COBS 9B Targeted support

1. (1) This chapter sets out the framework for the provision of targeted support services.
2. (2) The purpose of the framework for targeted support services is to enable firms to provide support to clients:
   1. (a) in relation to decisions about investments and pensions;
   2. (b) at scale;
   3. (c) on the basis of limited information and not a comprehensive consideration of a client’s characteristics or circumstances;
   4. (d) in situations involving a shared financial support need or objective;
   5. (e) through the delivery of a ready-made suggestion by reference to the client’s alignment with a pre-defined consumer segment; and
   6. (f) that is designed to put them in a better position than if they had not received a targeted support service from the firm.
3. (2) A firm:
   1. (a) should design its targeted support service to be provided only where the firm has reasonable grounds to consider that the provision of such targeted support service would put individuals for whom that targeted support service is designed in a better position than if that support were not provided; and

   2. (b) is required to ensure that any ready-made suggestion developed to deliver on that purpose is suitable for an individual in the consumer segment for which is it developed (COBS 9B.4.20R).

       

1. (1) This chapter (other than COBS 9B.9) applies to a firm providing targeted support in relation to:
   1. (a) a designated investment other than a pure protection contract; or
   2. (b) a structured deposit.

2. (2) COBS 9B.9 applies to a firm that is an issuer or product provider.

    

1. (1) This rule applies to a firm providing targeted support in relation to a type of specified investment that is beyond the scope of application of this chapter.

2. (2) In providing targeted support, a firm in (1) must comply with the rules which would apply to that firm if it were advising on investments.

    

1. (1) The regulated activity of providing targeted support applies to recommendations relating to securities, structured deposits and relevant investments. It therefore applies to a broader range of specified investments than those to which the rules in this chapter apply (COBS 9B.2.1R).
2. (2) For this reason, the Handbook distinguishes between:
   1. (a) providing targeted support, which refers to the regulated activity in article 55A of the Regulated Activities Order; and
   2. (b) the provision of a targeted support service, which refers to the provision of a service to which the rules in this chapter apply.
3. (3) The definition of personal recommendation does not include a recommendation made by a firm carrying on the regulated activity of providing targeted support other than:
   1. (a) in relation to a type of specified investment to which the rules in this chapter do not apply; and
   2. (b) for the purpose of the definition of investment service (and related definitions).
4. (4) The effect of (3), COBS 9B.2.5R and similar provisions in ICOBS 1 Annex 1 Part 2 6.1R and FPCOB 1 Annex 1 3.1R is that a firm carrying on the regulated activity of providing targeted support in relation to a type of specified investment to which the rules in this chapter do not apply must comply with the relevant rules applicable to advice on investments and the provision of personal recommendations.
5. (5) For example, a firm carrying on the regulated activity of providing targeted support in relation to a general insurance contract would need to comply with the rules applicable to a firm advising on investments in relation to such contracts in ICOBS.

1. (1) A firm may provide support to a consumer in accordance with the framework set out in this chapter but that does not amount to the firm providing a targeted support service. This may be because, for example, the suggestion made to the consumer does not involve a recommendation in relation to a particular investment.
2. (2) A firm providing support in the manner described in (1) should ensure that the consumer understands the nature of the support they are receiving (and see COBS 9B.6.1R(2)).
3. (3) Alternatively, in providing a targeted support service, a firm may specify a ready-made suggestion incorporating elements which:
   1. (a) provided in isolation, would not involve the firm providing a targeted support service; and
   2. (b) are sufficiently closely connected to the targeted support service as to be integral to the recommendation as a whole.
4. Where this is the case, the firm should consider whether it would be appropriate to treat the elements of the recommendation that do not amount to a targeted support service as forming part of the ready-made suggestion and design and deliver the full ready-made suggestion in accordance with the rules in this chapter.

5. (4) Firms should consider COBS 9B.4.38R when giving information in relation to pension consolidation in the course of providing a targeted support service. Firms are able to provide targeted support services where a client has multiple pension pots to support that client with a decision, or decisions, that do not rely on those pension pots being consolidated (for example, to support that client with a decision in relation to their options at retirement). The effect of COBS 9B.4.38R is that a firm must not provide information or support in relation to pension consolidation which is sufficiently closely connected to the targeted support service as to be integral to the recommendation as a whole such as to amount to an express or implied recommendation to consolidate pension pots.

    

    

The nature of a targeted support service means that it may involve:

1. (1) the provision of an investment service within the scope of MiFID (for example, where the ready-made suggestion is in respect of one or more transactions relating to financial instruments); or
2. (2) insurance distribution activity (for example, where the ready-made suggestion is in relation to a life policy).

1. (1) The provision of a targeted support service to which the rules in this chapter apply is not subject to the suitability requirements in COBS 9 or COBS 9A.

2. (2) Principle 9 applies to a firm providing targeted support and requires that a firm take reasonable care to ensure the suitability of its advice for any customer who is entitled to rely on its judgement.

    

1. (1) The effect of COBS 9B.3.4R is that, in relation to its provision of a targeted support service, a firm must apply other parts of the Handbook on the basis that the client is a retail client.

2. (2) COBS 9B.3.4R does not prevent a firm from categorising a client differently for other purposes (COBS 3.7.7G).

    

Unless the context otherwise requires, in this chapter:

1. (1) ‘individual’ is used in relation to the design of consumer segments to refer to a notional natural person by reference to whom a consumer segment is defined; and
2. (2)  ‘client’ is used in relation to the delivery of ready-made suggestions to refer to a natural person to whom a firm provides, intends to provide or has provided, a ready-made suggestion.

