Related provisions for COBS 9.6.11

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COBS 6.1A.1RRP
(1) 1This section applies to a firm which makes a personal recommendation to a retail client in relation to a retail investment product.personal recommendations to retail clients in relation to retail investment products.(2) This section does not apply to a firm giving advice, or providing services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme.2
COBS 6.1A.1AGRP
8Guidance on the regulated activity of advising in relation to a new or existing investment can be found in PERG 8.24 to PERG 8.29. Although the guidance in PERG 8.29.7 G relates to advising on investments under article 53 of the Regulated Activities Order, exactly the same answers apply to a personal recommendation because the examples given relate to the relationship between a firm and a particular client and advice given to that specific client. A firm wishing to know when
COBS 6.1A.2RRP
This section does not apply to a firm when it gives basic advice in accordance with the basic advicerules.
COBS 6.1A.2ARRP
4This section does not apply to a firm when it makes a personal recommendation to a retail client in relation to a Holloway sickness policy, provided that the Holloway policy special application conditions are met.
COBS 6.1A.4RRP
Except as specified in COBS 6.1A.4A R and COBS 6.1A.4B R, a firm must:6(1) only be remunerated for the personal recommendation (and any other related services provided by the firm) by adviser charges; and(2) not solicit or accept (and ensure that none of its associates solicits or accepts) any other commissions, remuneration or benefit of any kind in relation to the personal recommendation or any other related service, regardless of whether it intends to refund the payments or
COBS 6.1A.4ARRP
6A firm and its associates may:(1) solicit and accept a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1A.4 R if:(a) the personal recommendation was made on or before 30 December 2012;(b) the solicitation and acceptance of the commission, remuneration or benefit of any kind was permitted by the rules in force on 30 December 2012;(c) the contract under which the right to receive the commission, remuneration or benefit of any kind was entered
COBS 6.1A.4AAGRP
(1) 8A firm may continue to accept a commission, remuneration or benefit of any kind after 30 December 2012 if there is a clear link between the payment and an investment in a retail investment product which was made by the retail client following a personal recommendation made, or a transaction executed, on or before 30 December 2012. This is the case even if the firm makes a personal recommendation to the same retail client after 30 December 2012 to the extent that the continued
COBS 6.1A.4BRRP
6If a retail client chooses to become a client of a firm and that firm or its associate enters into an arrangement in COBS 6.1A.4AR (2), the firm must:(1) before the arrangement is entered into, disclose to the retail client that the transfer of the commission, remuneration or benefit of any kind will be requested by the firm or its associate;(2) throughout the period during which the firm or its associate receives the commission, remuneration or benefit of any kind, provide the
COBS 6.1A.5GRP
A firm may receive an adviser charge that is no longer payable (for example, after the service it is received in payment for has been amended or terminated) provided the firm refunds any such payment to the retail client.
COBS 6.1A.6RRP
7‘Related service(s)’ for the purposes of COBS 6.1A includes:(1) arranging or executing a transaction which has been recommended to a retail client by the firm, an associate or another firm in the same group or conducting administrative tasks associated with that transaction; or(2) managing a relationship between a retail client (to whom the firm provides personal recommendations on retail investment products) and a discretionary investment manager or providing a service to such
COBS 6.1A.8GRP
Examples of payments and benefits that should not be accepted under the requirement to be paid through adviser charges include:(1) a share of the retail investment product charges or platform service provider's charges, or5retail investment product provider’s or platform service provider's5 revenues or profits; and5(2) a commission set and payable by a retail investment product provider in any jurisdiction.
COBS 6.1A.9RRP
If the firm or its associate is the retail investment product provider, the firm must ensure that the level of its adviser charges is at least reasonably representative of the services associated with making the personal recommendation (and related services).
COBS 6.1A.10GRP
An adviser charge is likely to be reasonably representative of the services associated with making the personal recommendation if:(1) the expected long term costs associated with making a personal recommendation and distributing the retail investment product do not include the costs associated with manufacturing and administering the retail investment product;(2) the allocation of costs and profit to adviser charges and product charges is such that any cross-subsidisation is not
COBS 6.1A.11RRP
A firm must determine and use an appropriate charging structure for calculating its adviser charge for each retail client.
