SECN 3 Selling securitisation positions to retail clients

1. (1)

   The seller of a securitisation position shall not sell such a position to a retail client, unless all of the following conditions are fulfilled:

   1. (a)

      the seller of the securitisation position has performed a suitability test in accordance with COBS 9A.2.1R and COBS 9A.2.16R;

   2. (b)

      the seller of the securitisation position is satisfied, on the basis of the test referred to in (a), that the securitisation position is suitable for that retail client;

   3. (c)

      the seller of the securitisation position immediately communicates in a report to the retail client the outcome of the suitability test.

2. (2)

   Where the conditions set out in (1) are fulfilled and the financial instrument portfolio of that retail client does not exceed £500,000, the seller shall ensure, on the basis of the information provided by the retail client in accordance with SECN 3.2.2G, that the retail client does not invest an aggregate amount exceeding 10% of that client’s financial instrument portfolio in securitisation positions, and that the initial minimum amount invested in one or more securitisation positions is £10,000.

For the purposes of SECN 3.2.1R and SECN 3.2.2G, the retail client’s financial instrument portfolio shall include cash deposits and financial instruments, but shall exclude any financial instruments that have been given as collateral.