COBS 6.1ZA Information about the firm and compensation information (MiFID and insurance distribution provisions)

1. (1)

   Subject to (2) and (3), this section applies to a firm:

   1. (a)

      in relation to its MiFID, equivalent third country or optional exemption business; and

   2. (b)

      carrying on insurance distribution activities.

2. (2)

   COBS 6.1ZA.16R does not apply to a firm in respect of its MiFID optional exemption business.

3. (3)

   Where a firm is carrying on insurance distribution activities for a professional client only those rules which implemented the requirements of the IDD apply.

A firm carrying on insurance distribution activities must provide a retail client with the following general information, if relevant:

1. (1)

   the name and address of the firm, and the contact details necessary to enable a client to communicate effectively with the firm;

2. (2)

   the methods of communication to be used between the firm and the client including, where relevant, those for the sending and reception of orders;

3. (3)

   a statement of the fact that the firm is authorised and the name of the competent authority that has authorised it;

4. (4)

   if the firm is acting through an appointed representative a statement of this fact;

5. (5)

   the nature, frequency and timing of the reports on the performance of the service to be provided by the firm to the client in accordance with the rules on reporting to clients on the provision of services (COBS 16 or COBS 16A in relation to an insurance-based investment product);

6. (6)
   1. (a)

      a description, which may be provided in summary form, of (as applicable) the conflicts of interest policy, or the policy required SYSC 3.3.10R (for insurers) or SYSC 10.1A.3R (for insurance intermediaries in relation to insurance-based investment products); and

   2. (b)

      if not included in the information provided under (a), when a material interest or conflict of interest may or does arise, the manner in which the firm will ensure fair treatment of the client;

7. (7)

   at any time that the client requests it, further details of the conflicts of interest policy.

The timing of these disclosures is governed by COBS 6.1ZA.19AR.

In good time before the conclusion of a life policy and, if necessary, on its amendment:

1. (1)

   a firm must provide the client with at least the following information:

   1. (a)

      its identity, address and whether it is an insurance intermediary or an insurance undertaking;

   2. (b)

      whether it provides a personal recommendation about the insurance products offered;

   3. (c)

      the procedures allowing clients and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its clients; and

2. (2)

   an insurance intermediary must also provide the client with the following information:

   1. (a)

      the fact that it is included in the Financial Services Register (or if it is not on the Financial Services Register, the register in which it has been included) and the means for verifying this;

   2. (b)

      whether it has a direct or indirect holding representing 10% or more of the voting rights or capital in a given insurance undertaking (that is not a pure reinsurer);

   3. (c)

      whether a given insurance undertaking (that is not a pure reinsurer) or its parent undertaking has a direct or indirect holding representing 10% or more of the voting rights or capital in the firm; and

   4. (d)

      whether it is representing the client or is acting for and on behalf of the insurer.

[Note: articles 18 and 19(1)(a) and (b) of the IDD]

Where an insurance intermediary proposes or advises on a life policy, in good time before the conclusion of a life policy and, if necessary, on its amendment, an insurance intermediary must provide the client with at least information on whether the firm:

1. (1)

   gives a personal recommendation on the basis of a fair and personal analysis; or

2. (2)

   is under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings, in which case it must provide the names of those insurance undertakings; or

3. (3)
   1. (a)

      is not under a contractual obligation to conduct insurance distribution exclusively with one or more insurance undertakings; and

   2. (b)

      does not give a personal recommendation on the basis of a fair and personal analysis,

   in which case it must provide its client with the name of those insurance undertakings with which the insurance intermediary may and does conduct business.

[Note: article 19(1)(c) of the IDD]

If an insurance intermediary informs a client that it gives a personal recommendation on the basis of a fair and personal analysis, it must give that personal recommendation on the basis of an analysis of a sufficiently large number of insurance contracts available on the market to enable it to make a personal recommendation in accordance with professional criteria, regarding which life policy would be adequate to meet the client’s needs.