A firm must:

1. (1) in its design of its targeted support service, act with due skill, care and diligence in:
   1. (a) identifying those situations, involving shared financial support needs or objectives, for which to specify ready-made suggestions;
   2. (b) defining consumer segments; and
   3. (c) specifying suitable ready-made suggestions that meet the shared financial support need or objective of the consumer segment for which they are designed;
2. (2) in its delivery of its targeted support service, act with due skill, care and diligence in:
   1. (a) establishing whether a client aligns with a consumer segment; and
   2. (b) communicating with clients, including in relation to the nature and limitations of the targeted support service; and

3. (3) always conduct itself in a manner that is consistent with its obligation to act in good faith towards retail customers (PRIN 2A.2.1R).

    

1. (1) FG21/1 (Guidance for firms on the fair treatment of vulnerable customers: https://www.fca.org.uk/publication/finalised-guidance/fg21-1.pdf) is relevant to firms’ relationships with their clients, including in the design and delivery of targeted support services.

2. (2) Firms also need to consider their obligations under the Equality Act 2010 (or equivalent legislation in Northern Ireland). Principle12 and PRIN 2A support existing legal requirements, such as those in the Equality Act 2010, by requiring firms to monitor whether any group of retail customers is experiencing different outcomes than other customers and take appropriate action where they do.

    

1. (1) Targeted support services involve the delivery of ready-made suggestions to clients by reference to the client’s alignment with a pre-defined consumer segment.

2. (2) This section contains rules and guidance relating to the design of a firm’s targeted support service by reference to the definition of consumer segments and allocation to those consumer segments of ready-made suggestions.

    

1. (1) A firm designing its targeted support service will be a manufacturer of that service (and, when providing it, will be a distributor of that service). Beyond the requirements in this section, a firm will also be subject to rules elsewhere in the Handbook.
2. (2) For manufacturers of services, relevant rules include those set out in PRIN 2A.3 (Consumer Duty: retail customer outcome – products and services) and PRIN 2A.4 (Consumer Duty: retail customer outcome on price and value).

3. (3) Where a firm recommends a product as part of a targeted support service, the firm will be a distributor in relation to that product and the relevant requirements on distributors in PRIN 2A.3, PRIN 2A.4, PROD 3 and/or PROD 4 will also apply. The arrangements the firm has in place should enable the firm to obtain all necessary information from the product manufacturer to understand the product throughout its life cycle.

    

In the FCA’s view, the following are particularly relevant considerations for a firm in the design of its targeted support service:

1. (1) in identifying the situations for which to develop ready-made suggestions, the prevalence of the situation among its clients (including potential clients);
2. (2) in defining common characteristics, the ease with which a firm would be able to identify a particular client as aligning with a consumer segment; and
3. (3) in specifying ready-made suggestions, the ease with which such a suggestion may be communicated to the firm’s clients.

For the purposes of this chapter, a consumer segment is a group of individuals defined by reference to:

1. (1) a situation involving a shared financial support need or objective; and

2. (2) where relevant, common characteristics.

    

Before a firm provides a ready-made suggestion to a client, it must have:

1. (1) defined one or more consumer segments; and

2. (2) specified a single ready-made suggestion for each consumer segment.

    

COBS 9B.1.1G explains that the framework for targeted support services is designed to enable firms to provide support to clients on the basis of limited information and not a comprehensive consideration of a client’s characteristics or circumstances. COBS 9B.4.9R requires firms to design consumer segments at a level of detail that is both:

1. (1) sufficient to ensure that clients receive suitable recommendations; and

2. (2) appropriate to the nature of a targeted support service and supports clients' understanding of the service they are receiving.

    

A firm must:

1. (1) define a consumer segment at a level of detail that is sufficiently granular as to enable the firm to assess whether a ready-made suggestion would be suitable for an individual within that consumer segment; and

2. (2) not define a consumer segment at a level of detail that a firm in the business of providing investment advice would reasonably associate with a comprehensive consideration of a person’s characteristics or circumstances.

    

1. (1) An example of when a consumer segment would not be at a sufficiently granular level is if the common characteristics used to define the consumer segment did not enable the firm to determine whether a ready-made suggestion was suitable for an individual in that consumer segment. This could be because the consumer segment was defined by reference to:
   1. (a) an insufficient number of common characteristics; or
   2. (b) common characteristics which were not relevant to determining the suitability of a ready-made suggestion to address the shared financial support need or objective of individuals for whom the consumer segment was designed.

2. (2) COBS 9B.4.11R enables firms to apply reasonable assumptions to consumer segments with a view to limiting, where appropriate, the level of detail in the specification of consumer segments and supporting compliance with COBS 9B.4.9R.

    

1. (1) This rule applies to a firm that makes assumptions about individuals in a consumer segment.

2. (2) A firm must ensure that any assumptions are reasonable and referable to evidence about the type of individuals covered by the consumer segment.

    

1. (1) In identifying the situations to be met through the provision of a targeted support service, firms should have regard to:
   1. (a) the circumstances commonly encountered by their clients (including potential clients) and whether these can reasonably be expected to be met through the provision of a targeted support service in compliance with the rules in this chapter; and
   2. (b) the purpose of a targeted support service (COBS 9B.1.1G).
2. (2) A firm may define multiple consumer segments which reference the same situation. 

3. (3) A firm is able to determine the range of situations in which it will provide a targeted support service. In specifying that a firm must define at least one consumer segment, the FCA recognises that a firm could provide a targeted support service for only one particular group of individuals in one situation.

    

1. (1) Where relevant, the common characteristics by reference to which a consumer segment is defined refer to those characteristics which a client must either have (in the case of including characteristics) or not have (in the case of excluding characteristics) in order to be aligned with a consumer segment.

