FCA Handbook - GEN 4.3 Letter disclosure

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GEN 4.3 Letter disclosure

Disclosure in letters to retail clients

A firm must take reasonable care to ensure that every letter (or electronic equivalent) which it or its employees send to a retail client, with a view to or in connection with the firm carrying on a regulated activity, includes the disclosure in GEN 4 Annex 1 R (firms that are not PRA-authorised persons) or GEN 4 Annex 1AR (PRA-authorised persons) as applicable.

A TP firm must take reasonable care to ensure that every letter (or electronic equivalent) which it or its employees send to a retail client, with a view to or in connection with the TP firm carrying on a regulated activity, includes the disclosure in, as the case may be:

(1)
[deleted]
(2)
for a TP firm under Part 6 of the EU Exit Passport Regulations, GEN 4 Annex 1C 1.1R or 1.2R (firms that are not PRA-authorised persons) or GEN 4 Annex 1C 2.1R or 2.2R (PRA-authorised persons).

Where a letter covers both activities to which this sectionapplies and activities to which this sectiondoes not apply, the firm should comply with the rules in this chapter in relation to the business to which it applies.

An example for GEN 4.3.1A G would be where a letter covers business for which the FCA is the competent authority under the the UK provisions which implemented IDD and under the UK provisions which implemented MiFID.

For a UK domestic firm that is not a PRA-authorised person, the required disclosure in GEN 4 Annex 1 R is "Authorised and regulated by the Financial Conduct Authority".

For a UK domestic firm that is a PRA-authorised person, the required disclosure in GEN 4 Annex 1AR is "Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority".

(1)
GEN 4.3.1 R (Disclosure in letters to retail clients) covers letters delivered by hand, sent by post and sent by fax and also electronic mail, but not text messages, account statements, business cards or compliment slips (used as such).
(2)
GEN 4.3.1 R (Disclosure in letters to retail clients) applies in relation to letters sent by any of the firm's employees, which includes its appointed representatives and their employees.
(3)
Firms are likely to find it convenient to include the required disclosure in their letterhead.

Exception: insurers

GEN 4.3.1 R (Disclosure in letters to retail clients) does not apply in relation to:

(1)
general insurance business if the State of the risk is outside the United Kingdom and the client is not in the United Kingdom when the contract of insurance is entered into; or
(2)
long-term insurance business if the client is habitually resident outside the United Kingdom and is not present in the United Kingdom when the contract of insurance is entered into.

Exception: authorised professional firms

For an authorised professional firm, GEN 4.3.1 R (Disclosure in letters to retail clients) does not apply with respect to its non-mainstream regulated activities.

Exception: use of third party processors in home finance and insurance distribution activities

(1)
Where a firm has outsourced activities to a third party processor other than advising on life policies, GEN 4.3.1 R does not apply to that third party processor when acting as such, so long as the outsourcing firm ensures that the third party processor and its employees comply with that rule as if it was the firm and they were employees of the firm.
(2)
Where an appointed representative has outsourced insurance distribution activities other than advising on life policies or home finance mediation activities to a third party processor, GEN 4.3.1 R does not apply to that third party processor when acting as such, so long as the appointed representative's principal ensures that the third party processor and its employees comply with that rule as if it was the appointed representative and they were the employees of the appointed representative.
(3)
Where an appointed representative of a firm is carrying on:
1. (a)
  insurance distribution activities other than advising on life policies; or
2. (b)
  home finance mediation activities;
which have been outsourced to it by the firm, GEN 4.3.1 R does not apply to the firm when the appointed representative is carrying on the outsourced activities, so long as the firm ensures that the appointed representative and its employees comply with that rule as if it was the firm and they were employees of the firm.

Exception: credit firms

GEN 4.3.1 R (Disclosure in letters to retail clients) does not apply to a credit firm (other than a firm with a limited permission) with respect to the activity of entering into a regulated credit agreement as lender to which the Consumer Credit Directive would have applied if the activity had been carried on immediately before IP completion day.

A credit firm which carries on the activity of entering into a regulated credit agreement as lender, in respect of an agreement to which GEN 4.3.1R (Disclosure in letters to retail clients) does not apply as a result of GEN 4.3.7R is under an obligation to disclose pre-contract information in the form and to the extent required by the Consumer Credit (Disclosure of Information) Regulations 2010 (SI 2010/1013). Firms which carry on credit broking may take on the same obligation. A credit firm must also ensure specified information is included in credit agreements to which GEN 4.3.1R (Disclosure in letters to retail clients) does not apply as a result of GEN 4.3.7R in the form and to the extent required by the Consumer Credit (Agreements) Regulations 2010 (SI 2010/1014).

The effect of GEN 4.3.7 R is that a credit firm in relation to a regulated credit agreement which would have been covered by the Consumer Credit Directive if the activity had been carried on immediately before IP completion day does not need to comply with GEN 4.3.1 R in relation to those letters (or electronic equivalents) that accompany the information required under the Regulations referred to in GEN 4.3.8 G.

GEN 4.3.7R and the guidance related to it are not relevant to regulated activities covered by a limited permission (see the "relevant credit activities" set out in paragraph 2G of Schedule 6 to the Act).