[Note: article 20(3) of the IDD]

1. (1) A firm providing a portfolio management service must establish an appropriate method of evaluation and comparison such as a meaningful benchmark, based on the investment objectives of the client and the types of financial instruments included in the client portfolio, so as to enable the client to assess the firm's performance.
2. (2) If a firm proposes to provide a portfolio management service to a client, the firm must provide the client with such of the following information as is applicable (in addition to the information required by COBS 6.1ZA.5R):
   1. (a) information on the method and frequency of valuation of the financial instruments in the client portfolio;
   2. (b) details of any delegation of the discretionary management of all or part of the financial instruments or funds in the client portfolio;
   3. (c) a specification of any benchmark against which the performance of the client portfolio will be compared;
   4. (d) the types of financial instrument that may be included in the client portfolio and types of transaction that may be carried out in those financial instruments, including any limits; and
   5. (e) the management objectives, the level of risk to be reflected in the manager’s exercise of discretion, and any specific constraints on that discretion.
3. (3) A firm must provide the information in (2) in good time before the provision of investment services or ancillary services to a client.

1. (1) A firm that holds financial instruments or client money for a client subject to the custody chapter or the client money chapter must provide that client with the following information:
   1. (a) if applicable:
      1. (i) that the financial instruments or client money of that client may be held by a third party on behalf of the firm;
      2. (ii) the responsibility of the firm under the applicable national law for any acts or omissions of the third party; and
      3. (iii) the consequences for the client of the insolvency of the third party;
   2. (b) if applicable, that the financial instruments of the client may be held in an omnibus account by a third party and a prominent warning of the resulting risks;
   3. (c) if it is not possible under national law for financial instruments belonging to a client held with a third party to be separately identifiable from the proprietary financial instruments of that third party or of the firm, that fact and a prominent warning of the resulting risks;
   4. (d) if applicable, that accounts that contain financial instruments or client money belonging to that client are or will be subject to the law of a jurisdiction other than that of the United Kingdom and an indication that the rights of the client relating to those financial instruments or client money may differ accordingly.

• (2) A firm that holds financial instruments or client money for a client must inform the client, if applicable:
  1. (a) about the existence and the terms of any security interest or lien which the firm has or may have over the client'sfinancial instruments or client money, or any right of set-off it holds in relation to the client'sfinancial instruments or client money; and
  2. (b) that a depository may have a security interest or lien over, or right of set-off in relation to, those financial instruments or client money.
• (3) A firm that holds financial instruments or client money for a client must also, before entering into securities financing transactions in relation to financial instruments held by it on behalf of a client, or before otherwise using such financial instruments for its own account or the account of another client, in good time before the use of those financial instruments provide the client, in a durable medium, with clear, full and accurate information on the obligations and responsibilities of the firm with respect to the use of those financial instruments, including the terms for their restitution, and on the risks involved.

1. (1)

    Where a firm doing insurance distribution activities holds client money for a retail client and has elected to comply with the client money chapter, it must provide that client with the information specified in:

   1. (a)

      COBS 6.1.7R; or

   2. (b)

       (if it is a firm doing MiFID, equivalent third country or optional exemption business) COBS 6.1ZA.9R and COBS 6.1.7R(1)(e);

   in relation to that client money.

2. (2)

    [deleted]

3. (3)

    The timing of this disclosure is governed by COBS 6.1ZA.19AR.

Afirm must provide a client with at least the following information about all costs and related charges (see also COBS 2.2A.2R):

1. (1)

   (as applicable) information relating to:

   1. (a)

      both investment services and ancillary services; and

   2. (b)

      the distribution of an insurance-based investment product;

2. (2)

   where relevant, the cost of any investment advice;

3. (3)

   the cost of the financial instrument or insurance-based investment product recommended or marketed to the client;

4. (4)

   information on how the client may pay; and

5. (5)

   details of any third party payments.