2. (2) COBS 9B.4.6G(3) explains why common characteristics will not always be relevant in defining a consumer segment.

    

1. To the extent that common characteristics are relevant to the definition of a consumer segment, they must:
   1. (1) include both:
      1. (a) including characteristics; and
      2. (b) excluding characteristics; and
   2. (2) be relevant to:
      1. (a) the shared financial support need or objective that the consumer segment is designed to meet (COBS 9B.4.4R(1)); and

      2. (b) the firm's specification of a suitable ready-made suggestion for an individual within that consumer segment.

          

1. (1) A firm must specify, in respect of each consumer segment, the information which it requires about a client in order to identify whether that client aligns with the consumer segment.
2. (2) The information in (1) must enable the firm to determine whether the client has:
   1. (a) all of the including characteristics; and

   2. (b) none of the excluding characteristics.

       

When defining any common characteristics for a consumer segment, a firm should have regard to the factors that:

1. (1) (in the case of including characteristics) would make a suggestion suitable; and
2. (2) (in the case of excluding characteristics) could or would make a suggestion unsuitable,

for an individual within the consumer segment.

1. (1) Excluding characteristics are those characteristics which are attributed to a consumer segment and which, if identified in a client, would prevent that client from being aligned with the consumer segment.
2. (2) Excluding characteristics refer to those characteristics of an individual that would be likely to render a ready-made suggestion unsuitable for an individual in the situation which the ready-made suggestion is designed to address – for example, because that ready-made suggestion would be ineffective, inappropriate or unduly risky.
3. (3) The effect of COBS 9B.5.5R(2)(c) is that if a client is identified as having any excluding characteristic of a consumer segment, they cannot be aligned with that consumer segment and provided with the associated ready-made suggestion.
4. (4) Having identified the excluding characteristics for a consumer segment, a firm should:
   1. (a) consider whether to define a consumer segment for individuals with a particular excluding characteristic; or

   2. (b) where it considers that (a) is not reasonably practicable, and where appropriate, identify ways to direct the individuals with the relevant excluding characteristic to other forms of support. For example, a firm should consider signposting individuals to guidance services (such as MoneyHelper).

       

1. (1) The rules in this chapter are designed so that firms can provide clients with ready-made suggestions without the need to undertake individual suitability assessments in the manner required by COBS 9 and COBS 9A.
2. (2) The effect of COBS 9B.4.20R is that a firm must assess the suitability of a ready-made suggestion by reference to:
   1. (a) the shared financial support need or objective of the relevant consumer segment; and

   2. (b) where relevant, the common characteristics of the relevant consumer segment.

       

1. A firm should be able to demonstrate how, for any product it intends to recommend by way of a ready-made suggestion, it has considered, at least, the following:
   1. (1) the costs and charges of the product;
   2. (2) whether the target market of the product is consistent with the shared financial support need or objective of the relevant consumer segment and the nature of the ready-made suggestion; and

   3. (3) the financial strength of the product provider.

       

1. For the purposes of COBS 9B.4.28R to COBS 9B.4.37G, ‘annuity’ means all annuities that are designated investments and includes:
   1. (1) pension annuities;
   2. (2) short-term annuities; and

   3. (3) fixed-term annuities, unless the fixed-term annuity can be surrendered for value.

       

A firm may only recommend an annuity as, or as part of, a ready-made suggestion where the following conditions are met:

1. (1) the recommendation:
   1. (a) does not expressly refer to a particular annuity; and
   2. (b) goes no further than a recommendation relating to the features of an annuity;
2. (2) the ready-made suggestion does not include, or is not accompanied by, any quote for an annuity (including a guaranteed quote or market-leading pension annuity quote, as defined in COBS 19.9.1R(2) and (3), or an illustrative quote); and

3. (3) the ready-made suggestion includes a direction to the client to visit the comparison facility provided by the MoneyHelper website [https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities] before taking any further step toward the purchase of an annuity.

    

For the purposes of COBS 9B.4.28R(1)(b):

1. (1) a firm can go no further than providing a recommendation relating to the features of an annuity. Subject to that limitation (and the requirement to not expressly refer to a particular annuity), a firm is able to provide a recommendation in relation to annuities more generally, including a recommendation to consider buying an annuity; and

2. (2) a recommendation to a client relating to the features of an annuity should ensure the client aligns with a particular consumer segment in relation to which the features have been assessed as suitable, in accordance with COBS 9B.4.20R and COBS 9B.5.5R.

    

When a firm has provided a ready-made suggestion which includes a recommendation relating to an annuity in accordance with COBS 9B.4.28R(1) and (2) to a client and the firm has complied with COBS 9B.4.28R(3), it must:

1. (1) ensure that the targeted support service interaction with the client is brought to an end; and
2. (2) communicate to the client that:
   1. (a) the targeted support service interaction has ended; and

   2. (b) any further steps taken between the firm and the client towards the purchase of an annuity would form part of a separate sales journey after the client had been provided with the opportunity to visit the MoneyHelper website as set out in COBS 9B.4.28R(3).

       

A firm may refer a client to an annuity brokerage service, but only where the following conditions are met:

1. (1) the firm has complied with COBS 9B.4.32R;
2. (2) the client has been given a reasonable opportunity to act on the direction given by the firm to visit the comparison facility provided by the MoneyHelper website in accordance with COBS 9B.4.28R(3);
3. (3) the particular annuity brokerage service will provide the client with access to a sufficient range of annuities available on the market in accordance with COBS 9B.4.35R; and

4. (4) the referral is not accompanied by any quote for an annuity (including a guaranteed quote or market-leading pension annuity quote, as defined in COBS 19.9.1R(2) and (3), or an illustrative quote).

