COBS 6.1ZA Information about the firm and compensation information (MiFID and insurance distribution provisions)

1. (1)

   2Subject to (2) and (3)3, this section applies to a firm:3

   1. (a)

      in relation to its MiFID, equivalent third country or optional exemption business; and3

   2. (b)

      carrying on insurance distribution activities.3

2. (2)

   COBS 6.1ZA.16R2 does not apply to a firm in respect of its MiFID optional exemption business.

3. (3)

   Where a firm is carrying on insurance distribution activities for a professional client only those rules which implement the requirements of the IDD apply.3

2Provisions in this section marked “EU” apply in relation to MiFID optional exemption business as if they were rules (see COBS 1.2.2G).

3A firm carrying on insurance distribution activities must provide a retail client with the following general information, if relevant:

1. (1)

   the name and address of the firm, and the contact details necessary to enable a client to communicate effectively with the firm;

2. (2)

   the methods of communication to be used between the firm and the client including, where relevant, those for the sending and reception of orders;

3. (3)

   a statement of the fact that the firm is authorised and the name of the competent authority that has authorised it;

4. (4)

   if the firm is acting through an appointed representative a statement of this fact specifying the EEA State in which that appointed representative is registered;

5. (5)

   the nature, frequency and timing of the reports on the performance of the service to be provided by the firm to the client in accordance with the rules on reporting to clients on the provision of services (COBS 16 or COBS 16A in relation to an insurance-based investment product);

6. (6)
   1. (a)

      a description, which may be provided in summary form, of (as applicable) the conflicts of interest policy, SYSC 3.3.1EU (applied by SYSC 3.3.3R) or the policy required by article 4(1) of the IDD Regulation; and

   2. (b)

      if not included in the information provided under (a), when a material interest or conflict of interest may or does arise, the manner in which the firm will ensure fair treatment of the client;

7. (7)

   at any time that the client requests it, further details of the conflicts of interest policy.

The timing of these disclosures is governed by COBS 6.1ZA.19AR.

3In good time before the conclusion of a life policy and, if necessary, on its amendment:

1. (1)

   a firm must provide the client with at least the following information:

   1. (a)

      its identity, address and whether it is an insurance intermediary or an insurance undertaking;

   2. (b)

      whether it provides a personal recommendation about the insurance products offered;

   3. (c)

      the procedures allowing clients and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its clients; and

2. (2)

   an insurance intermediary must also provide the client with the following information:

   1. (a)

      the fact that it is included in the Financial Services Register (or if it is not on the Financial Services Register, the register in which it has been included) and the means for verifying this;

   2. (b)

      whether it has a direct or indirect holding representing 10% or more of the voting rights or capital in a given insurance undertaking (that is not a pure reinsurer);

   3. (c)

      whether a given insurance undertaking (that is not a pure reinsurer) or its parent undertaking has a direct or indirect holding representing 10% or more of the voting rights or capital in the firm; and

   4. (d)

      whether it is representing the client or is acting for and on behalf of the insurer.

[Note: articles 18 and 19(1)(a) and (b) of the IDD]

3Where an insurance intermediary proposes or advises on a life policy, in good time before the conclusion of a life policy and, if necessary, on its amendment, an insurance intermediary must provide the client with at least information on whether the firm:

1. (1)

   gives a personal recommendation on the basis of a fair and personal analysis; or

2. (2)

   is under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings, in which case it must provide the names of those insurance undertakings; or

3. (3)
   1. (a)

      is not under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings; and

   2. (b)

      does not give a personal recommendation on the basis of a fair and personal analysis,

   in which case it must provide its client with the name of those insurance undertakings with which the insurance intermediary may and does conduct business.

[Note: article 19(1)(c) of the IDD]

3If an insurance intermediary informs a client that it gives a personal recommendation on the basis of a fair and personal analysis, it must give that personal recommendation on the basis of an analysis of a sufficiently large number of insurance contracts available on the market to enable it to make a personal recommendation in accordance with professional criteria, regarding which life policy would be adequate to meet the client’s needs.

[Note: article 20(3) of the IDD]

1. (1)

   3Where a firm doing insurance distribution activities holds client money for a retail client and has elected to comply with the client money chapter, it must provide that client with the information specified in:

   1. (a)

      COBS 6.1.7R; or

   2. (b)

      (if it is a firm doing MiFID, equivalent third country or optional exemption business) COBS 6.1ZA.9EU and COBS 6.1.7R(1)(e);

   in relation to that client money.

