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COBS 9.1 Application and purpose provisions

[Note: ESMA has also issued guidelines under article 16(3) of the ESMA Regulation on certain aspects of the MiFID suitability requirements. See https://www.esma.europa.eu/sites/default/files/library/2015/11/2012-387_en.pdf.]

Making personal recommendations

COBS 9.1.1RRP

1This chapter applies to a firm which makes a personal recommendation in relation to a designated investment.32

Providing basic advice on a stakeholder product

COBS 9.1.2RRP

If a firm makes a personal recommendation in relation to a stakeholder product, other than in the course of MiFID or equivalent third country business, it may choose to give basic advice under the rules in section 9.6 of this chapter instead of the rules in the remainder of this chapter.

Managing investments

COBS 9.1.3RRP

This chapter applies to a firm which manages investments.

COBS 9.1.3AGRP

3This chapter does not apply to a firm which manages investments when that firm takes a decision to trade for a client and that decision relates to a P2P agreement. This is because the regulated activity of managing investments does not extend to the management of assets where those assets are P2P agreements.

Business which is not MiFID or equivalent third country business

COBS 9.1.4RRP

In respect of the business of a firm which is not MiFID or equivalent third country business, this chapter applies only if:

  1. (1)

    the client is a retail client; or

  2. (2)

    the firm is managing the assets of an occupational pension scheme, stakeholder pension scheme or personal pension scheme.

Life policies for professional clients

COBS 9.1.5RRP

If the firm makes a personal recommendation to a professional client to take out a life policy, this chapter applies only those rules which implement the requirements of the Insurance Mediation Directive.

COBS 9.1.6GRP

If a rule implements a requirement of the Insurance Mediation Directive, a Note follows the rule indicating which provision is being implemented. COBS 7 (Insurance mediation) contains further rules implementing the Insurance Mediation Directive.

COBS 9.1.7GRP

The effect of these application rules and the fact that the Insurance Mediation Directive does not apply to an insurer (unless it is involved in mediation activities) is that this chapter does not apply to an insurer when it is making a personal recommendation to a professional client to take out a life policy.

Related rules

COBS 9.1.8GRP

For a firm making personal recommendations in relation to pensions, COBS 19 contains additional provisions relevant to assessing suitability and the contents of suitability reports.

COBS 9.1.9GRP

COBS 7 (Insurance mediation) contains requirements relating to the basis on which certain recommendations may be made, including requirements relating to fair analysis and range and scope.