    

For the purposes of COBS 9B.4.33R(3), an annuity brokerage service will provide a client with access to a sufficient range of annuities where:

1. (1) the number and variety of annuities accessible through the brokerage service are adequately representative of annuities available on the market; and

2. (2) the brokerage service can provide access to annuities which reflect the firm’s design of the underlying consumer segment and associated ready-made suggestion.

    

    

A recommendation to consolidate pension arrangements would require a more individualised assessment of a client’s circumstances than firms are permitted to provide through a targeted support service. Pension consolidation includes:

1. (1) transferring at least one pension arrangement into an existing pension arrangement that a client holds; and

2. (2) transferring multiple pension arrangements held by the client into a new arrangement.

    

A ready-made suggestion must not include a recommendation to buy or subscribe for (including for the purpose of holding in a pension scheme), or become a lender under:

1. (1) a restricted mass market investment;
2. (2) a non-mass market investment;
3. (3) an investment subject to a restriction on distribution or promotion in COBS 22; or

4. (4) deferred shares issued by a credit union or credit union subordinated debt subject to the requirements in CREDS 3A.5.

    

1. (1) COBS 9B.4.42R does not prevent a firm from recommending a suitable investment which has a component part that provides exposure to an investment of a type referred to in that rule, such as a packaged product or a default arrangement in a qualifying scheme.
2. (2) The fact that a type of investment is not subject to the restriction in COBS 9B.4.42R does not mean that it will be appropriate for it to be the subject of a ready-made suggestion that is provided on the basis of limited information. For example, it is unlikely to be appropriate for a targeted support service to be used to recommend investments which:
   1. (a) are, or may become:
      1. (i) leveraged or structured in such a way that an investor could lose more than their invested capital;
      2. (ii) particularly illiquid or for which market prices are not readily and regularly available; or
      3. (iii) particularly volatile; or
   2. (b) are otherwise designed for a narrow target market.

3. (3) COBS 9B.4.42R does not prevent a firm from specifying a ready-made suggestion that recommends that a client sells an investment of a type referenced in that rule.

    

A firm may provide a targeted support service to a client:

1. (1) at the request of that client; or

2. (2) at the initiative of the firm (but see COBS 9B.5.3R).

    

A firm must not initiate the provision of a targeted support service other than:

1. (1) in response to an express request from the client for the provision of:
   1. (a) a targeted support service of the type provided by the firm; or
   2. (b) other support relating to investments of a type which could be met by the firm’s targeted support service; or

2. (2) where the firm has reasonable grounds to consider that the client is in a situation which may be met by the firm’s targeted support service.

    

1. (1) A firm that approaches a client other than in compliance with COBS 9B.5.3R may be in breach of its obligations to the client under PRIN 2A.2.1R (Act in good faith), PRIN 2A.2.8R (Avoid causing foreseeable harm) and PRIN 2A.2.14R (Enable and support retail customers).

2. (2) COBS 9B.5.3R does not prevent a firm contacting clients to inform them of the availability of a targeted support service.

    

1. (1) A firm must only provide a ready-made suggestion to a client where it identifies, using reasonable skill and care, that the client aligns with a consumer segment.
2. (2) For the purposes of (1), a client aligns with a consumer segment where the firm confirms that the client:
   1. (a) is in the situation covered by the consumer segment;
   2. (b) (where relevant) has all of the including characteristics of the consumer segment; and

   3. (c) (where relevant) has none of the excluding characteristics of the consumer segment.

       

       

1. (1) A firm may identify such alignment by reference to information which it either holds or collects about that client (or a combination of both).

2. (2) The rules in this section recognise that not every targeted support service journey will be the same. The rules afford firms flexibility in the way that they engage with clients, save that certain information must be disclosed to a client in connection with a ready-made suggestion (COBS 9B.6.3R and COBS 9B.6.5R).

    

1. (1) The rules in this chapter are designed so that firms can provide clients with ready-made suggestions without the need to undertake individual suitability assessments in the manner required by COBS 9 and COBS 9A.
2. (2) The effect of the requirements in this chapter is that a client should receive a suitable ready-made suggestion where:
   1. (a) the firm has aligned that client with a consumer segment in accordance with the rules in this section; and
   2. (b) the relevant consumer segment and associated ready-made suggestion have been specified in compliance with the rules in COBS 9B.4.

3. (3) Notwithstanding (2), it is possible that there are considerations specific to a particular client which are not addressed by the common characteristics of a consumer segment with which that client is aligned. COBS 9B.5.11R requires a firm to have regard to information, beyond that required to align a client with a consumer segment, which may affect the suitability of a ready-made suggestion for a client.

    

1. (1) The effect of COBS 9B.5.5R is that a firm must not provide a client with a ready-made suggestion specified for a consumer segment where:
   1. (a) the client is not in the situation covered by the relevant consumer segment;
   2. (b) (where relevant) the client does not align with all of the including characteristics of the relevant consumer segment; or
   3. (c) (where relevant) any of the excluding characteristics of the relevant consumer segment apply to the client.

2. (2) COBS 9B.5.11R specifies further circumstances in which a ready-made suggestion must not be provided to a client.

    

1. (1) A firm ought reasonably to be aware of information which:
   1. (a) is held by the firm;
   2. (b) is relevant to the suitability of the ready-made suggestion; and
   3. (c) is, or ought reasonably to be, readily accessible to the business area of the firm engaged in the provision of the targeted support service.
2. (2) The information it would be reasonable to expect a firm to be aware of and have regard to in providing its targeted support service is likely to depend on the particular circumstances of that targeted support service. For example:
   1. (a) the context in which the targeted support service is provided; and
   2. (b) the nature of the situation which the targeted support service is designed to address.