2. (2)

   For the purposes of COBS 6.1ZA.10AR(1)(b), COBS 1.2.3R applies except ‘funds’ should be read as meaning client money that a firm receives or holds for, or on behalf of, a client in the course of, or in connection with, its insurance distribution activities.

3. (3)

   The timing of this disclosure is governed by COBS 6.1ZA.19AR.

2A3firm must3 provide a client with at least the following3 information about all costs and related charges (see also COBS 2.2A.2R)3:

1. (1)

   (as applicable)3 information relating to:3

   1. (a)

      both investment services and ancillary services; and3

   2. (b)

      the distribution of an insurance-based investment product;3

2. (2)

   where relevant, the cost of any investment advice;

3. (3)

   the cost of the financial instrument or insurance-based investment product3 recommended or marketed to the client;

4. (4)

   information on how the client may pay; and

5. (5)

   details of any third party payments.

[Note: article 24(4)(c) of MiFID, article 29(1)(c) of the IDD3]

1. (1)

   2A firm must aggregate the information about costs and charges required by COBS 2.2A.2R and COBS 6.1ZA.11R2, where those costs and charges are not caused by the occurrence of underlying market risk. This is to allow the client to understand the overall cost, and the cumulative effect on the return, of the investment.

2. (2)

   A firm must provide the client with an itemised breakdown of the costs and charges information required by (1) and COBS 6.1ZA.11R2 when requested by the client.

3. (3)

   The information must, where applicable, be provided to the client on a regular basis, and at least annually, during the life of the investment.

[Note: article 24(4) of MiFID, second paragraph of article 29(1) of the IDD3]

1. (1)

   2A firm must provide the information required by COBS 6.1ZA.11R2 and COBS 6.1ZA.12R2 in a comprehensible form in such a manner that the client is reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument or insurance-based investment product3 that is being offered and, consequently, to take investment decisions on an informed basis.

2. (2)

   That information may be provided in a standardised format.

[Note: article 24(5) of MiFID, third paragraph of article 29(1) of the IDD3]

3In addition to the information specified by COBS 2.2A.2R and COBS 6.1ZA.11R, a firm carrying on insurance distribution activities must provide a retail client with the following information on costs and associated charges, if applicable:

1. (1)

   the total price to be paid by the client in connection with the life policy or the insurance distribution activity, including all related fees, commissions, charges and expenses, and all taxes payable via the firm or, if an exact price cannot be indicated, the basis for the calculation of the total price so that the client can verify it. The commissions charged by the firm must be itemised separately in every case;

2. (2)

   if any part of the total price referred to in (1) is to be paid in or represents an amount of foreign currency, an indication of the currency involved and the applicable currency conversion rates and costs;

3. (3)

   notice of the possibility that other costs, including taxes, related to transactions in connection with the life policy or the insurance distribution activity may arise for the client that are not paid via the firm or imposed by it; and

4. (4)

   the arrangements for payment or other performance.

The timing of this disclosure is governed by COBS 6.1ZA.19AR.

3In good time before the conclusion of the life policy and, if necessary, on its amendment, an insurance intermediary must provide the client with information:

1. (1)

   on the nature of the remuneration received in relation to the life policy;

2. (2)

   about whether in relation to the life policy it works on the basis of:

   1. (a)

      a fee, that is remuneration paid directly by the client; or

   2. (b)

      a commission of any kind, that is the remuneration included in the premium; or

   3. (c)

      any other type of remuneration, including an economic benefit of any kind offered or given in connection with the contract; or

   4. (d)

      on the basis of a combination of any type of remuneration set out above in (a), (b) and (c).

[Note: article 19(1)(d) and (e) of the IDD]

3In good time before the conclusion of a life policy an insurance undertaking must provide its client with information on the nature of the remuneration received by its employees in relation to the life policy.

[Note: article 19(4) of the IDD]

3The remuneration referred to in this section includes remuneration that is not guaranteed or which is contingent on meeting certain targets.

3If any payments, other than ongoing premiums and scheduled payments, are made by the client under the life policy after its conclusion, a firm must make the disclosures required by COBS 6.1ZA.15BR or COBS 6.1ZA.15CR5, for each such payment.

[Note: articles 19(3) and (5) of the IDD]

1. (1)

   3Where a fee is payable in relation to a life policy, the firm must inform its client of the amount of the fee.

2. (2)

   The information in (1) must be given before the client incurs liability to pay the fee, or before conclusion of the life policy, whichever is earlier.