[Note: article 24(4)(c) of MiFID, article 29(1)(c) of the IDD]

1. (1)

   A firm must aggregate the information about costs and charges required by COBS 2.2A.2R and COBS 6.1ZA.11R, where those costs and charges are not caused by the occurrence of underlying market risk. This is to allow the client to understand the overall cost, and the cumulative effect on the return, of the investment.

2. (2)

   A firm must provide the client with an itemised breakdown of the costs and charges information required by (1) and COBS 6.1ZA.11R when requested by the client.

3. (3)

   The information must, where applicable, be provided to the client on a regular basis, and at least annually, during the life of the investment.

[Note: article 24(4) of MiFID, second paragraph of article 29(1) of the IDD]

1. (1)

   A firm must provide the information required by COBS 6.1ZA.11R and COBS 6.1ZA.12R in a comprehensible form in such a manner that the client is reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument or insurance-based investment product that is being offered and, consequently, to take investment decisions on an informed basis.

2. (2)

   That information may be provided in a standardised format.

[Note: article 24(5) of MiFID, third paragraph of article 29(1) of the IDD]

1. (1) (a) A firm must disclose to the client, in good time before the relevant service is provided, a reasonable estimate of all costs and charges of the service and of any investment in a financial instrument which the firm has offered or sold to the client, or which the firm has arranged for the client to enter into.
2. [Note: COBS 6.1ZA.14BR(1)(a) corresponds to what were known as ‘ex-ante’ requirements under article 50 of the UK version of the Commission Delegated Regulation (EU) 2017/565 (MiFID Org Regulation)]
   1. (b) (i) Where the condition in (ii) is met, the firm must disclose on a personalised and annual basis the actually incurred costs and charges of the service provided as well as the costs and charges of investment in the financial instrument. 
   2. (ii) The condition is that the firm provides the client with a relevant service on an ongoing basis in respect of a financial instrument which the firm has sold to the client or arranged for the client to buy.
   3. (iii) A firm may opt to provide the disclosure in (i) together with any existing periodic reporting to the client.
   4. [Note: COBS 6.1ZA.14BR(1)(b) corresponds to what were known as ‘ex-post’ requirements under article 50 of UK version of the Commission Delegated Regulation (EU) 2017/565 (MiFID Org Regulation)]
   5. (c) (i) When complying with (a) and (b), the firm must also provide the client with an illustration showing the cumulative effect of overall costs and charges on the return of the client's investment in the financial instrument.
   6. (ii) The illustration must be accompanied by a description and show any anticipated changes in costs and charges, as applicable.
3. (2) A relevant service is:
   1. (a) in respect of a retail client, any service involving the carrying on of a regulated activity or ancillary activity; and
   2. (b) in respect of a professional client, a service which includes or amounts to investment advice or managing investments.
4. (3) (a) In complying with the obligations in (1), a firm must aggregate the costs and charges specified in COBS 6 Annex 7R, as applicable, in relation to:
   1. (i) the relevant services provided to the client, including costs and charges imposed by the firm; and
   2. (ii) the manufacture and distribution of the financial instrument.
   3. (b) Where the financial instrument is a consumer composite investment, the costs and charges of manufacture to be disclosed: 
   4. (i)  under (1)(a) are the ongoing costs, one-off costs, and transaction costs required to be disclosed in the product summary by applicable rules in DISC, and
   5. (ii) under (1)(b), where applicable, are the actual figures for ongoing costs, one-off costs, transaction costs, and any performance fees or carried interest.   
   6. (c) A firm must also itemise and separately disclose to the client any third-party payments it receives in connection with the service provided to the client.
   7. (d) The total sum of aggregated costs must be expressed as a cash amount and as a percentage.
5. (4) (a) Where more than one firm will provide, or has provided, a relevant service to the client, each firm must disclose the costs and charges relating to its services. 
6. (b) Where a firm recommends to the client the relevant service of another firm, or otherwise arranges for, facilitates, or directs the client to receive the relevant service of another firm, it must aggregate the cost and charges of its services together with the costs and charges of the services the other firm will provide or has provided.
7. (5) The requirements in this rule do not apply where the client is an eligible counterparty.