3. (3) For example, if a client gave the firm information when taking out a mortgage several years prior to receiving the targeted support service, it would not necessarily be reasonable to expect that such information would be readily accessible to the area of the firm providing the targeted support service to the client.

    

1. (1) Firms are not expected to request information from a client during the targeted support service journey other than that required for the provision of the targeted support service.
2. (2) Where a client volunteers information beyond that which is requested by the firm during a targeted support service journey:
   1. (a) the firm may terminate the targeted support service journey for the client;
   2. (b) the firm may continue to provide a ready-made suggestion with which the client otherwise aligns if the firm is reasonably satisfied that the additional information does not indicate that the ready-made suggestion may be unsuitable for the client; or
   3. (c) where the additional information suggests that the suitability of a ready-made suggestion with which the client otherwise aligns could be affected:
      1. (i) the firm should consider whether to ask for any further information necessary to enable it to decide how to proceed; and
      2. (ii) if the firm determines that the additional information indicates that the ready-made suggestion may be unsuitable for the client, the firm may:
         1. (A) seek to align the client with a different consumer segment; or
         2. (B) terminate the targeted support service journey for the client.
3. (3) The situation in (2)(c) might arise because the client volunteers:
   1. (a) new information; or
   2. (b) information which appears to conflict with other information by reference to which the client is aligned with a consumer segment.
4. (4) The guidance in COBS 9B.7 is relevant to the situation in which a client’s volunteering of additional information results in the termination of a targeted support service journey.

5. (5) The firm need not consider the additional information for a purpose other than satisfying itself as to the suitability of a ready-made suggestion for the client, unless that information is relevant to the firm’s satisfaction of other requirements (for example, when reviewing its processes for the provision of its targeted support service under COBS 9B.10.9R).

    

In determining what steps to take where a client requests that a firm executes a transaction which is inconsistent with a ready-made suggestion provided by the firm, the firm should have particular regard to:

1. (1) the client’s best interests rule; and 

2. (2) its obligations to support retail customer understanding (PRIN 2A.5.3R) and to design and deliver support including by giving retail customers sufficient opportunity to understand and assess their options (PRIN 2A.6.2R(3)).

    

1. (1) When a firm provides a ready-made suggestion to a client, it must clearly refer to the service by which the ready-made suggestion is provided as ‘Targeted Support’.

2. (2) A firm must only refer to a service as being a targeted support service when the service is one that has been designed and delivered in compliance with the rules in this chapter.

    

COBS 9B.6.1R(1) does not prevent a firm from:

1. (1) using another name for the service it provides, provided that at the point a ready-made suggestion is provided to a client, the service is clearly described as being ‘Targeted Support’ (such that the client can identify the service as such); or

2. (2) referring to the service as ‘Targeted Support’ in communications other than when providing a ready-made suggestion.

    

When a firm provides a ready-made suggestion to a client, the firm must clearly disclose to the client:

1. (1) the common characteristics (both including characteristics and excluding characteristics) of the consumer segment with which the firm has aligned the client;
2. (2) that the ready-made suggestion was designed for the consumer segment with which the firm has aligned the client; and

3. (3) the nature of any limitations on the scope of products considered by the firm in developing its ready-made suggestions including, where applicable, that the firm has only considered products issued or provided by the firm or its associates.

    

At the same time as a firm providing targeted support makes a recommendation to a client, the firm must make a statement to that client which specifies:

1. (1) that the recommendation is not based on a comprehensive consideration by the firm of the client’s characteristics or circumstances;
2. (2) that the recommendation is not specific to the client; and
3. (3) the characteristics, circumstances, or both if applicable, of the group which the firm has used as the basis for the recommendation.

4. [Note: article 55A(4) and (5) of the Regulated Activities Order]

    

In connection with providing a client with a ready-made suggestion, a firm should, where appropriate:

1. (1) signpost the client to tools or modellers that could assist the client in understanding the implications of the ready-made suggestion;
2. (2) inform the client about the availability of guidance services (such as MoneyHelper) and other types of advice, including more comprehensive, individualised advice;
3. (3) to support consumer understanding, inform the client about any assumptions that the firm has made about the individuals in the consumer segment;
4. (4) consider encouraging the client to consider other products which might be available in the market before making a decision; and

5. (5) consider explaining to the client that the firm only considers the ready-made suggestion to be suitable for the individuals in the consumer segment at the point in time it has been suggested, where this is the case.

    

1. (1) Firms are reminded of their obligations under Principle 12 (Consumer Duty) and PRIN 2A.5.3R (Communications to retail customers) in relation to supporting retail customer understanding.
2. (2) PRIN 2A.5.3R requires a firm to equip retail customers to make decisions that are effective, timely and properly informed.
3. (3) In complying with PRIN 2A.5.3R, a firm should consider:
   1. (a) whether to disclose any other relevant information (beyond that required by COBS 9B.6.3R and COBS 9B.6.5R) that would support consumer understanding of the targeted support service or a ready-made suggestion; and

   2. (b) whether to disclose information separately or to consolidate information.

       

1. (1) PRIN 2A.5.5R requires a firm to communicate in good time for retail customers to make effective decisions, including before the purchase of a product.
2. (2) In complying with PRIN 2A.5.5R, a firm should consider when it is appropriate to make disclosures to a client in connection with the provision of a targeted support service. It is likely to be appropriate to disclose relevant information to a client:
   1. (a) when the firm has initial contact with the client in relation to the provision of a targeted support service;
   2. (b) where applicable, at any point at which the firm contacts the client to request, or verify the accuracy of, information for the purpose of aligning the client with a consumer segment; and
   3. (c) where applicable, when the firm provides the client with a ready-made suggestion.