3. (3)

   To the extent that it is not possible for an amount to be given, a firm must give the basis for its calculation.

[Note: articles 19(2) and (5) of the IDD]

3The fee disclosure requirement extends to all such fees that may be charged during the life of a policy.

[Note: article 19(3) of the IDD]

1. (1)

   2This rule applies to a firm that offers an investment service with another service or product or as part of a package or as a condition of the same agreement or package.

2. (2)

   The firm must inform the client whether it is possible to buy the different components separately and must provide information on the costs and charges of each component.

3. (3)

   If the agreement or package is offered to a retail client, the firm must:

   1. (a)

      inform that retail client if the risks resulting from the agreement or package are likely to be different from the risks associated with the components when taken separately; and

   2. (b)

      provide that retail client with an adequate description of the different components of the agreement or package and the way in which its interaction modifies the risks.

[Note: article 24(11) of MiFID]

3When offering a non-insurance ancillary product or service as part of a package or the same agreement with a life policy, a firm must:

1. (1)

   inform the client whether it is possible to buy the different components separately and, if so, must provide the client with an adequate description of:

   1. (a)

      the different components;

   2. (b)

      where applicable, any way in which the risk or insurance coverage resulting from the agreement or package differs from that associated with the components taken separately; and

2. (2)

   provide the client with separate evidence of the costs and charges of each component.

[Note: article 24(1) and (2) of the IDD]

3When offering a life policy ancillary to and as part of a package or in the same agreement with a non-insurance product or service, a firm must offer the client the option of buying the non-insurance goods or services separately.

3 COBS 6.1ZA.16BR does not apply where the non-insurance product or service is any of the following:

1. (1)

   investment services or activities; or

2. (2)

   a credit agreement as defined in point 3 of article 4 of the MCD which is:

   1. (a)

      an MCD credit agreement; or

   2. (b)

      an exempt MCD credit agreement; or

   3. (c)

      a CBTL credit agreement; or

   4. (d)

      a credit agreement referred to in articles 72G(3B) and (4) of the Regulated Activities Order; or

3. (3)

   a payment account as defined in regulation 2(1) of the Payment Accounts Regulations.

[Note: article 24(3) of the IDD]

3 COBS 6.1ZA.16AR to COBS 6.1ZA.16CR do not prevent the distribution of insurance products which provide coverage for various types of risks (multi-risk insurance policies).

[Note: article 24(5) of the IDD]

1. (1)

   3A firm must provide a client with the information required by COBS 6.1ZA.7AR, COBS 6.1ZA.10AR and COBS 6.1ZA.15AR in good time before the provision of the insurance distribution activity concerned unless otherwise provided by this rule.

2. (2)

   A firm may instead provide that information immediately after starting to provide the insurance distribution activity concerned if:

   1. (a)

      the firm was unable to comply with (1) because, at the request of the client, the agreement was concluded using a means of distance communication which prevented the firm from doing so; and

   2. (b)

      in any case where the rule on voice telephony communications (COBS 5.1.12R) does not otherwise apply, the firm complies with that rule in relation to the retail client, as if that client were a consumer.

3Where this section requires an insurance distributor to provide information to clients in relation to a life policy it must do so in accordance with COBS 7.4 (Means of communication to clients), unless COBS 6.1ZA.18AR(2) applies.

[Note: article 23 of the IDD]

1. (1)

   3A firm carrying on insurance distribution activities must notify a client in good time about any material change to the information provided in relation to an insurance distribution activity under this section which is relevant to a service that the firm is providing to that client.

2. (2)

   A firm must provide this notification in a durable medium if the information to which it relates was given in a durable medium.

1. (1)

   2A firm must make available to a client, who has used or intends to use a firm’s services, information necessary for the identification of the compensation scheme or any other investor-compensation scheme of which the firm is a member (including, if relevant, membership through a branch) or any alternative arrangement provided for in accordance with the Investor Compensation Directive.

2. (2)

   The information under (1) must include the amount and scope of the cover offered by the compensation scheme and any rules laid down by the EEA State pursuant to article 2(3) of the Investor Compensation Directive.

3. (3)

   A firm must provide, on the client’s request, information concerning the conditions governing compensation and the formalities which must be completed to obtain compensation.

4. (4)

   The information provided for in this rule must be made available in a durable medium or via a website if the website conditions are satisfied in the official language or languages of the EEA State.

[Note: article 10(1) and (2) of the Investor Compensation Directive]