Banking: Conduct of Business sourcebook

1 Banking: Conduct ofBusiness sourcebookBCOBS ContentsBanking: Conduct of Business sourcebookBCOBS application1 Annex 1 Structured deposit businessBCOBS 2 Communications andfinancial and Application: Who and what? fair, clear and not misleading box for savings information about overdrafts for personal current general requirements for communications deposit ISAs and cash deposit CTFs2 Annex 1 Form of Summary Box for Savings Accounts2 Annex 2 Guidance on presentation of interest -rate information in savings accountsummary boxBCOBS 2 AOptional additional on marketing or providing an optional product for which afee is payableBCOBS 3 Distance Commerce3 Annex 1 Distance marketing information3 Annex 2 Abbreviated distance marketing informationBCOBS 4 Information to be communicated to banking banking customers to make informed of to be provided by a non ring-fenced body to individualaccount information to be provided about personal current accountsn Release 15l Jan iBCOBS ContentsBCOBS 5 Post sale requirementsBCOBS right to the

2 Right to of on applicable legislationBCOBS 7 Information about current account information is to be published and how is it to be measured? opening a debit of certain services and of information about major operational or security incidents,and complaints of pricing information about personal current of information about current accounts7 Annex 1 Publication of information in a specified formatBCOBS 8 Tools for personal current account and provisions and SchedulesTP 1 Transitional ProvisionsSch 1 Record-keeping requirementsSch 2 Notification requirementsSch 3 Fees and other required paymentsSch 4 Powers exercisedSch 5 Rights of action for damagesSch 6 Rules that can be waivedn Release 15l Jan iiBCOBS Contentsn Release 15l Jan iiiBanking: Conduct of Business sourcebookChapter 1 Applicationn Release 15l Jan 1/1 BCOBS 1 : ApplicationSection.

3 General Release 15l Jan 1 applicationThe general application sourcebook applies to a firm with respect to the activity of acceptingdeposits from banking customers carried on from an establishmentmaintained by it in the United Kingdom and activities connected with to payment services and electronic addition to the general application rule, Chapter 2 of BCOBS applies to afirm (other than a credit union), an electronic money institution, a paymentinstitution and a registered account information service provider with respectto the provision of payment services or issuance or redemption of electronicmoney carried on from an establishment maintained by it or its agent in theUnited Kingdom and activities connected with those activities. These personsare referred to collectively in Chapters 1 and 2 of BCOBS as providers .Limitations on the general application rule and general application rule is modified:(1) in the chapters of this sourcebook for particular purposes; and(2) in n BCOBS 1 Annex 1 for certain types of firm in relation to the sale ofstructured as provided for in n BCOBS , this sourcebook does not apply to:(1) payment services where Parts 6 and 7 of the Payment ServicesRegulations apply; or(2) a person or firm which has permission for accepting deposits but onlyfor the purposes of, or in the course of, an activity other thanaccepting deposits.

4 (1) Chapters 2, 2A, 5 and 6 of BCOBS (except for n BCOBS ton BCOBS R) and n BCOBS and n apply to payment serviceswhere Parts 6 and 7 of the Payment Services Regulations 1 : ApplicationSection : General Release 15l Jan 1/3(2) Chapter 3 of BCOBS applies to payment services where Parts 6 and 7of the Payment Services Regulations apply with the modifications setout in n BCOBS R(2).(3) [deleted]Guidance on the application of the Payment Services Regulations can befound in n PERG BCOBS , n BCOBS , n BCOBS (2A) to (2E), (3A), (6A) and (6B),n BCOBS (2)(a), n BCOBS , n BCOBS , n BCOBS ,n BCOBS , n BCOBS , n BCOBS , n BCOBS 7 (except as appliedby n BCOBS ) and n BCOBS 8 do not apply to a credit BCOBS 2 (Communications and financial promotions) does not apply to theprovision of payment services, the issuance of electronic money or activitiesconnected to those activities by a credit union, except to the extent that theactivity is connected to the activity of accepting deposits from of firm or a provider must not seek to exclude or restrict, or rely on anyexclusion or restriction of, any duty or liability it may have to a bankingcustomer, a payment service customer or an electronic money customerunless it is reasonable for it to do so and the duty or liability arises otherthan under the regulatory general law, including the Unfair Terms Regulations (for contractsentered into before 1 October 2015)

5 And the CRA, also limits the scope for afirm to exclude or restrict any duty or liability to a firm that carries on the activity of accepting deposits which are structureddeposits should refer to n BCOBS 1 Annex 1 : ApplicationSection : General application1n Release 15l Jan 1/4 BCOBS 1 : ApplicationAnnex 11 Structured deposit businessApplication of BCOBS to firms selling structured BCOBS provisions shown below do not apply to a MiFID investment firm, a thirdcountry investment firm or a MiFID optional exemption firm in relation to the sale ofstructured deposits subject to the rules specified in COBS (2).BCOBS provisionDescriptionBCOBS 2 Communications with banking customers andfinancial promotionsBCOBS 4 (other than BCOBS to be communicated to bankingand BCOBS ) firm to which BCOBS 1 Annex 1 paragraph applies should read and understandthe reference to the appropriate information rule in BCOBS as referring toCOBS MiFID investment firm, a third country investment firm or a MiFID optional exemp-tion firm that sells structured deposits should consider COBS to COBS rules specify how certain provisions in COBS apply to a firm in relation to thesale of structured promotions relating to structured (1) BCOBS 2 contains rules which apply to a firm when it communicates a financial pro-motion that is not an excluded communication or when the firm approves a financialpromotion.