COBS 6.1A.12GRP
A firm can use a standard charging structure.
COBS 6.1A.13GRP
In determining its charging structure and adviser charges a firm should have regard to its duties under the client's best interests rule. Practices which may indicate that a firm is not in compliance with this duty include:(1) varying its adviser charges inappropriately according to provider or, for substitutable and competing retail investment products, the type of retail investment product; or(2) allowing the availability or limitations of services offered by third parties
COBS 6.1A.14RRP
A firm must not use a charging structure which conceals the amount or purpose of any of its adviser charges from a retail client.
COBS 6.1A.15GRP
A firm is likely to be viewed as operating a charging structure that conceals the amount or purpose of its adviser charges if, for example:(1) it makes arrangements for amounts in excess of its adviser charges to be deducted from a retail client's investments from the outset, in order to be able to provide a cash refund to the retail client later; or(2) it provides other services to a retail client (for example, advising on a home finance transaction or advising on an equity release
COBS 6.1A.16GRP
In order to meet its responsibilities under the client's best interests rule and Principle 6 (Customers’ interests), a firm should consider whether the personal recommendation or any other related service7 is likely to be of value to the retail client when the total charges the retail client is likely to be required to pay are taken into account.
COBS 6.1A.17RRP
A firm must disclose its charging structure to a retail client in writing, in good time before making the personal recommendation (or providing related services).
COBS 6.1A.18GRP
A firm may wish to consider disclosing as its charging structure a list of the advisory services it offers with the associated indicative charges which will be used for calculating the adviser charge for each service.
COBS 6.1A.19GRP
In order to meet the requirement in the rule on information disclosure before providing services (COBS 2.2.1 R), a firm should ensure that the disclosure of its charging structure is in clear and plain language and, as far as is practicable, uses cash terms. If a firm's charging structure is in non-cash terms, examples in cash terms should be used to illustrate how the charging structure will be applied in practice.
COBS 6.1A.20GRP
A firm is unlikely to meet its obligations under the fair, clear and not misleading rule and the client's best interests rule unless it ensures that:(1) the charging structure it discloses reflects, as closely as is practicable, the total adviser charge to be paid; for example, the firm should avoid using a wide range; and(2) if using hourly rates in its charging structure, it states whether the rates are indicative or actual hourly rates, provides the basis (if any) upon which
COBS 6.1A.21GRP
A firm may meet the disclosure requirements in this section by using a services and costs disclosure document or a combined initial disclosure document (COBS 6.3 and COBS 6 Annex 1G or COBS 6 Annex 2).
COBS 6.1A.22RRP
A firm must not use an adviser charge which is structured to be payable by the retail client over a period of time unless (1) or (2) applies:(1) the adviser charge is in respect of an ongoing service for the provision of personal recommendations or related services and: (a) the firm has disclosed that service along with the adviser charge; and6(b) the retail client is provided with a right to cancel the ongoing service, which must be reasonable in all the circumstances, without
COBS 6.1A.22AGRP
6To comply with the rule on providing a retail client with the right to cancel an ongoing service for the provision of personal recommendations or related services without penalty (COBS 6.1A.22R (1)(b)) a firm should:(1) ensure that any notice period of the retail client's right of cancellation is reasonable; (2) not make any charge in respect of cancellation of the ongoing service except for an amount which is in proportion to the extent of the service already provided by the
COBS 6.1A.22BRRP
6If a retail client exercises his right to cancel an ongoing service, the firm must clearly disclose to the retail client whether charges for other services provided by the firm, such as custody services, will continue to be payable by the retail client.
COBS 6.1A.23RRP
If COBS 6.1A.22R(1) or (2) do not apply, a firm may not offer credit to a retail client for the purpose of paying adviser charges unless this would be in the best interests of the retail client.
