Related provisions for COBS 20.2.2

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COBS 11.2.1RRP
A firm must take all reasonable steps to obtain, when executing orders, the best possible result for its clients taking into account the execution factors. [Note: article 21(1) of MiFID and article 25(2) first sentence of the UCITS implementing Directive]2[Note: The Committee of European Securities Regulators (CESR) has issued a Question and Answer paper on best execution under MiFID. This paper also incorporates the European Commission's response to CESR's questions regarding
COBS 11.2.1ARRP
2A management company must, in relation to each UCITS scheme or EEA UCITS scheme it manages, act in the best interests of the scheme when executing decisions to deal on its behalf in the context of the management of its portfolio, and COBS 11.2.1 R applies in relation to all such decisions.[Note: article 25(1) of the UCITS implementing Directive]
COBS 11.2.2GRP
The obligation to take all reasonable steps to obtain the best possible result for its clients (see COBS 11.2.1 R) should apply to a firm which owes contractual or agency obligations to the client. [Note: recital 33 to MiFID]
COBS 11.2.4GRP
If a firm provides a quote to a client and that quote would meet the firm's obligations to take all reasonable steps to obtain the best possible result for its clients if the firm executed that quote at the time the quote was provided, the firm will meet those same obligations if it executes its quote after the client accepts it, provided that, taking into account the changing market conditions and the time elapsed between the offer and acceptance of the quote, the quote is not
COBS 11.2.5GRP
The obligation to deliver the best possible result when executing client orders applies in relation to all types of financial instruments. However, given the differences in market structures or the structure of financial instruments, it may be difficult to identify and apply a uniform standard of and procedure for best execution that would be valid and effective for all classes of instrument. Best execution obligations should therefore be applied in a manner that takes into account
COBS 11.2.7RRP
Where a firm executes an order on behalf of a retail client, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which must include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.
COBS 11.2.8GRP
For the purposes of ensuring that a firm obtains the best possible result for the client when executing a retail client order in the absence of specific client instructions, the firm should take into consideration all factors that will allow it to deliver the best possible result in terms of the total consideration, representing the price of the financial instrument and the costs related to execution. Speed, likelihood of execution and settlement, the size and nature of the order,
COBS 11.2.9GRP
A firm's execution policy should determine the relative importance of each of the execution factors or establish a process by which the firm will determine the relative importance of the execution factors. The relative importance that the firm gives to those execution factors must be designed to obtain the best possible result for the execution of its client orders. Ordinarily, the FCA would expect that price will merit a high relative importance in obtaining the best possible
COBS 11.2.14RRP
A firm must establish and implement effective arrangements for complying with the obligation to take all reasonable steps to obtain the best possible result for its clients. In particular, the firm must establish and implement an order execution policy to allow it to obtain, for its client orders, the best possible result in accordance with that obligation. [Note: article 21(2) of MiFID and article 25(3) first paragraph of the UCITS implementing Directive]2
COBS 11.2.16GRP
(1) When establishing its execution policy, a firm should determine the relative importance of the execution factors, or at least establish the process by which it determines the relative importance of these factors, so that it can deliver the best possible result to its clients.(2) In order to give effect to that policy, a firm should select the execution venues that enable it to obtain on a consistent basis the best possible result for the execution of client orders.(3) A firm
COBS 11.2.30RRP
A firm must, when providing the service of portfolio management or, for a management company, collective portfolio management,2 comply with the obligation to act in accordance with the best interests of its clients when placing orders with other entities for execution that result from decisions by the firm to deal in financial instruments on behalf of its client. [Note: article 45(1) of MiFID implementing Directive and article 26(1) of the UCITS implementing Directive]2
COBS 11.2.31RRP
A firm must, when providing the service of reception and transmission of orders, comply with the obligation to act in accordance with the best interests of its clients when transmitting client orders to other entities for execution. [Note: article 45(2) of the MiFID implementing Directive]
COBS 11.2.32RRP
In order to comply with the obligation to act in accordance with the best interests of its clients when it places an order with, or transmits an order to, another entity for execution, a firm must:[Note: article 45(3) of the MiFID implementing Directive and article 26(1) of the UCITS implementing Directive]2(1) take all reasonable steps to obtain the best possible result for its clients taking into account the execution factors. The relative importance of these factors must be
COBS 20.2.16BGRP
5References to distributions in COBS 20 includes distributions of distributable profits arising, namely any permanent addition to policy benefits made at the firm's discretion based on the investment or other experience in the fund or more generally. Distributions include those relating to expected payments for which allowance has been made in the technical provisions or to a firm's other liabilities arising from its regulatory duty to treat customers fairly, and not just distributions
COBS 20.2.22ERP
(1) If a with-profits fund has an excess surplus, and to retain that surplus would be a breach of Principle 6 (Customers' interests), the firm should make a distribution from that with-profits fund.22(2) Compliance with (1) may be relied on as tending to establish compliance with Principle 6 (Customers' interests).(3) Contravention of (1) may be relied on as tending to establish a contravention of Principle 6 (Customers' interests).