3. (3) The information in COBS 9B.6.5R and COBS 9B.6.6G must necessarily be disclosed to the client when a ready-made suggestion is provided.

    

1. (1) This rule applies where another rule in this sourcebook (the ‘relevant rule’) requires a firm to provide information to a client about a targeted support service at a time that is incompatible with the nature of that targeted support service.

2. (2) A firm must provide the information required by the relevant rule at a time that is consistent with PRIN 2A.5.5R.

    

1. (1) Firms are reminded of their obligations under COBS 6.1 (Information about the firm and compensation information (non-MiFID and non-insurance distribution provisions)) and COBS 6.1ZA (Information about the firm and compensation information (MiFID and insurance distribution provisions)).
2. (2) To the extent applicable, firms are reminded of their obligations under COBS 2.2 (Information disclosure before providing services (other than MiFID and insurance distribution)) and under COBS 2.2A (Information disclosure before providing services (MiFID and insurance distribution provisions)).
3. (3) If a ready-made suggestion involves a recommendation of a particular investment, a firm may be subject to requirements in:
   1. (a) COBS 13 and COBS 14 relating to product information; and
   2. (b) for consumer composite investments, a requirement under DISC to provide retail investors with a product summary.
4. (4) When providing information to a client, a firm should have regard to its obligation under PRIN 2A.5.3R(2) and COBS 4.2.1R to communicate information to clients in a way which is fair, clear and not misleading. 

5. (5) COBS 9B.6.13R recognises that targeted support services may be provided differently to other types of service and that it may not, for example, be possible to provide information about the service ‘in good time’ before the service is provided. That rule allows information about a targeted support service to be provided at a time that is consistent with the way in which the service is provided in compliance with PRIN 2A.5.5R.

    

1. (1) A ready-made suggestion will generally incorporate a financial promotion.

2. (2) Firms are reminded of their obligations under COBS 4 in relation to the communication and approval of financial promotions, including the fair, clear and not misleading rule.

    

1. (1) It is important that clients understand the nature of the support they are receiving. It is particularly important that clients who have recently received, or are receiving, investment advice (as defined in the Handbook) understand the ways in which a targeted support service differs from that service.
2. (2) Firms are reminded of their obligation to support retail customer understanding so that firms’ communications equip retail customers to make decisions that are effective, timely and properly informed (PRIN 2A.5.3R).
3. (3) Firms should pay particular regard to the information needs of any client:
   1. (a) to whom the firm:
      1. (i)  has recently provided investment advice; or
      2. (ii) is providing investment advice of an ongoing nature; or
   2. (b) whom the firm is aware, or ought reasonably to be aware, is receiving, or has recently received, investment advice from another person.

4. (4) Before providing a ready-made suggestion to a client in (3), a firm should take reasonable steps to ensure that the client understands the difference between a targeted support service and the investment advice already received by the client.

    

1. (1) Unless (2) or (3) apply, a firm must provide the information in COBS 9B.6.3R and COBS 9B.6.5R to a client in a durable medium when it provides the client with a ready-made suggestion.
2. (2) In relation to the information in COBS 9B.6.3R, paragraph (1) applies unless the firm has provided that information in a durable medium within a reasonable period prior to the provision of the ready-made suggestion.

3. (3) Where it is not possible for a firm to provide the information in (1) in a durable medium when it provides the client with a ready-made suggestion, the firm must provide that information to the client in a durable medium as soon as reasonably practicable after it provides the ready-made suggestion.

    

1. (1) A firm may only deliver a ready-made suggestion to a client where it has identified that the client aligns with a consumer segment (COBS 9B.5.5R).

2. (2) This section sets out the steps which a firm should take where it is unable to provide a client with a ready-made suggestion.

    

Examples of reasons why a firm might be unable to provide a client with a ready-made suggestion include because the firm has:

1. (1) been unable to identify the client as being in a situation covered by a consumer segment;
2. (2) (where relevant) been unable to identify the client as having all of the including characteristics necessary to align the client with a consumer segment;
3. (3) (where relevant) identified that the client has an excluding characteristic which means that they cannot be aligned with a consumer segment;
4. (4) been unable to confirm that a client lacks all of the excluding characteristics necessary to align the client with a particular consumer segment; or

5. (5) identified or received additional information which means, or has led it to conclude, that it cannot provide a ready-made suggestion.

    

1. (1) In considering the appropriate course of action in relation to a client whom a firm has been unable to align with a consumer segment, a firm should have regard to its obligation to design and deliver support to retail customers (PRIN 2A.6.2R).
2. (2) Where a firm has been unable to provide a client with a ready-made suggestion, the firm should consider what alternative support, if any, it could usefully provide to that client. This may include directing the client to support (including investment advice) provided by other persons.

3. (3) Firms are reminded of their obligations under Principle 12 (Consumer Duty) and PRIN 2A – in particular, to act in good faith towards retail customers (PRIN 2A.2.1R) in a manner that is consistent with the reasonable expectations of those retail customers (PRIN 2A.2.2R).

    

1. (1) A firm may elect whether to charge a client for the provision of a targeted support service. Targeted support services may be provided without explicit charge to the client.
2. (2) The costs of providing a targeted support service may be met through other business lines of the firm or by other legal entities within the firm’s group.
3. (3) The rules in this section:
   1. (a) prohibit, except in certain circumstances, firms from receiving commissions and other benefits in connection with their business of providing a targeted support service;
   2. (b) require firms to ensure that clients understand what they will pay for a targeted support service; and
   3. (c) require all firms to ensure that the arrangements by which they are remunerated for their provision of a targeted support service are consistent with the obligation to ensure that their products provide fair value (PRIN 2A.4.2R).

