The FCA’s Conduct of Business and Client Assets Sourcebooks Flashcards
what firms are subject to COBS?
if they carry on any range of activities from an establishment maintained by them or their appointed representative in the UK
what activities are subject to COBS?
- designated investment business
- long-term insurance business
- accepting deposits
how does COBS define a client?
someone whom a firm provides, intends to provide or has provided a service in the course of carrying on a regulated activity
what is a per se professional client?
- those that are required to be authorised or regulated to operate in financial markets
- large undertaking companies whose balance sheet, turnover or own funds meet certain levels
what is the requirement to enter into a client agreement applicable in?
applies to designated investment businesses for a retail client and for MiFID business and ancillary services
what information requirements do firms have to give clients?
- nature and risks of investments
- information about the firm
- information requirements relating to managing investments
- information on safeguarding investments/money
what are firms required to do in terms of costs?
firms must provide retail clients with information on the costs and charges to which they will be subject in respect of both investment services and or financial instruments including ancillary services
what are the requirements in terms of disclosure?
- timing and medium of disclosure (must be made in a timely manner as requested and in a durable medium)
- firms must keep the client up to date
- existing clients must be kept up to date
what are the rules and regulations on reliance on others?
if a firm carrying on MiFID business receives an instruction to provide investment or ancillary services for a client through another firm, they can rely on information relayed about the client to it by the third party firm and recommendations that have been provided by the third party firm
what happens if a firm breaches any of the principles that apply to them?
they will be liable to disciplinary actions, but the onus will be on the FCA to show the firm has been at fault
what principles are the financial promotion rules consistent with?
principle 6 and 7
what are the main exceptions to financial promotion rules in COBS?
- exemptions for UHNWIS and sophisticated investors
- exemptions by unauthorised persons
- one off promotions that are not cold calls
what are the types and methods of communication addressed by COBS 4?
- real time e.g., face-to-face, telephone, presentations
- unsolicited real-time communications
- non-real time communications
- direct offer financial promotions
what are the routes to legally promoting crypto assets to consumers?
- promotion is communicated by an authorised person
- promotion is made by an unauthorised person but approved by an authorised person
- promotion is communicated by a cryptoasset business registered with the FCA
- promotion is otherwise communicated in compliance with the conditions of an exemption
what is churning?
the activity of over-dealing and/or trading more frequently for a client in order to generate additional fees or commission for the firm
