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COBS 4.7 Direct offer financial promotions

Application

COBS 4.7.-2 R

16This section (other than COBS 4.7.-1AEU to COBS 4.7.-1DG) does not apply in relation to a communication:

  1. (1)

    to the extent that it is an excluded communication;

  2. (2)

    to the extent that it is a prospectus advertisement to which article 22 of the Prospectus Regulation applies;

  3. (3)

    if it is image advertising;

  4. (4)

    to the extent that it relates to a deposit that is not a cash deposit ISA, cash-only lifetime ISA or cash deposit CTF;

  5. (5)

    to the extent that it relates to a pure protection contract that is a long-term care insurance contract.

COBS 4.7.-1 G
  1. (1)

    COBS 4.7.-1AUK12 to COBS 4.7.1R contain provisions on the communication of direct offer financial promotions.

    11
  2. (2)

    In broad terms:

    1. (a)

      COBS 4.7.-1AUK12 is relevant to a firm communicating a direct offer financial promotion in relation to its MiFID, equivalent third country or optional exemption business; 16

    2. (b)

      COBS 4.7.1R is relevant to a firm communicating a direct offer financial promotion that does not relate to its MiFID, equivalent third country or optional exemption business; and16

    3. (c)

      16the application of the other operative provisions in this section is not affected by reference to MiFID, equivalent third country or optional exemption business.

  3. (3)

    However, a MiFID investment firm, third country investment firm or MiFID optional exemption firm which is subject to the requirements in COBS 4.7.-1AUK12 may be subject to the rule in COBS 4.7.1R to the extent that it communicates a direct offer financial promotion:

    1. (a)

      which is not a marketing communication; or

    2. (b)

      which does not relate to its MiFID, equivalent third country or optional exemption business.

Direct offer financial promotions relating to MiFID, equivalent third country or optional exemption business

COBS 4.7.-1A UK

1246(6) Marketing communications containing an offer or invitation of the following nature and specifying the manner of response or including a form by which any response may be made, shall include such of the information referred to in Articles 47 to 50 as is relevant to that offer or invitation:

  1. (a) an offer to enter into an agreement in relation to a financial instrument or investment service or ancillary service with any person who responds to the communication;

  2. (b) an invitation to any person who responds to the communication to make an offer to enter into an agreement in relation to a financial instrument or investment service or ancillary service.

However, the first subparagraph shall not apply if, in order to respond to an offer or invitation contained in the marketing communication, the potential client must refer to another document or documents, which, alone or in combination, contain that information.

[Note: article 46(6) of the MiFID Org Regulation]

Effect of provisions marked “UK” for third country investment firms and MiFID optional exemptions firms

COBS 4.7.-1B R

Provisions in this section marked “UK”12 apply in relation to MiFID optional exemption business as if they were rules (see COBS 1.2.2G).

COBS 4.7.-1C G

The effect of GEN 2.2.22AR is that provisions in this section marked “UK”12 also apply in relation to the equivalent business of a third country investment firm as if they were rules.

COBS 4.7.-1D G

For the purposes of COBS 4.7.-1AUK12, the provisions of articles 47 to 50 of the MiFID Org Regulation can be found reproduced in COBS 6.1ZA and COBS 14.3A.

Other direct offer financial promotions

COBS 4.7.1 R RP

  1. (1)

    Subject to (3) and (4), a firm must ensure that a direct offer financial promotion that is addressed to, or disseminated in such a way that it is likely to be received by, a retail client contains:

    1. (a)

      11the information referred to in the rules on information disclosure (COBS 6.1.4 R, COBS 6.1.6 R, COBS 6.1.7 R, COBS 6.1.9 R, COBS 14.3.2 R, COBS 14.3.3 R, COBS 14.3.4 R and COBS 14.3.5 R) as is relevant to that offer or invitation; and11

    2. (b)

      11additional appropriate information about the relevant business and relevant investments so that the client is reasonably able to understand the nature and risks of the relevant business and relevant investments and consequently to take investment decisions on an informed basis.

  2. (2)

    This rule does not require the information in (1) to be included in a direct offer financial promotion if, in order to respond to an offer or invitation contained in it, the retail client must refer to another document or documents, which, alone or in combination, contain that information.

