COBS 9A.3 Information to be provided to the client

1. (1)

   A firm must not create any ambiguity or confusion about its responsibilities in the process of assessing the suitability of insurance-based investment products in accordance with COBS 9A.2.1R and COBS 9A.2.16R.

2. (2)

   A firm must inform the client, clearly and simply, that the reason for assessing suitability is to enable it to act in the client’s best interest.

[Note: article 11 of the IDD Regulation]

1. (1)

   [deleted]

2. (2)

   When providing investment advice to a retail client, a firm must, before the transaction is concluded, provide the client with a suitability report in a durable medium:

   1. (a)

      specifying the advice given and how that advice meets the preferences, objectives and other characteristics of the client;

   2. (b)

      (for an insurance-based investment product):

      1. (i)

         specifying, on the basis of the information obtained from the client, the client’s demands and needs; and

      2. (ii)

         including a personalised recommendation explaining why a particular insurance-based investment product would best meet the client’s demands and needs.

      The details in (i) and (ii) must be modulated according to the complexity of the contract of insurance proposed and the type of client.

3. (3)

   Where the transaction is concluded using a means of distance communication which prevents the prior delivery of the suitability report, the firm may provide the suitability report in a durable medium immediately after the client is bound by the transaction, provided both the following conditions are met:

   1. (a)

      the client has consented to receiving the suitability report without undue delay after the conclusion of the transaction; and

   2. (b)

      the firm has given the client the option of delaying the transaction in order to receive the suitability report in advance.

4. (4)

   Where a firm provides a portfolio management service or has informed the client that it will carry out periodic assessment of suitability, the periodic report, provided under COBS 16A.2.1R, must contain an updated statement of how the client’s investments meet the preferences, objectives and other characteristics of the client.

[Note: second, third and fourth paragraphs of article 25(6) of, and recital 82 to, MiFID; article 20(1), article 20(2), second paragraph of article 22(1) and second, third and fourth paragraphs of article 30(5) of the IDD]

Where a firm makes a personal recommendation to a professional client on an insurance-based investment product it must, prior to the conclusion of the contract, provide to the client the information in COBS 9A.3.2R(2)(b) in accordance with COBS 7.4.

[Note: article 20(1) and 20(2) of the IDD]

• (1) When providing investment advice to a retail client, a firm must provide the client with a report that includes an outline of:

  1.  

     (a) the advice given and how the recommendation is suitable for them; and

  2.  (b) how the recommendation meets their objectives and personal circumstances with reference to:

     1. (i) the investment term required;

     2. (ii) their knowledge and experience; and

     3. (iii) their attitude to risk and capacity for loss.

• (2) A firm must include in the suitability report information on whether the recommended services or instruments are likely to require the retail client to seek a periodic review of their arrangements, and draw the client's attention to this information.

• (3) Paragraph (4) applies to a firm that provides a service involving periodic assessments of suitability.

• (4) Following the first suitability report provided to the client at the commencement of the service, any subsequent reports:

  1. (a) need only cover changes in:

     1. (i) the relevant services or instruments;

     2. (ii) the circumstances of the client; and

  2. (b) need not repeat all of the information in the first report.

1. (1)

   When providing a personal recommendation on the suitability of an insurance-based investment product in accordance with COBS 9A.2.1R and COBS 9A.2.16R, a firm must provide a statement to the client (suitability statement) that includes the following:

   1. (a)

      an outline of the personal recommendation given;

   2. (b)

      information on how the recommendation provided is suitable for the client, in particular how it meets:

      1. (i)

         the client’s investment objectives, including that person’s risk tolerance;

      2. (ii)

         the client’s financial situation, including that person’s ability to bear losses;

      3. (iii)

         the client’s knowledge and experience.

2. (2)

   A firm must draw the client’s attention to, and must include in the suitability statement, information on whether any recommended insurance-based investment product is likely to require the client to seek a periodic review of their arrangements.

3. (3)

   Where a firm has informed the client that it will carry out a periodic assessment of suitability, the subsequent statements after the initial service is established may be limited to changes in the services or underlying investment assets, and/or the circumstances of the client without repeating all the details contained in the first statement.

[Note: article 14(1) to (3) of the IDD Regulation]

A firm must:

1. (1)

   in relation to an insurance-based investment product, at least in good time prior to the conclusion of the contract;

2. (2)

   otherwise, in good time before it provides its investment advice;

inform the client whether it will provide the client with a periodic assessment of the suitability of the financial instruments or the insurance-based investment products recommended to the client.

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

1. (1) This rule applies to a firm that provides a client with a periodic assessment of suitability pursuant to COBS 9A.3.3R.
2. (2) The firm must disclose to the client:
   1. (a) the frequency and extent of the periodic suitability assessment and where relevant, the conditions that trigger that assessment;
   2. (b) the extent to which the information previously collected will be subject to reassessment; and
   3. (c) the way in which an updated recommendation will be communicated to the client.

1. (1)

   A firm providing a periodic assessment of suitability must review, in accordance with the best interests of its client, the suitability of the recommended insurance-based investment products at least annually

2. (2)

   The frequency of a periodic assessment must be increased depending on the characteristics of the client, such as the risk tolerance, and the nature of the recommended insurance-based investment product.

[Note: article 14(4) of the IDD Regulation]