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COBS 3.7 Providing clients with a higher level of protection

03/01/2018R

A firm must allow a professional client or an eligible counterparty to request re-categorisation as a client that benefits from a higher degree of protection.

[Note: second paragraph of article 30(2) of, and the second paragraph of section I of annex II to, MiFID]

03/01/2018G

It is the responsibility of a professional client or eligible counterparty to ask for a higher level of protection when it deems it is unable to properly assess or manage the risks involved.

[Note: third paragraph of section I and fourth paragraph of section II.2 of annex II to MiFID]

23/10/2025R

A firm may, either on its own initiative or at the request of the client concerned, treat that client:

  1. (1) as a professional client or retail client where thatclient might otherwise be classified as an eligible counterparty pursuant to COBS 3.6.2R; or
  2. (2) as a retail client where that client is considered a professional client pursuant to COBS 3.5.2R.
23/10/2025R
  1. (1) If an eligible counterparty requests re-categorisation as a client that benefits from a higher degree of investor protection, a firm must require that the request:
    1. (a) be made in writing; and
    2. (b) indicate whether the treatment as retail client or professional client refers to one or more services or transactions, or one or more types of transaction or product.
  2. (2) If an eligible counterparty makes the request in (1), but does not expressly request treatment as a retail client, the firm must treat that eligible counterparty as a professional client.
  3. (3) If the eligible counterparty expressly requests treatment as a retail client, the firm must treat the eligible counterparty as a retail client, applying COBS 3.7.1R, COBS 3.7.2G and COBS 3.7.5R.
03/01/2018R

  1. (1)

    If, in relation to MiFID or equivalent third country business a per se professional client requests treatment as a retail client, the client will be classified as a retail client if it enters into a written agreement with the firm to the effect that it will not be treated as a professional client or eligible counterparty for the purposes of the applicable conduct of business regime.

  2. (2)

    This agreement must specify the scope of the re-categorisation, such as whether it applies to one or more particular services or transactions, to one or more types of product or transaction or to one or more rules.

[Note: fourth paragraph of section I of annex II to MiFID]

01/11/2007G

  1. (1)

    In accordance with Principle 7 (communications with clients) if a firm at its own initiative re-categorises a client in accordance with this section, it should notify that client of its new category under this section.

  2. (2)

    If the firm already has an agreement with the client, it should also consider any contractual requirements concerning the amendment of that agreement.

03/01/2018G

The ways in which a client may be provided with additional protections under this section include re-categorisation:

  1. (1)

    on a general basis; or

  2. (2)

    on a trade by trade basis; or

  3. (3)

    in respect of one or more specified rules; or

  4. (4)

    in respect of one or more particular services or transactions; or

  5. (5)

    in respect of one or more types of product or transaction.

[Note: second paragraph of article 30(2) of MiFID]

01/11/2007G

Re-categorising a client as a retail client under this section does not necessarily mean it will become an eligible complainant under DISP.