4. (4) Save as specified in this section, the rules on adviser charging and remuneration (COBS 6.1A) do not apply to firms in relation to the provision of a targeted support service.

    

1. (1) Subject to COBS 9B.8.3R and COBS 9B.8.4R, a firm must not solicit or accept (and must ensure that none of its associates solicits or accepts) any fees, commissions, or monetary or non-monetary benefits in connection with its business of providing a targeted support service or any other related services which are paid or provided by:
   1. (a) any third party; or
   2. (b) a person acting on behalf of a third party.
2. (2) Reference in (1) to a firm’s business of providing a targeted support service refers to its activities of designing and delivering a targeted support service.
3. (3) Paragraph (1) applies regardless of whether the firm intends to refund the payments or pass the benefits on to the client.
4. (4) ‘Related service(s)’ for the purposes of (1) includes:
   1. (a) arranging or executing a transaction which has been the subject of a ready-made suggestion provided by the firm or an associate or conducting administrative tasks associated with that transaction;
   2. (b) managing a relationship between a client (to whom the firm provides a targeted support service) and a discretionary investment manager or providing a service to such a client in relation to the investments managed by such a manager; or

   3. (c) recommending a discretionary investment manager or person providing investment advice to a client (to whom the firm provides a targeted support service).

       

COBS 9B.8.2R does not prevent:

1. (1) a firm from accepting any payment made:
   1. (a) by or on behalf of a client (including those that facilitate the payment of a charge for the provision of a targeted support service from a client’s investment); or
   2. (b) by an affiliated company which is no more than is reasonably representative of the cost of providing the targeted support service; or

2. (2) a firm or its associates from accepting any minor non-monetary benefits which meet the requirements of COBS 6.1A.5AR.

    

COBS 9B.8.2R does not apply to the solicitation or acceptance of any fees, commissions, or monetary or non-monetary benefits in connection with a firm’s (or its associate’s) business of providing a targeted support service or any other related services where the following conditions are met:

1. (1) such business or related service relates exclusively to annuities (as defined in COBS 9B.4.26R);
2. (2) the business or related service is conducted in accordance with COBS 9B.4.28R to COBS 9B.4.37G; and

3. (3) the fee, commission, or monetary or non-monetary benefit is received by the firm as a result of a referral to a whole of market annuity brokerage service made in accordance with COBS 9B.4.33R and COBS 9B.4.35R.

    

1. (1) This rule applies to a firm that does not charge the client a fee for the provision of a targeted support service.

2. (2) A firm must ensure that the arrangements by which it is remunerated for the provision of its targeted support service are consistent with its obligation to ensure that its products provide fair value (PRIN 2A.4.2R).

    

1. (1) This rule applies where the costs and charges associated with an investment that is the subject of a ready-made suggestion differ as between:
   1. (a) a client who buys or subscribes for that investment having received a targeted support service; and
   2. (b) a client who buys or subscribes for that investment without having received a targeted support service.
2. (2) In complying with its obligation to ensure that its client is equipped to make properly informed decisions, a firm providing the ready-made suggestion must clearly disclose to the client the nature and extent of the difference in (1).
3. (3) The firm must make the disclosure in (2):
   1. (a) when it communicates the ready-made suggestion to the client; or

   2. (b) if earlier, when it provides relevant information about costs and charges to the client in compliance with requirements in this sourcebook.

       

1. (1) This rule applies to a firm that charges a client in relation to the provision of a targeted support service.
2. (2) A firm must ensure that:
   1. (a) any charges which it applies to the provision of a targeted support service are consistent with its obligation under PRIN 2A.4.2R to ensure that a product provides fair value; and
   2. (b) it provides clients with sufficient information about those charges as to meet its obligation under PRIN 2A.5.3R to meet the information needs of clients.
3. (3) As early as practicable before the firm provides a chargeable targeted support service, any charge(s) relating to the provision of that service must be disclosed to, and agreed with, the client.
4. (4) The disclosure required by (3) must be in:
   1. (a) cash terms (or convert non-cash terms into illustrative cash equivalents); and

   2. (b) a durable medium, or through a website (if it does not constitute a durable medium) if the website conditions are satisfied.

       

1. (1) In determining and disclosing its charges for the provision of a targeted support service, a firm should also have regard to its duties under the client’s best interests rule and the fair, clear and not misleading rule.

2. (2) In particular, a firm should not vary its charges for the provision of a targeted support service inappropriately according to provider or, for substitutable and competing products, the type of product.

    

Firms are reminded of their obligations:

1. (1) relating to the identification and management of conflicts of interest under SYSC 3.3 (for insurers) and SYSC 10 (for other firms);
2. (2) to act honestly, fairly and professionally in accordance with the best interests of their clients (COBS 2.1.1R);
3. (3) under the rules on inducements in COBS 2.3 and COBS 2.3A, in so far as they relate to the payment or provision of monetary and non-monetary benefits;
4. (4) in COBS 6.1 and COBS 6.1ZA in relation to the disclosure of information, including concerning a firm’s costs and charges; and

5. (5) for life policies, the rules in COBS 7.3 in relation to demands and needs.