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.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.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.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 2.3.1RRP
A firm must not pay or accept any fee or commission, or provide or receive any non-monetary benefit, in relation to designated investment business or, in the case of its MiFID or equivalent third country business, another ancillary service, carried on for a client other than:(1) a fee, commission or non-monetary benefit paid or provided to or by the client or a person on behalf of the client; or(2) a fee, commission or non-monetary benefit paid or provided to or by a third party
COBS 2.3.3GRP
The obligation of a firm to act honestly, fairly and professionally in accordance with the best interests of its clients includes both the client's best interests rule and the duties under Principles 1 (integrity), 2 (skill, care and diligence) and 6 (customers' interests).
COBS 2.3.9GRP
1The following guidance and evidential provisions provide examples of arrangements the FCA believes will breach the client's best interests rule if a firm sells or arranges5 the sale of a packaged product for a retail client.5
COBS 2.3.11AGRP
5The following guidance and evidential provisions provide examples of arrangements the FCA believes will breach the client's best interests rule in relation to a personal recommendation of a retail investment product or P2P agreement10to a retail client.
COBS 2.3.14GRP
(1) 1In relation to the sale of retail investment products,5 the table on reasonable non-monetary benefits (COBS 2.3.15 G) indicates the kind of benefits which are capable of enhancing the quality of the service provided to a client and, depending on the circumstances, are capable of being paid or received without breaching the client's best interests rule. However, in each case, it will be a question of fact whether these conditions are satisfied. 5(2) The guidance in the table
COBS 2.3.16AGRP
5In interpreting the table of reasonable non-monetary benefits, a firm that provides a personal recommendation in relation to a retail investment product to a retail client or gives advice, or provides a service, to an employer in connection with a group personal pension scheme or a group stakeholder pension scheme6 should be aware that acceptance of benefits on which the firm will have to rely for a period of time is more likely to impair compliance with the client's best interests
COBS 11.6.3RRP
(1) Subject to (3), an3investment manager must not accept any good or service3in addition to the execution of its customer orders if it:33(a) executes its customer orders through a broker or another person;(b) passes on the broker's or other person'scharges to its customers; and(c) is offered that good or service3 in return for the charges referred to in (b).3(2) [deleted]3(3) 3The prohibition under (1) does not apply where:(a) the investment manager has reasonable grounds to
COBS 11.6.8AGRP
(1) 3An investment manager intending to pass on to its customers any charges under the exemption at COBS 11.6.3R (3) should have regard to its duties under the client's best interests rule. For example, this means that:(a) an investment manager should not pass on a charge to a customer under the exemption at COBS 11.6.3R (3) that is greater than the cost charged by the broker or relevant person specifically for the relevant good or service falling under COBS 11.6.3R (3); (b) if
COBS 19.7.5GRP
This section amplifies Principles 6 and 7, but does not exhaust or restrict what they require. A firm will, in any event, need to ensure that its sales processes are consistent with the Principles and other rules.
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 6.1E.2GRP
A2platform service provider should pay due regard to its obligations under Principle 6 (Customers’ interests), Principle 7 (Communications with clients) and the client's best interests rule, and ensure that it presents retail investment products without bias.2232
COBS 6.1E.3GRP
2A platform service provider should pay due regard to its obligations under Principle 6 (Customers’ interests) and the client's best interests rule and not vary its platform charges inappropriately according to provider or, for substitutable and competing retail investment products, the type of retail investment product.
