COBS 9B.8 Charging and remuneration

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.