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

COB 5A.3 Scope and range of advice on stakeholder products: general

COB 5A.3.1R
  1. (1)

    A firm which provides a private customer with basic advice on a stakeholder product must take reasonable steps to ensure that the scope of the basic advice given to a private customer is based upon a selection of one of the following:

    1. (a)

      a limited number of providers of stakeholder products; or

    2. (b)

      a single provider of a stakeholder product.

  2. (2)

    A firm which provides a customer with basic advice on a stakeholder product must do so only on the basis of a range of stakeholder products which includes no more than one of each of:

    1. (a)

      a CIS stakeholder product or a linked-life stakeholder product; or

    2. (b)

      a stakeholder pension; or

    3. (c)

      a stakeholder CTF.

  3. (3)

    A firm must take reasonable steps to ensure that any of its representatives which give basic advice on stakeholder products that offer a choice of funds, do not give advice on, or recommend, a particular fund for the customer.

  4. (4)

    A firm must take reasonable steps to ensure that its representatives do not, while they are engaged in providing basic advice on stakeholder products, provide advice on products other than those within the range offered by the firm.

  5. (5)

    A firm which has commenced the sales process for stakeholder products in respect of a particular customer may only depart from that process if:

    1. (a)

      it has taken reasonable steps to ensure its representatives advise the customer that basic advice on stakeholder products within the range offered by the firm will not be provided during the period of departure; and

    2. (b)

      it has taken reasonable steps to ensure its representatives do not provide basic advice during the period of departure.

  6. (6)

    A firm must take reasonable steps to ensure that if its representatives return to the sales process for stakeholder products after the period of departure referred to in COB 5A.3.1R (5), they first advise the customer that the period of departure has ended and the sales process for stakeholder products has recommenced.

COB 5A.3.2G
  1. (1)

    A firm can provide a customer with basic advice on a stakeholder product on the basis of a range of stakeholder products which includes more than one deposit-based stakeholder product.

  2. (2)

    A firm can provide advice on a deposit-based stakeholder product during the period of departure referred to in COB 5A.3.1R (5).

COB 5A.3.3G
  1. (1)

    A firm which provides basic advice on stakeholder products is required by COB 5A.3.1R (2) to do so, in relation to any particular customer, by reference to a range of stakeholder products which should include no more than one of each type of stakeholder product specified in COB 5A.3.1R (2). A firm may however operate with more than one such range.

  2. (2)

    When a firm provides basic advice on a stakeholder product which is not produced by the firm, it is responsible for the advice given. By contrast, the producer is responsible for the relevant terms and conditions of the stakeholder product.

Range of stakeholder products: appointed representatives

COB 5A.3.4R
  1. (1)

    A firm must maintain in writing and keep up to date a statement of:

    1. (a)

      the scope of basic advice (within the meaning of COB 5A.3.1R (1)) which each of its appointed representatives is, through its contract with the firm, permitted to give; and including

    2. (b)

      the range (or ranges) of stakeholder products on which each appointed representative advises.

  2. (2)

    In applying the rules in COB to a firm in respect of its appointed representatives, references to a firm's scope or range of stakeholder products are to be taken as references to the scope (or scopes) and to the range (or ranges) of its appointed representatives.

COB 5A.3.5G

An appointed representative's range of stakeholder products should be defined by means of a list of the names or titles of each of the stakeholder products which it is permitted to sell.

Range of stakeholder products: records

COB 5A.3.6R
  1. (1)

    A firm must make, and keep up to date, a record of its scope and range (or ranges) of stakeholder products.

  2. (2)

    The record in (1) must be retained for six years from the date on which it was superseded by a more up-to-date record.

  3. (3)

    The record for distribution to a customer must be the particular range of stakeholder products which is appropriate for the services provided to that customer and include details of:

    1. (a)

      the identity of the firms within the range whose stakeholder products the firm may sell; and

    2. (b)

      a list of the products the firm may sell.

  4. (4)

    A firm must maintain a record of the particular range of stakeholder products on which its basic advice to each private customer is based and such a record must be kept for six years from the date on which the basic advice is given.

Branding stakeholder products

COB 5A.3.7R

If a firm provides basic advice on a stakeholder product produced by another person, it must not:

  1. (1)

    hold itself out as the stakeholder product's producer;

  2. (2)

    do or say anything which might reasonably lead a customer to be mistaken as to the identity of the product's producer.

Staying within the range of advice of stakeholder products

COB 5A.3.8R
  1. (1)

    A firm must take reasonable steps to ensure that neither it nor any of its representatives provides basic advice on a stakeholder product unless the product is:

    1. (a)

      within the firm's range (or ranges) of stakeholder products; and

    2. (b)

      is within the particular range of stakeholder products on which the firm has indicated it will give basic advice to that customer.

"Independence" - restriction on holding out

COB 5A.3.9R
  1. (1)

    A firm must not in providing basic advice on stakeholder products hold itself out as giving such basic advice on an independent basis.

  2. (2)

    Notwithstanding (1) a firm may use its facilities and stationery which it may use for other business in respect of which it does hold itself out as acting or advising independently.

Remuneration structure and referrals

COB 5A.3.10R

A firm must take reasonable steps to ensure that none of its representatives:

  1. (1)

    is likely to be influenced by the structure of his or her remuneration to give unsuitable basic advice on stakeholder products to a customer; and

  2. (2)

    refers customers to another firm in circumstances which would amount to the provision of an inducement under COB 2.2.3 R (Prohibition of inducements).