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COBS 14.2 Providing product information to clients1

The provision rules

COBS 14.2.1 R RP

1A firm that sells:

  1. (1)

    a packaged product to a retail client, must provide a key features document and a key features illustration2 to that client (unless the packaged product is a unit in a UCITS scheme,7simplified prospectus scheme or an EEA UCITS scheme which is a recognised scheme);7

    7
  2. (2)

    a life policy to a client, must provide the Solvency II Directive information13 to that client;

    1313
  3. (3)

    the variation of a life policy or personal pension scheme to a retail client, must provide that client with sufficient information about the variation for the client to be able to understand the consequences of the variation;

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  4. (3A)

    [deleted]10

    410
  5. (3B)

    the variation of a personal pension scheme to a retail client, which involves an election by the client to make income withdrawals or a purchase of a short-term annuity, must provide that client with such information as is necessary for the client to understand the consequences of the variation, including where relevant, the information required by COBS 13 Annex 2.2.9 R (Additional requirements: drawdown pensions and regular uncrystallised funds pension lump sum payments14); 5

    66
  6. (3C)

    the variation of a personal pension scheme to a retail client, which involves one-off, ad-hoc or regular uncrystallised funds pension lump sum payments, must provide that client with such information as is necessary for the client to understand the consequences of the variation, including (where relevant) the information required by COBS 13 Annex 2.2.9 R (Additional requirements: drawdown pensions and regular uncrystallised funds pension lump sum payments); 14

  7. (4)

    a cash-deposit ISA, cash-only lifetime ISA16 or cash-deposit CTF to a retail client, must provide a key features document to that client;

  8. (4A)

    16a lifetime ISA, which is not a cash-only lifetime ISA, to a retail client must provide to that client the information in COBS 14 Annex 1;

  9. (5)

    a unit in a simplified prospectus scheme to a client, must offer the scheme's current simplified prospectus to that client. In addition, if the client is a retail client present in the EEA, the firm must provide the simplified prospectus to the client together with:

    1. (a)

      enough information for the client to be able to make an informed decision about whether to hold the units in a wrapper (if the units will, or may, be held in that way); and

    2. (b)

      information about the three types of CTF that are generally available (stakeholder CTFs, cash-deposit CTFs and2security-based CTFs2), and the type of CTF the firm is offering (if the units will, or may, be held in a CTF);

  10. (6)

    [deleted]7

    7
  11. (7)

    a unit in a UCITS scheme, or in an EEA UCITS scheme which is a recognised scheme, to a client, must:7

    1. (a)

      provide a copy of the scheme'skey investor information document or, as the case may be, EEA key investor information document to that client; and7

    2. (b)

      where the client is a retail client, provide separately (unless already provided) the information required by COBS 13.3.1R (2) (General requirements) and, if that client is present in the EEA, the information required by (5)(a) and (b);7

  12. (8)

    where the operator of a non-UCITS retail scheme has a dispensation from the FCA in the form of a general waiver by consent under which it may market units of the scheme on the basis of a key investor information document (as modified by the general waiver direction, a "NURS KII document"), rather than on the basis of a key features document or simplified prospectus, a firm that sells units in the scheme must comply with its obligations under this rule by:7

    1. (a)

      providing the retail client with the relevant NURS KII document; and7

    2. (b)

      offering any client that is not a retail client the relevant NURS KII document;7

    on condition that it complies with each of the other rules in this section in relation to the provision of the document, as if references in those rules to a “key features document” or “simplified prospectus” were a reference to the “NURS KII document”.

[Note: in respect of (2) article 185(1) of the Solvency II Directive13]

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[Note: in respect of (7),7 articles 17 and 807 of the UCITS Directive]

7 7 7

Provision of key investor information document

COBS 14.2.1A R RP
  1. (1)

    7This rule applies

    to an authorised fund manager of a UCITS scheme that is either an authorised unit trust, authorised contractual scheme12 or an ICVC, and an ICVC that is a UCITS scheme.

  2. (2)

    An authorised fund manager and an ICVC in (1) that sells units in a UCITS scheme directly, or through another natural or legal person who acts on its behalf and under its full and unconditional responsibility, must ensure that investors are provided with the key investor information document for the scheme.

  3. (3)

    An authorised fund manager and an ICVC in (1) that does not sell units in a UCITS scheme directly, or through another natural or legal person who acts on its behalf and under its full and unconditional responsibility, must ensure that the key investor information document for the scheme is provided on request to product manufacturers and intermediaries selling, or advising investors on, potential investments in those UCITS schemes or in products offering exposure to them.

  4. (4)

    The key investor information document must be provided to investors free of charge.

