ICOBS 2.1 Client categorisation

Introduction

ICOBS 2.1.1G

1Different provisions in this sourcebook may apply depending on the type of person with whom a firm is dealing:

  1. (1)

    A policyholder includes anyone who, upon the occurrence of the contingency insured against, is entitled to make a claim directly to the insurance undertaking.

  2. (2)

    Only a policyholder or a prospective policyholder who makes the arrangements preparatory to him concluding a contract of insurance (directly or through an agent) is a customer. In this sourcebook, customers are either consumers or commercial customers.

  3. (3)

    A consumer is any natural person who is acting for purposes which are outside his trade or profession.

  4. (4)

    A commercial customer is a customer who is not a consumer.

Customer to be treated as consumer when status uncertain

ICOBS 2.1.2R

If it is not clear in a particular case whether a customer is a consumer or a commercial customer, a firm must treat the customer as a consumer.

Customer covered in both a private and business capacity

ICOBS 2.1.3G
2
  1. (1)

    Except where paragraph (2) applies, if a customer is acting in the capacity of both a consumer and a commercial customer in relation to a particular contract of insurance, the customer is a commercial customer.

    2
  2. (2)

    For the purposes of ICOBS 5.1.4 G and ICOBS 8.1.2 R, if, in relation to a particular contract of insurance, the customer entered into it mainly for purposes unrelated to his trade or profession, the customer is a consumer.

    2

Customer classification examples

ICOBS 2.1.4G

In practice, private individuals may act in a number of capacities. The following table sets out a number of examples of how an individual acting in certain capacities should, in the FCA's view, be categorised.

Customer classification examples

Capacity

Classification

Personal representatives, including executors, unless they are acting in a professional capacity, for example, a solicitor acting as executor.

Consumer

Private individuals acting in personal or other family circumstances, for example, as trustee of a family trust.

Consumer

Trustee of a trust such as a housing or NHS trust.

Commercial customer

Member of the governing body of a club or other unincorporated association such as a trade body and a student union.

Commercial customer

Pension trustee.

Commercial customer

Person taking out a policy covering property bought under a buy-to-let mortgage.

Commercial customer

Partner in a partnership when taking out insurance for purposes related to his profession.

Commercial customer