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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 simplified prospectus scheme or an EEA simplified prospectus scheme);

  2. (2)

    a life policy that is not a reinsurance contract to a client, must provide the Consolidated Life Directive information to that client;

  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 (unless the policy or scheme is a SIPP);

  4. (3A)

    the variation of a SIPP to a retail client, to contract out of the State Second Pension, must provide the client with a projection for an appropriate personal pension and a contracting-out comparison for those benefits together with such additional information as is necessary for the client to understand the consequences of the variation;4

  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: unsecured and alternatively secured pensions);5

  6. (4)

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

  7. (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);

  8. (6)

    a unit in an EEA simplified prospectus scheme to a client, must offer an up-to-date copy of the scheme's EEA simplified prospectus to that client.

[Note: in respect of (2) article 36(1) of, and Annex III to, the Consolidated Life Directive]

[Note: in respect of (5) and (6) articles 1, 33(1) and 44 of the UCITS Directive]

COBS 14.2.2 R RP

The documents or information required to be provided or offered by the first provision rule (COBS 14.2.1 R) 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.

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

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 Consolidated Life Directive information, if another person is required to provide that information by the rules of another EEA State;

  4. (4)

    a simplified prospectus if:

    1. (a)

      another person is required to offer the simplified prospectus to the client by the rules of another EEA State; or

    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 36(4) of, and Annex III to, the Consolidated Life Directive]

[Note: in respect of (4), articles 1, 33(1) and 44 of the UCITS directive]

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 that is not a reinsurance contract if:

    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 36 of the Consolidated Life Directive]

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 and simplified prospectuses

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.

[Note: articles 1, 33(1), and 44 of the UCITS directive]

COBS 14.2.10 G RP

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.

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, simplified prospectus scheme or EEA simplified prospectus scheme, or any combination of those schemes, if:

  1. (1)

    the schemes are offered through a funds supermarket service;

  2. (2)

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

  3. (3)

    (in the case of a simplified prospectus scheme or an EEA simplified prospectus scheme) the firm also offers copies of the relevant prospectuses to the client.

[Note: article 33(1) of the UCITS directive]

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

  2. (2)

    provide a key features document, a simplified prospectus, an EEA 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.

[Note: article 33(1) of the UCITS directive]

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

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.

COBS 14.2.17 R RP

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:

  1. (1)

    if the client gives explicit consent to receiving only limited information, provide the abbreviated distance marketing disclosure information(COBS 5 Annex 2 R)3 orally to the client;

    3
  2. (2)

    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(COBS 5 Annex 1 R)3 orally to the client;

    3
  3. (3)

    in the case of (1) or (2), send the documents or information to the client in a durable medium immediately after the contract is concluded.