  5. (5)

    An authorised fund manager and an ICVC in (1) may, instead of providing the key investor information document to investors in paper copy in accordance with (2), provide it in a durable medium other than paper or by means of a website that meets the website conditions, in which case the authorised fund manager and ICVC must:

    1. (a)

      deliver a paper copy of the key investor information document to the investor on request and free of charge; and

    2. (b)

      make available an up-to-date version of the key investor information document to investors on the website of the ICVC or authorised fund manager.

[Note: articles 80 and 81 of the UCITS Directive]

Provision of a generic key features illustration15

COBS 14.2.1B R RP

9When the rules in this chapter require the offer or provision of a key features illustration, a firm may provide a generic key features illustration if that generic key features illustration has been prepared in accordance with COBS 13.4.2 R.

Provision of information: other requirements15

COBS 14.2.1C R RP

9A firm that arranges to start the facilitation of, or an increase in, an adviser charge or consultancy charge from an in-force packaged product, must provide to the retail client sufficient information for the retail client to be able to understand the likely effect of that facilitation.

COBS 14.2.2 R RP

The documents or information required to be provided or offered by COBS 14.2.1 R and COBS 14.2.1C R9 must be in a durable medium or made available on a website (where that does not constitute a durable medium) that meets the website conditions.

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COBS 14.2.3 R RP
  1. (1)

    A firm that personally recommends that a retail client holds a particular asset in a SIPP must provide that client with sufficient information for the client to be able to make an informed decision about whether to buy or invest.

  2. (2)

    This rule does not apply if the asset is described in COBS 14.2.1 R.

Firm not to cause confusion about the identity of the producer of a product

COBS 14.2.4 R RP

When a firm provides a document or information in accordance with the rules in this section, it must not do anything that might reasonably cause a retail client to be mistaken about the identity of the firm that has produced, or will produce, the product.

Exception to the provision rules: key features documents and simplified prospectuses, simplified prospectuses and key investor information documents7

COBS 14.2.5 R RP

A firm is not required to provide:

  1. (1)

    a document, if the firm produces the product and the rules in this section require another firm to provide the document;

  2. (2)

    a key features document or key features illustration2, if another person is required to provide the distance marketing information by the rules of another EEA State;

  3. (3)

    the Solvency II Directive information,13 if another person is required to provide that information by the rules of another EEA State;

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  4. (4)

    a simplified prospectus if:

    1. (a)

      [deleted]7

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    2. (b)
      1. (i)

        the client is buying or investing in response to a direct offer financial promotion without receiving a personal recommendation to buy or invest; and

      2. (ii)

        the firm offers an up-to-date copy of the simplified prospectus to the client and provides materially the same information to the client in some other way.

[Note: in respect of (3), article 185(8) of the Solvency II Directive13]

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Exception: key features illustrations2

COBS 14.2.6 R RP

2A firm is not required to provide a key features illustration for a product if the information that would have been included in that illustration is included in the key features document provided to the client. 2

Exception to the provision rules: key features documents and key features illustrations2

COBS 14.2.7 R RP

A firm is not required to provide a key features document or a key features illustration2for:

  1. (1)

    a key features scheme if it provides a simplified prospectus instead;

  2. (2)

    a life policy if:

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    1. (a)

      the firm is operating from an establishment in another EEA State and the sale is by distance contract; or

    2. (b)

      the client is habitually resident outside the United Kingdom and the sale is not by distance contract.

  3. (3)

    a traded life policy.

[Note: in respect of (2), articles 4(1) and 16 of the Distance Marketing Directive and article 185 of the Solvency II Directive13]

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Exception to the provision rules: key features documents and key features illustrations2

COBS 14.2.8 R RP

A firm is not required to provide a key features document or a key features illustration2, if:

  1. (1)

    the client is buying or investing in response to a direct offer financial promotion without receiving a personal recommendation to buy or invest; and

  2. (2)

    the firm provides materially the same information in some other way.

Exception to the provision rules: key features documents, key features illustrations2, simplified prospectuses and key investor information documents7

COBS 14.2.9 R RP

A firm is not required to provide a , a key features illustration2 or a simplified prospectus for a key features scheme or simplified prospectus scheme if:

  1. (1)

    the client is habitually resident outside the EEA and not present in the EEA when the relevant application is signed; or

  2. (2)

    the purchase is by a discretionary investment manager on behalf of a retail client; or

  3. (3)

    the sale is arranged or personally recommended by an investment manager and the client has agreed that a key features document or simplified prospectus is not required; or

  4. (4)

    a retail client is purchasing a holding in a scheme in which the client already has a holding, or the client is switching from one class of shares or units to another in the same scheme, and the relevant document has already been provided to that client.