In addition to the information specified by COBS 2.2A.2R and COBS 6.1ZA.11R, a firm carrying on insurance distribution activities must provide a retail client with the following information on costs and associated charges, if applicable:

1. (1)

   the total price to be paid by the client in connection with the life policy or the insurance distribution activity, including all related fees, commissions, charges and expenses, and all taxes payable via the firm or, if an exact price cannot be indicated, the basis for the calculation of the total price so that the client can verify it. The commissions charged by the firm must be itemised separately in every case;

2. (2)

   if any part of the total price referred to in (1) is to be paid in or represents an amount of foreign currency, an indication of the currency involved and the applicable currency conversion rates and costs;

3. (3)

   notice of the possibility that other costs, including taxes, related to transactions in connection with the life policy or the insurance distribution activity may arise for the client that are not paid via the firm or imposed by it; and

4. (4)

   the arrangements for payment or other performance.

The timing of this disclosure is governed by COBS 6.1ZA.19AR.

In good time before the conclusion of the life policy and, if necessary, on its amendment, an insurance intermediary must provide the client with information:

1. (1)

   on the nature of the remuneration received in relation to the life policy;

2. (2)

   about whether in relation to the life policy it works on the basis of:

   1. (a)

      a fee, that is remuneration paid directly by the client; or

   2. (b)

      a commission of any kind, that is the remuneration included in the premium; or

   3. (c)

      any other type of remuneration, including an economic benefit of any kind offered or given in connection with the contract; or

   4. (d)

      on the basis of a combination of any type of remuneration set out above in (a), (b) and (c).

[Note: article 19(1)(d) and (e) of the IDD]

In good time before the conclusion of a life policy an insurance undertaking must provide its client with information on the nature of the remuneration received by its employees in relation to the life policy.

[Note: article 19(4) of the IDD]

The remuneration referred to in this section includes remuneration that is not guaranteed or which is contingent on meeting certain targets.

If any payments, other than ongoing premiums and scheduled payments, are made by the client under the life policy after its conclusion, a firm must make the disclosures required by COBS 6.1ZA.15BR or COBS 6.1ZA.15CR, for each such payment.

[Note: articles 19(3) and (5) of the IDD]

1. (1)

   Where a fee is payable in relation to a life policy, the firm must inform its client of the amount of the fee.

2. (2)

   The information in (1) must be given before the client incurs liability to pay the fee, or before conclusion of the life policy, whichever is earlier.

3. (3)

   To the extent that it is not possible for an amount to be given, a firm must give the basis for its calculation.

[Note: articles 19(2) and (5) of the IDD]

The fee disclosure requirement extends to all such fees that may be charged during the life of a policy.

[Note: article 19(3) of the IDD]

1. (1)

   This rule applies to a firm that offers an investment service with another service or product or as part of a package or as a condition of the same agreement or package.

2. (2)

   The firm must inform the client whether it is possible to buy the different components separately and must provide information on the costs and charges of each component.

3. (3)

   If the agreement or package is offered to a retail client, the firm must:

   1. (a)

      inform that retail client if the risks resulting from the agreement or package are likely to be different from the risks associated with the components when taken separately; and

   2. (b)

      provide that retail client with an adequate description of the different components of the agreement or package and the way in which its interaction modifies the risks.

[Note: article 24(11) of MiFID]

When offering a non-insurance ancillary product or service as part of a package or the same agreement with a life policy, a firm must:

1. (1)

   inform the client whether it is possible to buy the different components separately and, if so, must provide the client with an adequate description of:

   1. (a)

      the different components;

   2. (b)

      where applicable, any way in which the risk or insurance coverage resulting from the agreement or package differs from that associated with the components taken separately; and

2. (2)

   provide the client with separate evidence of the costs and charges of each component.