6 (2) If a financial promotion relates to a structured deposit, rules relating to past, simu-lated past and future performance in COBS or COBS will also deposits as are reminded that structured deposits are PRIIPs and that the provisions of thePRIIPs Regulation are also relevant to such products. The PRIIPs Regulation requires aperson who advises on, or sells, a PRIIP to provide a retail investor (as defined in thePRIIPs Regulation) with the key information document for that a firm is required to provide information in a key information document, itwill not be required to provide the same information under BCOBS [Note: BCOBS (3) and article 13 of the PRIIPs Regulation]n Release 15l Jan 1 Annex 1/1 BCOBS 1 : ApplicationAnnex 11n Release 15l Jan 1 Annex 1/2 Banking: Conduct of Business sourcebookChapter 2 Communications and financialpromotionsn Release 15l Jan 2/1 BCOBS 2 : Communications andSection : Purpose and Application: Whofinancial promotionsand what?

7 Release 15l Jan 2 and Application: Who andwhat?Principle 6 requires a firm to pay due regard to the interests of its customersand treat them fairly. Principle 7 requires a firm to pay due regard to theinformation needs of its clients and communicate information to them in away which is clear, fair and not misleading. Principles 6 and 7 also apply toan electronic money institution, a payment institution and a registeredaccount information service provider with respect to provision of paymentservices and the issuance of electronic money. This chapter reinforces theserequirements by requiring a firm and these other providers to pay regard tothe information needs of banking customers, payment service customers andelectronic money customers when communicating with, or making a financialpromotion or a payment service or electronic money promotion to, them andto communicate information in a way that is clear, fair and not addition to the general application rule (n BCOBS R), this chapterapplies to the communication, or approval for communication, to a person inthe United Kingdom of a financial promotion of a retail banking serviceunless it can lawfully be communicated by an unauthorised person chapter applies to a firm:(1) communicating with a banking customer in relation to acceptingdeposits.

8 (2) communicating a financial promotion that is not an excludedcommunication; or(3) approving a financial chapter applies to a provider:(1) communicating with a payment service customer or an electronicmoney customer in relation to the provision of a payment service orthe issuing of electronic money and activities connected with thoseactivities; or(2) communicating a payment service or electronic money 2 : Communications andSection : Purpose and Application: Whofinancial promotionsand what? Release 15l Jan 2/3In accordance with n BCOBS 1 Annex 1 paragraph , n BCOBS 2 does notapply to a MiFID investment firm, a third country investment firm or a MiFIDoptional exemption firm in relation to the sale of structured deposits. AMiFID investment firm, a third country investment firm or a MiFID optionalexemption firm is subject to the rules specified in n COBS (2) in relationto the sale of structured 2 : Communications andSection : The fair, clear and notfinancial promotionsmisleading Release 15l Jan 2 fair, clear and not misleadingruleA firm or other provider must take reasonable steps to ensure that acommunication, financial promotion or payment service or electronic moneypromotion is fair, clear and not fair, clear and not misleading rule applies in a way that is appropriateand proportionate taking into account the means of communication and theinformation that it is intended to convey.

9 So a communication addressed to abanking customer, a payment service customer or an electronic moneycustomer who is not a consumer may not need to include the sameinformation, or be presented in the same way, as a communication addressedto a rules in n SYSC 3 (Systems and Controls) and n SYSC 4 (Generalorganisational requirements) require a firm to put in place systems andcontrols or policies and procedures in order to comply with the rules inn COBS (Past, simulated past and future performance), n COBS R(Direct offer financial promotions), n COBS (Systems and controls andapproving and communicating financial promotions) and this chapter 7 (Offences relating to Financial Services) of the Financial Services Act2012 create criminal offences relating to certain misleading statements communication, financial promotion or payment service or electronicmoney promotion should not describe a feature of a product or service as"guaranteed", "protected" or "secure", or use a similar term unless:(1) that term is capable of being a fair, clear and not misleadingdescription of it.

10 And(2) the firm or other provider communicates all of the informationnecessary, and presents that information with sufficient clarity andprominence, to make the use of that term fair, clear and communication, or payment service or electronic money promotionrelating to a currency transfer service is likely to be misleading if it presentsan exchange rate in a way that is likely to give the impression that the rateBCOBS 2 : Communications andSection : The fair, clear and notfinancial promotionsmisleading Release 15l Jan 2/5is available to a person or a class of persons if that rate is unlikely to beobtained by that person or class of persons with respect to a inclusion of wording in a communication or payment service orelectronic money promotion to the effect that an exchange rate shown isnot available to particular customers will not necessarily prevent thepresentation of the exchange rate being communication or a financial promotion that refers to sums available byway of an authorised non- Business overdraft agreement should make clearthat such sums constitute borrowing or 2 : Communications andSection.