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Status: You are viewing the version of the handbook as on 2018-01-03.

COBS 9.5A Additional guidance for firms with insistent clients

Purpose

COBS 9.5A.1G

1The guidance in this section is relevant where a client of a firm becomes an insistent client. The purpose of the guidance is to set out how a firm, when dealing with an insistent client, can comply with its obligations under:

  1. (1)

    the Principles (see PRIN 2);

  2. (2)

    the client’s best interests rule (see COBS 2.1.1R);

  3. (3)

    the fair, clear and not misleading rule (see COBS 4.2.1R);

  4. (4)

    the rules on suitability in this chapter (COBS 9 (Suitability (including basic advice)); and

  5. (5)

    the rules on record-keeping (see COBS 9.5 (Record keeping and retention periods for suitability reports) and SYSC 9 (General rules on record-keeping)).

Who is an insistent client?

COBS 9.5A.2G

In this section, a client should be considered an insistent client where:

  1. (1)

    the firm has given the client a personal recommendation;

  2. (2)

    the client decides to enter into a transaction which is different from that recommended by the firm in the personal recommendation; and

  3. (3)

    the client wishes the firm to facilitate that transaction.

Information to be communicated to an insistent client

COBS 9.5A.3G
  1. (1)

    Where a firm proceeds to execute a transaction for an insistent client which is not in accordance with the personal recommendation given by the firm, the firm should communicate to the insistent client, in a way which is clear, fair and not misleading, and having regard to the information needs of the insistent client so that the client is able to understand, the information set out in (2).

  2. (2)

    The information which the firm should communicate to the insistent client is:

    1. (a)

      that the firm has not recommended the transaction and that it will not be in accordance with the firm’s personal recommendation;

    2. (b)

      the reasons why the transaction will not be in accordance with the firm’s personal recommendation;

    3. (c)

      the risks of the transaction proposed by the insistent client; and

    4. (d)

      the reasons why the firm did not recommend that transaction to the client.

Acknowledgement from the insistent client

COBS 9.5A.4G
  1. (1)

    The firm should obtain from the insistent client an acknowledgement that:

    1. (i)

      the transaction is not in accordance with the firm’s personal recommendation; and

    2. (ii)

      the transaction is being carried out at the request of the client.

  2. (2)

    Where possible, the acknowledgment should be in the client’s own words.

Further personal recommendations given to an insistent client

COBS 9.5A.5G

Where a firm gives a further personal recommendation in relation to the transaction proposed by the insistent client, the firm should make clear to the client that this personal recommendation is distinct from, but does not affect the conclusions of, the initial personal recommendation.

Record keeping

COBS 9.5A.6G
  1. (1)

    A firm dealing with an insistent client should retain a record of:

    1. (a)

      the advice and transaction process followed, including the communications with the client; and

    2. (b)

      the acknowledgment from the client referred to in COBS 9.5A.4G.

COBS 9.5A.7G

A firm dealing with an insistent client should also refer to the record keeping requirements in COBS 9.5 (Record keeping and retention periods for suitability records) and SYSC 9.1 (General rules on record-keeping).