FCA Handbook - COBS 15.2 The right to cancel

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COBS 15.2 The right to cancel

Cancellable contracts

A consumer has a right to cancel any of the following contracts with a firm:

Cancellable contract	Cancellation period	Supplementary provisions
Life and pensions:
• a life policy (including a pension annuity, a pension policy or within a wrapper) • a contract to join a personal pension scheme or a stakeholder pension scheme • a pension contract • a contract for a pension transfer • a contract to vary an existing personal pension scheme or stakeholder pension scheme by exercising, for the first time, an option to make income withdrawals	30 calendar days	For a life policy effected when opening or transferring a wrapper, the 30 calendar day right to cancel applies to the entire arrangement For a contract to buy a unit in a regulated collective investment scheme within a pension wrapper, the cancellation right for 'non-life/pensions (advised but not at a distance)' below may apply Exemptions may apply (see COBS 15 Annex 1 )
Lifetime ISAs (advised but not at a distance):
• a non-distance contract to open or transfer a lifetime ISA	30 calendar days	These rights arise only following a personal recommendation or ready-made suggestion of the contract (by the firm or any other person). Exemptions may apply (see COBS 15 Annex 1)
Cash deposit ISAs:
• a contract for a cash deposit ISA	14 calendar days	Exemptions may apply (see COBS 15 Annex 1 )
Non-life/pensions (advised but not at a distance): a non-distance contract:
• to buy a unit in a regulated collective investment scheme (including within a wrapper or pension wrapper) • to open or transfer a child trust fund (CTF) • to open or transfer an ISA (other than a lifetime ISA) • for an Enterprise Investment Scheme	14 calendar days	These rights arise only following a personal recommendation or ready-made suggestion of the contract (by the firm or any other person). For a unit bought when opening or transferring a wrapper or pension wrapper, the 14 calendar day right to cancel applies to the entire arrangement. Exemptions may apply (see COBS 15 Annex 1 ).
Non-life/pensions (at a distance): a distance contract, relating to:
• accepting deposits • designated investment business • issuing electronic money	14 calendar days	Exemptions may apply (see COBS 15 Annex 1 )

[Note: article186 of the Solvency II Directive and article 6(1) of the Distance Marketing Directive]

(1)
If the same transaction attracts more than one right to cancel, the firm should apply the longest cancellation period applicable.
(2)
A firm may provide longer or additional cancellation rights voluntarily, but if it does these should be on terms at least as favourable to the consumer as those in this chapter, unless the differences are clearly explained.
(3)
If the right to cancel applies to a wrapper or pension wrapper and underlying investments, the firm may give the consumer the option of cancelling individual components separately if it wishes.

Start of cancellation period

The cancellation period begins:

(1)
either from the day of the conclusion of the contract, except in respect of contracts relating to life policies where the time limit will begin from the time when the consumer is informed that the contract has been concluded; or
(2)
from the day on which the consumer receives the contractual terms and conditions and any other pre-contractual information required under this sourcebook or DISC, if that is later than the date referred to above.

[Note: article186 of the Solvency II Directive and article 6(1) of the Distance Marketing Directive]

If a firm does not give a consumer the required information about the right to cancel and other matters, the contract remains cancellable and the consumer will not be liable for any shortfall.

Disclosing a right to cancel or withdraw

(1)
The firm must disclose to the consumer:
1. (a)
  in good time before or, if that is not possible, immediately after the consumer is bound by a contract that attracts a right to cancel or withdraw; and
2. (b)
  in a durable medium;
the existence of the right to cancel or withdraw, its duration and the conditions for exercising it including information on the amount which the consumer may be required to pay, the consequences of not exercising it and practical instructions for exercising it indicating the address to which the notification of cancellation or withdrawal should be sent.
(1A)
If the firm offers to facilitate, directly or through a third party, the payment of adviser charges or consultancy charges, it must disclose to the consumer at the same time as it makes the disclosure in (1):
1. (a)
  whether any refund will include an adviser charge or consultancy charge; and
2. (b)
  that the consumer may be liable to pay any outstanding adviser charges or consultancy charges.
(2)
This rule applies only where a consumer would not otherwise receive similar information under a rule in this sourcebook or in a product summary from the firm or another authorised person (such as under the distance marketing disclosure rules (COBS 5.1.1 R to 5.1.4 R), COBS 14 (Providing product information) or DISC).