FCA Handbook - PDCOB 2 General principles

You are viewing PDCOB 2 General principles as of . PDCOB 2 General principles was last updated on 30/11/2024.

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PDCOB 2.1 The customer’s best interests rule

A firm must act honestly, fairly and professionally in accordance with the best interests of its customer (the customer’s best interests rule).

PDCOB 2.2 Exclusion of liability

A firm must not seek to exclude or restrict, or rely on any exclusion or restriction of any duty or liability it may have to a customer, unless:

(1)
it is reasonable for it to do so and it is consistent with the firm’s obligations under the customer’s best interests rule; and
(2)
the duty or liability arises other than under the regulatory system.

The general law, including the CRA, also limits the scope for a firm to exclude or restrict any duty or liability to a customer.

PDCOB 2.3 Active election by a customer

In this sourcebook, references to an active election by a customer must not be read to include an omission by a customer.

A failure by a customer to change a default option such as a pre-ticked box on a website is an example of an omission by a customer for the purposes of PDCOB 2.3.1R.

PDCOB 2.4 Inducements

A firm must not pay or accept any fee or commission, or provide or receive any non-monetary benefit, unless the payment or acceptance of the fee or commission, or provision or receipt of the non-monetary benefit, would not impair compliance with the firm’s duty to act in accordance with the customer's best interest rule.

(1)
Principle 8 requires a firm to manage conflicts of interest fairly, both between itself and its customers and between a customer and another customer. This principle extends to soliciting or accepting inducements where this would conflict with a firm’s duties to its customers. A firm that offers or accepts such inducements should consider whether doing so conflicts with its obligations under:
1. (a)
  Principle 1 to act with integrity;
2. (b)
  Principle 12 to act to deliver good outcomes for retail customers; or
3. (c)
  the customer’s best interests rule.
(2)
An inducement is a benefit offered to a firm, or any person acting on its behalf, with a view to that firm, or that person, adopting a particular course of action. This can include, but is not limited to, cash, cash equivalents, commission, goods, hospitality or training programmes.
(3)
Firms should also refer to the rules on charging for the qualifying pensions dashboard service and post-view services (PDCOB 2.5 and PDCOB 12.4.1R to PDCOB 12.4.3R).

PDCOB 2.5 Restrictions on charging in relation to dashboard services

Firms are reminded that the Dashboard Regulations require that view services must be provided without charge.

Prohibition on charging other than for permitted dashboard services

A firm must not impose a charge on a customer for any service other than for a permitted dashboard service.

Prohibition on charging by other parties

A firm must not permit any other person to charge in relation to any services on or from the firm’s pensions dashboard platform.

Prohibition on providing a service for which a charge is payable without active election

A firm must not impose a charge on a customer for a permitted dashboard service, or enter into an agreement with a customer under which a charge is, or may become, payable for a permitted dashboard service, unless the customer has actively elected to receive that service and pay that charge.

A firm must not invite or induce a customer to receive services for which a charge will be, or may become, payable if the firm knows or has reasonable cause to suspect that the services are not permitted dashboard services or that an active election to be charged is unlikely to be made.

Impact of auto-renewals on active election

If, under the terms and conditions of a permitted dashboard service there is to be an automatic renewal of the agreement on substantially the same terms, it suffices for the purposes of PDCOB 2.5.4R if the customer actively elected to obtain the permitted dashboard service before entering into the initial agreement or a preceding renewal.

An automatic renewal of the agreement is not to be regarded as being on substantially the same terms if, following the renewal, a charge, or a significant charge, will or may become payable for the permitted dashboard service for the first time (in which case, PDCOB 2.5.4R applies at the time of the renewal).

Meaning of ‘charge’

For the purposes of this section, a charge includes any direct or indirect financial or non-financial consideration of any kind, whether payable to the firm or any other person.

Firms are reminded that a similar prohibition on opt-out selling of add-on products is imposed by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (www.legislation.gov.uk/uksi/2013/3134) in relation to additional payments under a contract where the main sale is not a financial service or product.