  3. (3)

    This rule16 does not apply in relation to a marketing11 communication that11 relates to a firm'sMiFID, equivalent third country or optional exemption business11

    33
  4. (4)

    [deleted]16

    311311
  5. (5)

    [deleted]11

    2

Guidance

COBS 4.7.2 G

Although COBS 4.7.1R (1)(b) does not apply in relation to MiFID, equivalent third country or optional exemption business11, similar requirements may apply under COBS 2.2A11.

COBS 4.7.2A G
  1. (1)

    6BCOBS 2A contains rules and guidance about the inclusion of a summary box in a direct offer financial promotion relating to a cash deposit ISA or cash deposit CTF provided by a firm other than a credit union.

  2. (2)

    Where BCOBS 2A applies, COBS 4.7.1R(1)(b) does not require a firm to include information outside a summary box in a direct offer financial promotion to the extent that this would simply repeat information included in a summary box in the same financial promotion.

COBS 4.7.3 G
  1. (1)

    COBS 4.7.1R (2) allows a firm to communicate a direct offer financial promotion that does not contain all the information required by COBS 4.7.1R (1), if the firm can demonstrate that the client has referred to the required information before the client makes or accepts an offer in response to the direct offer financial promotion.

  2. (2)

    A firmcommunicating or approving a direct offer financial promotion may also be subject to:10

    1. (a)

      the rules on providing product information in COBS 14.2, including the exceptions in COBS 14.2.5R to 14.2.9R; and10

    2. (b)

      the requirement in the PRIIPs Regulation to provide a key information document10.

COBS 4.7.4 G RP

In order to enable a client to make an informed assessment of a relevant investment or relevant business, a firm may wish to include in a direct offer financial promotion:

  1. (1)

    a summary of the taxation of any investment to which it relates and the taxation consequences for the average member of the group to whom it is directed or by whom it is likely to be received;1

  2. (2)

    a statement that the recipient should seek a personal recommendation if he has any doubt about the suitability of the investments or services being promoted; and1

  3. (3)

    (in relation to a promotion for a non-PRIIP packaged product10 that is not a financial instrument) a key features illustration, in which a generic projection may generally be used.1

COBS 4.7.5 G

[deleted]4

4
COBS 4.7.5A G RP

4 COBS 4.13.2 R (Marketing communications relating to UCITS schemes12) and COBS 4.13.3 R (Marketing communications relating to feeder UCITS) contain additional disclosure requirements for firms in relation to marketing communications (other than key investor information) that concern particular investment strategies of a UCITS scheme12

Warrants and derivatives5

COBS 4.7.6 R RP
  1. (1)

    2A firm must not communicate or approve a direct offer financial promotion:

    1. (a)

      relating to a warrant or derivative;

    2. (b)

      to or for communication to a retail client; and

    3. (c)

      where the firm will not itself be required to comply with the rules on appropriateness (see COBS 10 and 10A11);

    unless the firm has adequate evidence that the condition in (2) is satisfied.

  2. (2)

    The condition is that the person who will arrange or deal in relation to the derivative or warrant will comply with the rules on appropriateness or equivalent requirements for any application or order that the person is aware, or ought reasonably to be aware, is in response to the direct offer financial promotion.

COBS 4.7.6A G

14 Firms are reminded of their obligations in relation to the marketing, distribution and sale of restricted speculative investments in COBS 22.5.

COBS 4.7.6B G

18 19 Firms are reminded of the prohibitions in relation to the marketing, distribution and sale of cryptoasset derivatives and cryptoasset exchange traded notes in COBS 22.6.

COBS 4.7.6C R

[deleted]21

COBS 4.7.6D R

[deleted]21

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COBS 4.7.6E R

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COBS 4.7.6F G

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COBS 4.7.6G G

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COBS 4.7.6H R

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COBS 4.7.6I G

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COBS 4.7.6J R

[deleted]21

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COBS 4.7.6K G

[deleted]21

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COBS 4.7.6L R

[deleted]21

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COBS 4.7.6M G

[deleted]21

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COBS 4.7.6N R

[deleted]21

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COBS 4.7.6O G

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COBS 4.7.7 R RP

[deleted]21

COBS 4.7.8 R RP

[deleted]21

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COBS 4.7.9 R RP

[deleted]21

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COBS 4.7.10 R RP

[deleted]21

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COBS 4.7.11 G

[deleted]21

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COBS 4.7.11A G

[deleted]21

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COBS 4.7.12 G

[deleted]21

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COBS 4.7.13 G

[deleted]21

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COBS 4.7.14 R

[deleted]21

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COBS 4.7.15 G

[deleted]21

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