Conduct of Business Sourcebook - FCA Handbook

1 Conduct of BusinessSourcebookCOBS ContentsConduct of Business SourcebookCOBS in Financial Instruments distribution1 Annex 1 Application (see COBS )COBS 2 Conduct of Business honestly, fairly and disclosure before providing services (other than MiFID andinsurance distribution) disclosure before providing services (MiFID and insurancedistribution provisions ) relating to Business other than MiFID, equivalent thirdcountry or optional exemption Business and insurance-based relating to MiFID, equivalent third country or optionalexemption Business and insurance-based investment and and execution as client and reliance on additional productsCOBS 3 Client clients with a higher level of , procedures and recordsCOBS 4 Communicating with clients, includingfinancial , clear and not misleading promotions to be identifiable as with retail clients (non-MiFID provisions )n Release 21l Jul iCOBS with clients (including past, simulated past and futureperformance) (MiFID provisions ) , simulated past and future performance (non-MiFID provisions ) offerfinancial calls and other promotions that are not in promotions with an overseas and controls and approving and keeping.

2 Financial on the promotion of non-mainstream pooled on the promotion of speculative illiquid securities to retailclientsCOBS 5 Distance distance marketing disclosure Annex 1 Distance marketing information5 Annex 2 Abbreviated distance marketing disclosureCOBS 6 Information about thefirm, its services and about thefirm and compensation information (non-MiFIDand non-insurance distribution provisions ) about thefirm and compensation information (MiFID andinsurance distribution provisions ) charging and investment product provider, operator of an electronic system inrelation to lending, and platform service provider requirements relatingto adviser charging and charging and provider requirements relating to consultancy charging services: platform charges and using a platform service a platform service for arranging and of title to retail investment advice of charges, remuneration and commission6 Annex 1 Services and costs disclosure document described in COBS (1)[deleted]6 Annex 2 Combined initial disclosure document described in COBS , ICOBS MCOB [deleted]6 Annex 3[deleted]6 Annex 4[deleted]6 Annex 5[deleted]6 Annex 6 Calculating commission equivalentn Release 21l Jul iiCOBS ContentsCOBS 7 Insurance insurance distribution distribution: Means of communication to clientsCOBS 8 Client agreements (non-MiFID provisions ) agreements.

3 Non-MiFID designated investment businessCOBS 8 AClient agreements (MiFID provisions ) agreements (MiFID, equivalent third country or optionalexemption Business )COBS 9 Suitability (including basic advice) (other than MiFID andinsurance-based investment products) and purpose on assessing keeping and retention periods for suitability guidance forfirms with insistent rules for giving basic advice on a stakeholder product9 Annex 1 Basic advice initial disclosure information9 Annex 2 Sales processes for stakeholder productsCOBS 9 ASuitability (MiFID and insurance-based investment productsprovisions) and suitability: the to be provided to the keeping and retention periods for suitability recordsCOBS 10 Appropriateness (for non-MiFID and non-insurance-basedinvestment products non-advised services) (non-MiFID and non-insurance-based investment products provisions ) appropriateness: the the appropriateness: when it need not be appropriateness: afirm need not assess keeping and retention periods for appropriateness recordsn Release 21l Jul iiiCOBS ContentsCOBS 10 AAppropriateness (for non-advised services) (MiFID and insurance-based investment products provisions ) appropriateness: the the appropriateness: when it need not be done due to type appropriateness: appropriateness: when afirm need not assessappropriateness due to suitability keeping and retention periods for appropriateness recordsCOBS 11 Dealing and execution for AIFMs and residual CIS execution MiFID execution for UCITS management of order limit keeping.

4 Client orders and account account dealing relating to MiFID, equivalent third country oroptional exemption business11 Annex 1 UKRegulatory Technical Standard 28 (RTS 28) [deleted]COBS 11 AUnderwriting and and of future service restrictionsCOBS 12 Investment and research and non-independent recommendationsCOBS 13 Preparing product obligation to prepare product information: production standards, form and of a key features of a key features product information: other product information: adviser and consultancy charges13 Annex 1 Solvency II Directive Information13 Annex 2 Projections13 Annex 3 Charges information for a non-PRIIP packaged productn Release 21l Jul ivCOBS Contents13 Annex 4 Charges information for a personal pension scheme and a stakeholderpension schemeCOBS 14 Providing product information to product information to about designated investments (non-MiFID provisions ) aboutfinancial instruments (MiFID provisions ) of information by an intermediate Unitholder14 Annex 1 Lifetime ISA informationCOBS right to a right to of situations15 Annex 1 Exemptions from the right to cancelCOBS 16 Reporting information to clients (non-MiFID provisions )

5 Of client designated investments or client for surrender to clients life insurance, long term care insurance anddrawdown pensions16 Annex 1 RTrade confirmation and periodic information16 Annex 2 RInformation to be included in a periodic reportCOBS 16 AReporting information to clients (MiFID and insurance-basedinvestment products provisions ) client reporting and record keeping reporting: MiFID of clientfinancial instruments or client fundsCOBS 17 Claims handling for long-term care information to claimants, dealing with claims and warranties inpoliciesn Release 21l Jul vCOBS ContentsCOBS 18 Specialist market activity and oil market lending CIS operators and small authorised UK UK AIFMs and incoming EEA AIFM management ' Special Purpose Vehicles (ISPVs) an electronic system in relation to lending18 Annex 1 Research and inducements for collective portfolio managers18 Annex 2 Record keeping: client orders and transactionsCOBS 19 Pensions supplementary transfers, conversions, and advice on pension transfers and pension on contingent charging for pension transfers and pensions, FSAVCs and disclosure to members of occupational pension market governance committees (IGCs)