[Note: article 24(1) and (2) of the IDD]

When offering a life policy ancillary to and as part of a package or in the same agreement with a non-insurance product or service, a firm must offer the client the option of buying the non-insurance goods or services separately.

COBS 6.1ZA.16BR does not apply where the non-insurance product or service is any of the following:

1. (1)

   investment services or activities; or

2. (2)

   a credit agreement as defined in point 3 of article 4 of the MCD which is:

   1. (a)

      an MCD credit agreement; or

   2. (b)

      an exempt MCD credit agreement; or

   3. (c)

      a CBTL credit agreement; or

   4. (d)

      a credit agreement referred to in articles 72G(3B) and (4) of the Regulated Activities Order; or

3. (3)

   a payment account as defined in regulation 2(1) of the Payment Accounts Regulations.

[Note: article 24(3) of the IDD]

COBS 6.1ZA.16AR to COBS 6.1ZA.16CR do not prevent the distribution of insurance products which provide coverage for various types of risks (multi-risk insurance policies).

[Note: article 24(5) of the IDD]

1. (1) Subject to (2) and unless otherwise provided, a firm must provide a client with the information required by this section in good time before the provision of investment services or ancillary services to a client.
2. (2) If the agreement to buy or sell a financial instrument is concluded using a means of distance communication, which prevents the delivery of the information on costs and charges before that conclusion the firm:
   1. (a) must give the client the option of receiving the information on costs and charges over the telephone before the conclusion of the transaction; and
   2. (b) may, subject to satisfying the conditions in (3), provide the information on costs and charges:
      1. (i) in electronic format; or
      2. (ii) if requested by a retail client, on paper,
      3. without undue delay after the conclusion of the transaction.
3. (3) The conditions in (2)(b) are that:
   1. (a) the client has requested or consented to receiving the information without undue delay after the conclusion of the transaction; and
   2. (b) the firm has given the client the option of delaying the conclusion of the transaction until they have received the information.

1. (1)

   A firm must provide a client with the information required by COBS 6.1ZA.7AR, COBS 6.1ZA.10AR and COBS 6.1ZA.15AR in good time before the provision of the insurance distribution activity concerned unless otherwise provided by this rule.

2. (2)

   A firm may instead provide that information immediately after starting to provide the insurance distribution activity concerned if:

   1. (a)

      the firm was unable to comply with (1) because, at the request of the client, the agreement was concluded using a means of distance communication which prevented the firm from doing so; and

   2. (b)

      in any case where the rule on voice telephony communications (COBS 5.1.12R) does not otherwise apply, the firm complies with that rule in relation to the retail client, as if that client were a consumer.

Where this section requires an insurance distributor to provide information to clients in relation to a life policy it must do so in accordance with COBS 7.4 (Means of communication to clients), unless COBS 6.1ZA.18AR(2) applies.

[Note: article 23 of the IDD]

1. (1)

   A firm carrying on insurance distribution activities must notify a client in good time about any material change to the information provided in relation to an insurance distribution activity under this section which is relevant to a service that the firm is providing to that client.

2. (2)

   A firm must provide this notification in a durable medium if the information to which it relates was given in a durable medium.

1. (1)

   A firm must make available to a client, who has used or intends to use a firm’s services, information necessary for the identification of the compensation scheme if the firm is a participant firm.

2. (2)

   The information under (1) must include the amount and scope of the cover offered by the compensation scheme.

3. (3)

   A firm must provide, on the client’s request, information concerning the conditions governing compensation and the formalities which must be completed to obtain compensation.

4. (4)

   The information provided for in this rule must be made available in a durable medium or via a website if the website conditions are satisfied in the official language or languages of the United Kingdom.

[Note: article 10(1) and (2) of the Investor Compensation Directive]