COBS 6.1A.24RRP
(1) A firm must agree with and disclose to a retail client the total adviser charge payable to it or any of its associates by a retail client.(2) A disclosure under (1) must:(a) be in cash terms (or convert non-cash terms into illustrative cash equivalents);(b) be as early as practicable;(c) be in a durable medium or through a website (if it does not constitute a durable medium) if the website conditions are satisfied; and(d) if there are payments over a period of time, include
COBS 6.1A.24AGRP
3If the price of the retail investment product may vary as a result of fluctuations in the financial markets and the adviser charge is expressed as a percentage of that price, a firm need not disclose to the retail client the total adviser charge payable to the firm or any of its associates by the retail client until after execution of the transaction, provided it then does so promptly.
COBS 6.1A.25GRP
A firm may include the information required by the rule on disclosure of total adviser charges (COBS 6.1A.24 R) in a suitability report.
COBS 6.1A.26GRP
To comply with the rule on disclosure of total adviser charges (COBS 6.1A.24 R) and the fair, clear and not misleading rule, a firm's disclosure of the total adviser charge should:(1) provide information to the retail client as to which particular service an adviser charge applied to;(2) include information as to when payment of the adviser charge is due; (3) inform the retail client if the total adviser charge varies materially from the charge indicated for that service in the
COBS 6.1A.27RRP
A firm must keep a record of:(1) its charging structure;(2) the total adviser charge payable by each retail client; and(3) if the total adviser charge paid by a retail client has varied materially from the charge indicated for that service in the firm's charging structure, the reasons for that difference.
COBS 6.2A.1RRP
(1) 1This section applies to a firm that either:(a) makes a personal recommendation to a retail client in relation to a retail investment product; or(b) provides basic advice to a retail client.(2) This section does not apply to a firm when it makes a personal recommendation or provides basic advice to an employee, if that recommendation or advice is provided under the terms of an agreement between the firm and that employee’s employer which is subject to the rules on consultancy
COBS 6.2A.3RRP
(1) A firm must not hold itself out to a retail client as acting independently unless the only personal recommendations in relation to retail investment products it offers to that retail client are:(a) based on a comprehensive and fair analysis of the relevant market; and(b) unbiased and unrestricted.(2) Paragraph (1) does not apply to group personal pension schemes if a firm discloses information to a client in accordance with the rule on group personal pension schemes (COBS
COBS 6.2A.4GRP
(1) A firm that provides both independent advice and restricted advice should not hold itself out as acting independently for its business as a whole. However, a firm may hold itself out as acting independently in respect of its services for which it provides independent advice or advice which meets other independence requirements for particular investments. For example, a firm that provides independent advice on regulated mortgage contracts in accordance with MCOB but restricted
COBS 6.2A.4ARRP
5In complying with COBS 6.2A.3 R, a firm which: (1) holds itself out to a retail client as acting independently; and(2) relies upon a single platform service to facilitate the majority of its personal recommendations in relation to retail investment products;must take reasonable steps to ensure that, as appropriate, the platform service provider bases its selection of retail investment products on a comprehensive, fair and unbiased analysis of the relevant market.
COBS 6.2A.4BGRP
5When a firm considers whether a platform service provider's selection of retail investment products is based on an unbiased analysis of the relevant market, a firm should take into account any fees, commission or non-monetary benefits the platform service provider receives in relation to those retail investment products.
COBS 6.2A.5RRP
A firm must disclose in writing to a retail client, in good time before the provision of its services in respect of a personal recommendation or basic advice in relation a retail investment product, whether its advice will be:(1) independent advice; or(2) restricted advice.
COBS 6.2A.6RRP
(1) A firm must include the term “independent advice” or “restricted advice” or both, as relevant, in the disclosure.(2) If a firm provides independent advice in respect of a relevant market that does not include all retail investment products, a firm must include in the disclosure an explanation of that market, including the types of retail investment products which constitute that market.(3) If a firm provides restricted advice, its disclosure must explain the nature of the
COBS 6.2A.7RRP
A firm must provide the disclosure information required by the rule on describing the breadth of a firm's advice service (COBS 6.2A.5 R) in a durable medium or through a website (if it does not constitute a durable medium) provided the website conditions are satisfied.