6 And publication anddisclosure of costs and on charges in qualifying on early exit charges in personal pension schemes andstakeholder pension nudge and retirement risk of transaction costs and administration charges in connectionwith workplace pension annuity comparison , investment pathways and cash warnings19 Annex 1 Pensions nudge and retirement risk warnings - steps to take19 Annex 2 Communications about options to access pension savings19 Annex 3 Format for annuity information19 Annex 4 AAppropriate pension transfer analysis19 Annex 4 BTransfer value comparator19 Annex 4 CAssumptions19 Annex 5 Format for provision of transfer value comparatorCOBS with-profits with-profits policyholders and Practices of Financial with with-profits governancen Release 21l Jul viCOBS ContentsCOBS 21 Permitted Links and conditional permitted forfirms engaged in linked long-term insurance rules forfirms engaged in linked long-term insurance businessCOBS 22 Restrictions on the distribution of certain complex on the retail distribution of mutual society on the retail distribution of contingent convertibleinstruments and CoCo on the retail marketing.

7 Distribution and sale of derivativecontracts of a binary or otherfixed outcomes on the retail marketing, distribution and sale of contractsfor differences and similar speculative on the retail marketing, distribution and sale of cryptoassetderivatives and cryptoasset exchange traded notesTransitional provisions and SchedulesTP 1 Transitional provisions relating to Client CategorisationTP 2 Other 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 21l Jul viiConduct of Business SourcebookChapter 1 Applicationn Release 21l Jul 1/1 COBS 1 : ApplicationSection : general Release 21l Jul 1 applicationDesignated investment Business and long-term insurancebusiness in relation to life Sourcebook applies to a firm with respect to the following activitiescarried on from an establishment maintained by it, or its appointedrepresentative, in the United Kingdom:(1) [deleted](2) designated investment Business ;(3) long-term insurance Business in relation to life policies;and activities connected with (including structured deposits).

8 This Sourcebook applies to a firm with respect to activities carried on inrelation to deposits from an establishment maintained by it, or its appointedrepresentative, in the United Kingdom only as follows:Section / chapterApplication in relation todeposits(1)Rules in this sourcebookA MiFID investment firm, a thirdwhich implemented articlescountry investment firm and a24, 25, 26, 28 and 30 of Mi-MiFID optional exemption firmFID (and related provisionswhen selling, or advising a clientof the MiFID Delegated Dir-in relation to, a structuredective) (see COBS ).deposit.(2)COBS (Past, simulatedCommunication or approval of apast and future per-financial promotion relating toformance)a structured deposit that is ad-dressed to, or disseminated insuch a way that it is likely to bereceived by, a retail client.(3)COBS (Direct offer finan-Communication or approval of acial promotions)financial promotion relating toa cash deposit ISA, cash-only life-time ISA or cash deposit CTFthat is addressed to, or dissemin-ated in such a way that it islikely to be received by, a 1 : ApplicationSection : general Release 21l Jul 1/3(4)COBS (Systems and con-To the extent that other rules introls and approving andCOBS 4 financialpromotions)(5)COBS 13 (Preparing productProducing a cash-deposit ISA,information)cash-only lifetime ISA or cash-de-posit CTF.

9 (6)COBS 14 (Providing productSelling, personally recom-information to clients)mending or arranging the saleof a cash-deposit ISA, cash-onlylifetime ISA or cash-deposit CTFto a retail client.(7)COBS 15 (Cancellation)A cancellable contract betweena consumer and a deposits: further in n COBS , in the rules referred to in n COBS (1) (and in anyrelated guidance), references to:(1) investment services and designated investment Business includeselling, or advising clients in relation to, structured deposits; and(2) financial instruments and designated investments include 1(2) of the MiFID Org Regulation specifies how its provisions shouldbe read where they apply to firms selling, or advising on, structured (2)References to investment firms shall encompass credit institutionsand references to financial instruments shall encompass structureddeposits in relation to all the requirements (so far as relevant) inChapters II to IV of this third country investment firm and a MiFID optional exemption firm mustalso comply with the provisions of the MiFID Org Regulation which relate tothe rules which implemented the articles of MiFID referred to inn COBS (1), as modified by article 1(2) of the MiFID Org Regulation,when selling, or advising a client in relation to, a structured rules which implemented the provisions of MiFID and the MiFIDD elegated Directive referred to in n COBS (1) can be found in thechapters of COBS in the following table and are followed by a Note.

10 COBS chapterDescriptionCOBS 2 Conduct of Business obligationsCOBS 3 Client categorisationCOBS 4 Communicating with clients, includ-ing financial promotionsCOBS 6 Information about the firm, its ser-vices and remunerationCOBS 8 AClient agreementsCOBS 1 : ApplicationSection : general Release 21l Jul 1/4 COBS 9 ASuitability (MiFID provisions )COBS 10 AAppropriateness (for non-advised ser-vices) (MiFID provisions )COBS 11 Dealing and managingCOBS 14 Providing product information toclientsCOBS 16 AReporting information to clients (Mi-FID provisions )[Note: article 1(4) of MiFID]Electronic COBS R, n COBS 5 (Distance communications), n COBS (The right tocancel), n COBS (Exercising a right to cancel), n COBS (Effects ofcancellation) and n COBS 15 Annex 1 (Exemptions from the right to cancel)apply to a firm with respect to the activity of issuing electronic money as setout in those to TP firms and Gibraltar-based addition to the application rules in COBS as relevant, TP firms andGibraltar-based firms carrying on Business from an establishment in theUnited Kingdom must also comply with the provisions in:(1) n COBS (drawdown pensions: annual statements) andn COBS to n COBS (income withdrawals annualstatements);(2) n COBS (Drawdown, investment pathways and cash warnings).