COBS: Communications and Financial Promotions Flashcards
what are the rules about who can communicate a financial promotion and which law/act states this
must not communicate financial promotion unless:
it is an authorised person
or the content and method of delivery has been approved by an authorised person
S21 FSMA 2000
what is the maximum penalty of breaching S21 FSMA 2000 (financial promotion rules)
2 years in jail and or unlimited fine
what must a firm do before approving a financial promotion
make sure it complies with the relevant regulations
a firm that communicates a financial promotion produced by a third party would never be in breach of the rules if:
it has established an authorised firm has approved the promotion
it communicates the promotion only to those it was intended for
the promotion has not ceased to be fair, clear and not misleading
what are the exemptions to the financial promotion rules (5 exemptions)
exempt under financial promotions order
from outside the UK and cannot have effect within the UK
subject to the takeover code or any similar code
personal quotes or illustrations
one off promotions that are not cold calls
what are the 4 rules on prospectus promotions
state that prospectus has/will be published and where to obtain it
be clearly recognisable as an advertisement
contain info that is accurate and not misleading
is consistent with the info that is or is required to be on the prospectus
what is the exception to financial promotions needing to be clearly identifiable as such
if it is solely at professional or ECP clients
if a financial promotion is not ‘fair, clear and not misleading’ what type of offence is it and under which act/law
may be criminal under FSA 2012 misleading statements and impressions
what 5 things must a firm do when communicating a financial promotion to a retail client
name of the firm is included
details are accurate and fair
promotion is comprehensible
promotion does not obscure important items, statements or warnings e.g. capital at risk
FAIR, CLEAR and NOT MISLEADING
what type of investments are permitted to be promoted to retail clients
readily realisable securities
what types of investments are not allowed to be promoted to retail clients
non-mass market investments such as unregulated CIS, traded life policy and illiquid securities such as mini bonds and preference shares
what information is required when making direct offers to retail clients
the firm and its services
the safekeeping of client investments and money
costs and charges
what is distance marketing directive and when does it apply
applies when there is no face to face contact between client and firm
client given:
minimum specified info about a financial product and a right to cancel
what three things must a caller do when making an unwritten promotion
identify:
the caller
their employer
the purpose of the call
what three extra rules are there for making unwritten promotions
ask if client wishes to continue the call and stop if no
provide point of contact for the client
communicate at an appropriate time of day