COBS 6.2A.8GRP
A firm may meet the disclosure requirements in the rule on describing the breadth of a firm's advice service (COBS 6.2A.5 R) and the rule on content and wording of disclosure (COBS 6.2A.6R) by using a services and costs disclosure document or a combined initial disclosure document (COBS 6.3 and COBS 6 Annex 1G or COBS 6 Annex 2).
COBS 6.2A.9RRP
If a firm provides restricted advice and engages in spoken interaction with the retail client, a firm must disclose orally in good time before the provision of its services in respect of a personal recommendation that it provides restricted advice and the nature of that restriction.
COBS 6.2A.11GRP
A relevant market should comprise all retail investment products which are capable of meeting the investment needs and objectives of a retail client.
COBS 6.2A.12GRP
A relevant market can be limited by the investment needs and objectives of the retail client. For example, ethical and socially responsible investments or Islamic financial products could both be relevant markets. However, a firm would be expected to consider all retail investment products within those investment parameters.
COBS 6.2A.13GRP
For a firm not specialising in a particular market, the relevant market will generally include all retail investment products.
COBS 6.2A.14GRP
A personal recommendation on a retail investment product that invests in a number of underlying investments would not of itself meet the requirements for providing unbiased and unrestricted advice even if the retail investment product invests in a wide range of underlying investments.
COBS 6.2A.15GRP
In order to satisfy the rule on firms holding themselves out as independent (COBS 6.2A.3 R) a firm should ensure that it is not bound by any form of agreement with a retail investment product provider that restricts the personal recommendation the firm can provide or imposes any obligation that may limit the firm's ability to provide a personal recommendation which is unbiased and unrestricted.
COBS 6.2A.16GRP
A firm may be owned by, or own in whole or part, or be financed by or provide finance to, a retail investment product provider without contravening the ‘unbiased, unrestricted’ requirement provided the firm ensures that that ownership or finance does not prevent the firm from providing a personal recommendation which is unbiased and unrestricted.
COBS 6.2A.17GRP
In providing unrestricted advice a firm should consider relevant financial products other than retail investment products which are capable of meeting the investment needs and objectives of a retail client, examples of which could include national savings and investments products and cash deposit ISAs.
COBS 6.2A.18GRP
A firm may provide a personal recommendation on a comprehensive and fair analysis basis required by the rule on firms holding themselves out as independent (COBS 6.2A.3 R) by using ‘panels’. A firm would need to ensure that any panel is sufficiently broad in its composition to enable the firm to make personal recommendations based on a comprehensive and fair analysis, is reviewed regularly, and that the use of the panel does not materially disadvantage any retail client.
COBS 6.2A.19GRP
When using a panel a firm may exclude a certain type or class of retail investment product from the panel if, after review, there is a valid reason consistent with the client's best interests rule, for doing so.
COBS 6.2A.20GRP
If a firm chooses to use a third party to conduct a fair and comprehensive analysis of its relevant market, the firm is responsible for ensuring the criteria used by the third party are sufficient to meet the requirement. For example, criteria which selected retail investment product providers on the basis of payment of a fee (or facilitation of adviser charges), whilst excluding those not paying a fee (or such a facilitation) would not meet the comprehensive and fair analysis
COBS 6.2A.21GRP
Firms are reminded of the general record keeping requirements in SYSC 3.2 and SYSC 9. A firm should keep appropriate records of the disclosures required by this section.
COBS 6.2A.22GRP
(1) Firms are reminded of the systems and controls requirements in SYSC.(2) A firm providing restricted advice should take reasonable care to establish and maintain appropriate systems and controls to ensure that if there is no retail investment product in the firm's range of products which meets the investment needs and objectives of the retail client, no personal recommendation should be made.(3) A firm specialising in a relevant market should take reasonable care to establish
COBS 6.1B.2RRP
This section does not apply to a firm when a retail client receives basic advice in accordance with the basic advicerules.