COBS 14.2.9A R RP

7For the purposes of the provision rules in relation to a key investor information document, a firm:

  1. (1)

    may satisfy the requirement to provide the document to the investor by providing it to a person who has written authority to make investment decisions on that investor’s behalf; and

  2. (2)

    is not required to consider as a new transaction:

    1. (a)

      a subscription to units in a UCITS scheme or an EEA UCITS scheme in which the client already holds units; or

    2. (b)

      a series of connected transactions undertaken as the consequence of a single investment decision; or

    3. (c)

      a decision by the client to switch from one class of units to another in the same scheme;

      if an up-to-date version of the key investor information document for the scheme or the relevant class of units has already been provided to that client.

[Note: article 80 of the UCITS Directive]

COBS 14.2.10 G RP
7
  1. (1)

    Although a firm is not always required to provide a simplified prospectus to a client (COBS 14.2.9 R), the obligation to offer the prospectus to the client (COBS 14.2.1R (5)) remains.7

  2. (2)

    The FCA would regard a decision to subscribe to a regular monthly savings plan as a single investment decision for the purpose of COBS 14.2.9AR (2)(a). However, a subsequent decision by the client to increase the amount of the regular contributions to be invested in units of a particular scheme or to direct the contributions to a different scheme, would in each case constitute a new transaction.7

Exception to the provision rules: aggregated scheme documents

COBS 14.2.11 R RP

A firm may provide a single document, which describes more than one key features scheme or7simplified prospectus scheme, or any combination of those schemes, if:

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  1. (1)

    the schemes are offered through a platform service;8

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  2. (2)

    the document clearly describes the difference between the relevant schemes; and

  3. (3)

    (in the case of a simplified prospectus scheme) the firm also offers a copy7 of the relevant prospectus7 to the client.

    7

Exception: successive operations

COBS 14.2.12 R RP

In the case of a distance contract comprising an initial service agreement, followed by successive operations or a series of separate operations of the same nature performed over time, the rules in this section only apply to the initial agreement.

COBS 14.2.13 R RP

If there is no initial service agreement but the successive operations or separate operations of the same nature performed over time are performed between the same contractual parties, the rules in this section only apply:

  1. (1)

    when the first operation is performed; and

  2. (2)

    if no operation of the same nature is performed for more than a year, when the next operation is performed (the next operation being deemed to be the first in a new series of operations).

The timing rules

COBS 14.2.14 R RP

When the rules in this section require a firm to:

  1. (1)

    offer a simplified prospectus to a client, that prospectus must be offered free of charge before the conclusion of the contract; or

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  2. (2)

    provide a key features document, a simplified prospectus, or any other document or information to a client, the document or information must be provided free of charge and in good time before the firm carries on the relevant business; or7

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  3. (3)

    provide a key investor information document or EEA key investor information document to a client, it must be provided in good time before the client's proposed subscription for units in the scheme.7

[Note: article 807 of the UCITS Directive]7

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Exception to the timing rules: child trust funds

COBS 14.2.15 R RP

A key features document for an HMRC allocated CTF must be provided as soon as reasonably possible after the CTF has been opened.

Exception to the timing rules: distance contracts and voice telephony communications

COBS 14.2.16 R RP
7
  1. (1)

    A firm may provide a document, or the information required to be provided by the rules in this section, in a durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a client's request using a means of distance communication that does not enable the document or information to be provided in that form in good time before the client is bound by the contract.7

  2. (2)

    The exception in (1) does not apply in relation to the provision of an EEA key investor information document or a key investor information document required to be provided under COBS 14.2.1 R and COBS 14.2.1A R.7

COBS 14.2.17 R RP
7
  1. (1)

    Where the rules in this section require a document or information to be provided, in the case of a voice telephony communication, a firm must:7

    7
    1. (a)

      if the client gives explicit consent to receiving only limited information, provide the abbreviated distance marketing disclosure information () orally to the client;7

    2. (b)

      if the client does not give explicit consent to only receiving limited information, and the parties wish to proceed by voice telephony communication, provide the distance marketing information () orally to the client;7

    3. (c)

      in the case of (a) or (b), send the documents or information to the client in a durable medium immediately after the contract is concluded.7

  2. (2)

    The exception in (1) does not apply in relation to the provision of an EEA key investor information document or a key investor information document required to be provided under COBS 14.2.1 R and COBS 14.2.1A R.7

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Providing additional information to the client

14.2.18 G
  1. (1)

    19A firm that provides the product information required by this section is not precluded from providing additional information to the client (for example, in order to assist the client’s understanding of the proposed transaction).

  2. (2)

    When a firm provides additional information it should:

    1. (a)

      ensure that the additional information does not disguise, diminish or obscure important information contained in the product information required by this section;

    2. (b)

      consider whether any other rules or requirements in any directly applicable EU regulations apply to the communication of that additional information. For example, for marketing communications relating to a UCITS scheme or EEA UCITS scheme see COBS 4.13.2 R; and

    3. (c)

      have regard to the fair, clear and not misleading rule, the client’s best interests rule and Principles 6 and 7.