    

1. (1) A firm must not offer or pay (and must ensure that none of its associates offers or pays) any fees, commissions, or monetary or non-monetary benefits to another firm, or to any other third party for the benefit of that firm, in connection with that firm’s business of providing a targeted support service (or any related services).
2. (2) Paragraph (1) does not apply to:
   1. (a) payments made on behalf of a client (including those that facilitate the payment of a charge for the provision of a targeted support service from a client’s investment);
   2. (b) payments to an affiliated company which are no more than is reasonably representative of the cost of that affiliated company providing its targeted support service; or

   3. (c) minor non-monetary benefits which meet the requirements of COBS 6.1A.5AR.

       

In addition, firms are reminded: 

1. (1) of their obligations in SYSC to implement and maintain relevant systems, controls, policies and procedures, which should be sufficient to enable firms to ensure compliance with the rules in this chapter; and

2. (2) that in considering the competence and capabilities of relevant individuals involved in the design and delivery of a targeted support service, they should consider relevant provisions, including in SYSC 3.1 (Systems and controls), SYSC 5.1 (Skills, knowledge and expertise) and TC.

    

In complying with its obligations under SYSC and TC, a firm should ensure that employees involved in the design or delivery of a targeted support service are appropriately trained, supervised and supported, in particular so as to be able to:

1. (1) identify when a client can be aligned with a consumer segment; and

2. (2) appropriately consider, and respond to, any information provided by a client which is beyond that necessary to determine whether the client aligns with a consumer segment.

    

As part of a firm’s general obligation to monitor the outcomes that retail customers experience from its products (PRIN 2A.9.1R and PRIN 2A.9.8R), a firm should particularly monitor the outcomes which are generated by its targeted support service. In particular, a firm should use this monitoring to:

1. (1) identify whether the targeted support service is consistent with delivering good outcomes including that, at the point at which the service is delivered to clients, the firm has properly addressed the risk of ready-made suggestions leading to harm as a result of:
   1. (a) the firm’s design of its consumer segments;
   2. (b) the specification of the firm’s ready-made suggestions;
   3. (c) the firm’s processes to align clients with consumer segments; or
   4. (d) the firm’s ready-made suggestions no longer being suitable for individuals in the relevant consumer segment;
2. (2) understand whether clients in particular situations or with particular characteristics are routinely unable to be aligned with a consumer segment to inform the potential development of new consumer segments; and

3. (3) consider whether any product being used for a ready-made suggestion remains aligned with the relevant consumer segment including, for example, where the product manufacturer has made a significant adaptation to that product.

    

The requirements to monitor outcomes in this chapter:

1. (1) do not require a firm that provides a targeted support service to undertake ongoing suitability assessments (including the periodic reviews of product suitability set out in COBS 9 and COBS 9A) for clients who have previously received a targeted support service (unless the firm’s service to the client includes periodic assessment of suitability);

2. (2) take account of how firms should be acting in relation to their targeted support service in light of what is required of these firms under PROD 3, PROD 4 and PRIN 2A (as applicable) where they are also manufacturers or distributors of designated investments that are included in ready-made suggestions.

    

A firm must, in relation to a product that has been or may be recommended in a ready-made suggestion, have appropriate arrangements in place to:

1. (1) review information made available to it by the manufacturer of the product in relation to:
   1. (a) any significant adaptation to the product; or
   2. (b) mitigating actions a product manufacturer has taken or proposes to take in relation to the product; and

2. (2) consider whether any circumstances in (1) mean the product should no longer be recommended in that ready-made suggestion.

    

1. (1) Where a distributor recommends a product as part of a targeted support service, it will need to ensure the arrangements it has to meet requirements in PRIN 2A.3, PRIN 2A.4, PROD 3 and/or PROD 4 enable it to obtain all necessary information from the product manufacturer to understand the product, including its features, risks and costs.
2. (2) For the purposes of COBS 9B.10.6R(1), firms should have in place arrangements with the product manufacturer to obtain information about any significant adaptation to the product within the meaning of PRIN 2A.3, PROD 3 or PROD 4 (as appropriate).   

3. (3) When considering whether a significant adaptation (or other change) to a product means that it should no longer be recommended in a ready-made suggestion, firms should take into account the potential impact it could have on individuals in the consumer segment – for example, the effect of features being added to, or removed from, the product or changes to the target market.

    

1. (1) Firms should consider whether any information they receive from product manufacturers is relevant to their monitoring obligations under PRIN 2A (or, where relevant, under PROD) and indicates any circumstances that would require the firm to be taking appropriate action, for example under PRIN 2A.9.12R.

2. (2) Firms should consider what action is appropriate in light of the situation identified. For example, in certain circumstances, the specific information may mean the firm should consider, where it is appropriate, notifying the client of any changes to the product, and prompting them to consider taking further action including potentially a further targeted support service (including from the firm) or other advice, to enable the client to take appropriate steps.

    

A firm must review its processes for the provision of its targeted support service, including the ready-made suggestions:

1. (1) regularly; and
2. (2) with appropriate frequency.

The frequency with which the review in COBS 9B.10.9R is undertaken should be determined having regard to such matters as:

1. (1) the consumer segments the firm has created, including the complexity of those consumer segments;
2. (2) the complexity of the ready-made suggestions provided as part of the targeted support service;
3. (3) the number of clients to whom the firm has offered its targeted support service;
4. (4) the nature of the products distributed in connection with the ready-made suggestions; and
5. (5) any other relevant external factors such as:
   1. (a) changes to the relevant regulatory requirements, including to the FCA Handbook;
   2. (b) relevant technological developments; and

   3. (c) relevant changes to the market.

       

1. (1) SYSC 3 and SYSC 9 (as applicable) contain high level requirements in relation to record keeping.

2. (2) Firms should ensure that the records which they retain are sufficient to enable the FCA to monitor the firm’s compliance with the requirements in this chapter relating both to the design and delivery of their targeted support services.