COBS 6.1B.3GRP
This section applies to a firm when it makes a personal recommendation on a retail investment product and where a retail investment product for which it is the retail investment product provider is the subject of a personal recommendation made by another firm.
COBS 6.1B.5RRP
Except as specified in COBS 6.1B.5A R,5 a firm must not offer or pay (and must ensure that none of its associates offers or pays) any commissions, remuneration or benefit of any kind to another firm, or to any other third party for the benefit of that firm, in relation to a personal recommendation (or any related services), except those that facilitate the payment of adviser charges from a retail client's investments in accordance with this section.
COBS 6.1B.5ARRP
5A firm and its associates may:(1) offer and pay a commission, remuneration or benefit of any kind in the circumstances set out in COBS 6.1B.5 R if:(a) the personal recommendation was made on or before 30 December 2012;(b) the offer and payment was permitted by the rules in force on 30 December 2012;(c) the contract under which the right to receive the commission, remuneration or benefit of any kind was entered into on or before 30 December 2012; (d) the terms of that contract
COBS 6.1B.5BGRP
8A firm may continue paying commission, remuneration or benefits of any kind to another firm in relation to a personal recommendation made by that other firm in circumstances where that other firm may accept that commission, remuneration or benefit of any kind (see COBS 6.1A.4A R and COBS 6.1A.4AA G).
COBS 6.1B.7RRP
A firm must:(1) take reasonable steps to ensure that its retail investment product charges are not structured so that they could mislead or conceal from a retail client the distinction between those charges and any adviser charges payable in respect of its retail investment products; and(2) not include in any marketing materials in respect of its retail investment products or facilities for collecting adviser charges any statements about the appropriateness of levels of adviser
COBS 6.1B.8GRP
A firm should not offer to invest more than 100% of the retail client's investment.
COBS 6.1B.9RRP
A firm that offers to facilitate, directly or through a third party, the payment of adviser charges, including6 by means of a platform service must:4(1) obtain and validate instructions from a retail client in relation to an adviser charge;(2) offer sufficient flexibility in terms of the adviser charges it facilitates; and(3) not pay out or advance adviser charges to the firm to which the adviser charge is owed over a materially different time period, or on a materially different
COBS 6.1B.9AGRP
6A firm facilitates the payment of adviser charges for the purposes of COBS 6.1B.9 R if the adviser charge is not paid directly by the retail client, but is instead paid on behalf of the retail client via the firm.
COBS 6.1B.9BGRP
6A firm may facilitate the payment of adviser charges for the purposes of COBS 6.1B.9 R by:(1) selling all or part of the retail client'sretail investment product to pay the adviser charge; or(2) disposing of or reducing all or part of the retail client's rights under the retail investment product (for example, by way of a part disposal which creates benefits under a life policy) to pay the adviser charge; or(3) separating out an amount or amounts for the payment of the adviser
COBS 9.6.5RRP
When a firm first has contact with a retail client with a view to giving basic advice on a stakeholder product, it must give the retail client:1(1) the basic advice initial disclosure information (COBS 9 Annex 1), in a durable medium, together with an explanation of that information, unless:1(a) it has already done so and the basic advice initial disclosure information is likely still to be accurate and appropriate; or1(b) the contact is not face to face and is using a means of
COBS 9.6.6GRP
(1) A firm may give a retail client the basic advice initial disclosure information (COBS 9 Annex 1) as part of :12(a) a services and costs disclosure document;2 or 1(b) a combined initial disclosure document if it has reasonable grounds to believe that it will provide services relating to a stakeholder product and a non-investment insurance contract, a regulated mortgage contract, an equity release transaction or a home purchase plan.1(2) If a firm provides a services and costs
COBS 9.6.8RRP
If a firm's first contact with a retail client is not face to face, it must:1(1) inform the client at the outset:1(a) (if the communication is initiated by or on behalf of a firm), of the name of the firm and the commercial purpose of the communication;1(b) [deleted]33(c) that the firm will provide the retail client with basic advice without carrying out a full assessment of the retail client's needs and circumstances; and1(d) that such information will be confirmed in writing;
COBS 9.6.12RRP
1A firm must only recommend a stakeholder product to a retail client if:(1) it has taken reasonable steps to assess the client's answers to the scripted questions and any other facts, circumstances or information disclosed by the client during the sales process;(2) (unless the relevant product is a deposit-based stakeholder product) having done so, it has reasonable grounds for believing that the stakeholder product is suitable for the client; and(3) the firm reasonably believes
COBS 9.6.16RRP
1If a firm concludes a contract for a stakeholder product with or for a retail client it must provide a copy of the completed questions and answers to the client in a durable medium as soon as reasonably practicable afterwards.
