The firm is entering into or bringing about any execution-only transaction except:

(a)

a transaction in a contingent liability investment with or for a private customer; or

(b)

where the firm is entering into a distance contract with a retail customer, unless the contract:

(i)

relates solely to dealing as agent, advising or arranging by the firm; and

(ii)

is concluded merely as a stage in the provision of another service by the firm or another person (see COB 1.11.3 R)

(14)

Direct offer financial promotion

The firm is concluding a contract with a customer as a result of a direct offer financial promotion to which COB 3.9 (Direct offer financial promotions) applies. (COB 4.2.5 R (Requirement to provide terms of business to a customer) may therefore apply for a contract concluded as a result of a direct offer financial promotion communicated to a person outside the United Kingdom.)

(15)

The customer is an intermediate customer and not a retail customer

The firm must provide terms of business within a reasonable period of the firm beginning to conduct business with or for the customer