COBS 6.1C.13GRP
(1) In determining its charging structure and consultancy charges a firm should have regard to the best interests of the employer and the employer’s employees.(2) A firm may not be acting in the best interests of the employer and the employer’s employees if it:(a) varies its consultancy charges inappropriately according to product provider; or(b) allows the availability or limitation of services offered by third parties to facilitate the payment of consultancy charges to influence
COBS 19.1.6GRP
When advising a retail client who is, or is eligible to be, a member of a defined benefits occupational pension scheme or other scheme with safeguarded benefits5whether to transfer, convert 5 or opt-out, a firm should start by assuming that a transfer, conversion 5 or opt-out will not be suitable. A firm should only then consider a transfer, conversion 5 or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer, conversion 5 or opt-out
COBS 4.12.9GRP
(1) 3A firm which wishes to rely on any of the certified high net worth investor exemptions (see Part I of the Schedule to the Promotion of Collective Investment Schemes Order, Part I of Schedule 5 to the Financial Promotions Order and COBS 4.12.6 R) should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should take reasonable steps to ascertain that the retail client does, in fact, meet the income and net assets criteria
COBS 4.12.10GRP
(1) 3A firm which is asked to or proposes to assess and certify a retail client as a certified sophisticated investor (see article 23 of the Promotion of Collective Investment Schemes Order, article 50 of the Financial Promotions Order and COBS 4.12.7 R) should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should carry out that assessment with due skill, care and diligence, having regard to the generally complex nature
COBS 4.12.11GRP
(1) 3A firm which wishes to rely on any of the self-certified sophisticated investor exemptions (see Part II of the Schedule to the Promotion of Collective Investment Schemes Order, Part II of Schedule 5 to the Financial Promotions Order and COBS 4.12.8 R) should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should consider whether the promotion of the non-mainstream pooled investment is in the interests of the client
COBS 4.12.12GRP
(1) 3A firm which wishes to rely on one of the one-off promotion exemptions provided by the Promotion of Collective Investment Schemes or the Financial Promotion Order to promote a non-mainstream pooled investment to a retail client should have regard to its duties under the Principles and the client's best interests rule. In particular, the firm should consider whether the promotion of the non-mainstream pooled investment is in the interests of the client and whether it is fair
COBS 4.12.13GRP
(1) 3A firm which wishes to rely on the excluded communications exemption in COBS 4.12.4R (5) to promote units in a qualified investor scheme to a retail client should have regard to its duties under the Principles and the client's best interests rule. (2) As explained in COLL 8.1, qualified investor schemes are intended only for professional clients and retail clients who are sophisticated investors. Firms should note that, in the FCA's view, promotion of units in a qualified
COBS 6.1B.11GRP
COBS 6.1B.9R(3) does not prevent a firm, if this is in the retail client's best interests, from entering into an agreement with another firm which is providing a personal recommendation to a retail client, or with a retail client of such a firm, to provide it with credit separately in accordance with the rules on providing credit and other benefits to firms that advise on retail investment products or P2P agreements11(COBS 2.3.12 E and COBS 2.3.12A G).
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 11.3.2RRP
A firm must satisfy the following conditions when carrying out client orders:(1) it must ensure that orders executed on behalf of clients are promptly and accurately recorded and allocated;(2) it must carry out otherwise comparable orders sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable, or the interests of the client require otherwise; and(3) it must inform a retail client about any material difficulty relevant
COBS 9.2.7GRP
Although a firm may not be permitted to make a personal recommendation or take a decision to trade because it does not have the necessary information, its client may still ask the firm to provide another service such as, for example, to arrange a deal or to deal as agent for the client. If this happens, the firm should ensure that it receives written confirmation of the instructions. The firm should also bear in mind the client's best interests rule and any obligation it may have
COBS 2.1.1RRP
(1) 1A firm must act honestly, fairly and professionally in accordance with the best interests of its client (the client's best interests rule).(2) This rule applies in relation to designated investment business carried on:(a) for a retail client; and(b) in relation to MiFID or equivalent third country business, for any other client.(3) For a management company, this rule applies in relation to any UCITS scheme or EEA UCITS scheme the firm manages.23[Note: article 19(1) of MiFID
COBS 2.1.3GRP
(1) In order to comply with the client's best interests rule, a firm should not, in any communication to a retail client relating to designated investment business:(a) seek to exclude or restrict; or(b) rely on any exclusion or restriction of;any duty or liability it may have to a client other than under the regulatory system, unless it is honest, fair and professional for it to do so.(2) The general law, including the Unfair Terms Regulations (for contracts entered into before
COBS 16.2.4GRP
Where a firm executes an order in tranches, the firm may, where appropriate, indicate the trading time and the execution venue in a way that is consistent with this, such as, "multiple". In accordance with the client's best interests rule, a firm should provide additional information at the client's request.
COBS 22.2.3RRP
(1) 1The requirements in (2) and (3) must be met if:(a) the firm is not providing an investment service in the course of MiFID or equivalent third country business; and(b) the retail client is not otherwise receiving advice on the mutual society share from the firm or another person.(2) The firm must give the retail client the following statement on paper or another durable medium and obtain confirmation in writing from the retail client that he has signed it, in good time before
COBS 20.5.3RRP
A firm must ensure that the terms of reference contain, as a minimum, terms having the following effect:(1) the role of the with-profits committee or advisory arrangement is, as relevant, to assess, report on, and provide clear advice and, where appropriate, recommendations to the firm'sgoverning body on:(a) the way in which each with-profits fund is managed by the firm and, if a PPFM is required, whether this is properly reflected in the PPFM;(b) if applicable, whether the firm