COBS 9.6.18RRP
1A firm must ensure that none of its representatives:(1) is likely to be influenced by the structure of his or her remuneration to give unsuitable basic advice on stakeholder products to a retail client; or(2) refers a retail client to another firm in circumstances which would amount to the provision of any fee, commission or non-monetary benefit.
COBS 9.6.19RRP
1A firm must record that it has chosen to give basic advice to a retail client and make a record of the range used and the summary sheet (COBS 9.6.14R (2)) prepared for each retail client. That record must be retained for at least five years from the date of the relevant basic advice.
COBS 6.3.3GRP
(1) In the FCA's opinion, a firm may3 comply with the rules referred to in (4) of which (a) to (g) are derived from the Single Market Directives and the Distance Marketing Directive4 by ensuring3 that in good time before:3343(a) a retail client is bound by an agreement for the provision of a personal recommendation on packaged products; or (b) the firm performs an act preparatory to the provision of a personal recommendation;(c) (3in relation to the amendment of a life policy
COBS 6.3.4RRP
For the purposes of GEN 5, a firm may not use the Key facts logo in relation to any document that is designed to comply with rules in COBS 5, 6.1 or COBS 7 unless it is a services and costs disclosure document or a 3combined initial disclosure document produced in accordance with the templates and Notes in the annexes to this chapter. 33
COBS 6.3.14GRP
A firm would be unlikely to comply with the client's best interests rule and the fair, clear and not misleading rule, 3if:33(1) the services and costs disclosure document or the combined initial disclosure document that it provided initially did not reflect the relevant adviser charge or 4expected commission arrangements; or34(2) the firm arranged to retain any commission which exceeded the amount or rate disclosed without first providing further appropriate inducements information
COBS 6.3.21RRP
A firm must take reasonable steps to ensure that its representatives,5 when making contact with an employee with a view to giving a personal recommendation on his employer's group personal pension scheme or group stakeholder pension scheme,5 inform the employee:555(1) that the firm will be providing a personal recommendation on a group personal pension scheme5 and/or a group stakeholder pension scheme5 provided by the employer;(2) whether the employee will be provided with a personal
COBS 6.1C.3RRP
In this section ‘giving advice, or providing services, to an employer in connection with a group personal pension scheme or group stakeholder pension scheme’ includes:(1) giving advice or assistance to an employer on the operation of such a scheme;(2) taking, or helping the employer to take, the steps that must be taken to enable an employee of the employer to become a member of such a scheme; and(3) giving advice to an employee, pursuant to an agreement between the employer and
COBS 6.1.1RRP
(1) 1This section applies to a firm that carries on designated investment business for:(a) a retail client; and(b) in the case of MiFID or equivalent third country business, a client.(2) If expressly provided, this section also applies to ancillary services not covered by (1), but only in the course of MiFID or equivalent third country business carried on with or for a client.
COBS 6.1.7RRP
(1) A firm that holds designated investments or client money for a retail client subject to the custody chapter or the client money chapter must provide that client with the following information:444(a) if applicable,(i) that the designated investments or client money of that client may be held by a third party on behalf of the firm;(ii) the responsibility of the firm under the applicable national law for any acts or omissions of the third party; and(iii) the consequences for