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Status: You are viewing the version of the handbook as on 2005-06-30.

SIFA 9.4 Inducements

SIFA 9.4.1G

You must ensure that your firm, or anyone acting on behalf of it, does not conduct business under arrangements that are likely to result in a material conflict with your duty to your customers ( COB 2.3.3 R). This includes any inducement being given or received by an unregulated associate.

SIFA 9.4.2G

Principles 1 (Integrity) and 6 (Consumer's interest) apply to the issue of inducements.

Where are the relevant sections in the Handbook?

SIFA 9.4.3G

The following sections are relevant:

  1. (1)

    Section 2.2 of COB in particular COB 2.2.3 R requires a firm to be satisfied that it or anyone acting on its behalf does not conduct business under arrangements that are likely to result in a material conflict with its duty to its customers.

  2. (2)

    Selling packaged products is on the basis of disclosable commission or fees. Restrictions on the arrangements under which commission may be paid to an IFA in relation to the sale of a packaged product are set out in COB 2.2.5 E.

  3. (3)

    In addition some indirect benefits are permitted. These are set out in COB 2.2.6 G and the table under COB 2.2.7 G.

  4. (4)

    Record keeping requirements: COB 2.2.20 R.

Other considerations

SIFA 9.4.4G

For any firms that manage investments, COB 2.2.8 R?COB 2.2.19 R is relevant as it covers soft commission.

Record keeping requirements

SIFA 9.4.5G

You must make a record of the following:

SIFA 9.4.6G

Information

Required period of retention

Each payment of disclosable commission

At least six years from the date of payment.

Each benefit given to an independent intermediary

At least six years from the date on which it was given.

SIFA 9.4.7G

The sections below are also relevant:

•'Excessive charges' - Chapter 9.12 of this Overview;

•'Disclosing charges, remuneration & commission' - Chapter 9.13 of this Overview; and

PRIN 2.1 in the Handbook.