Topic 20 - Conduct of Business Requirements I Flashcards
What are the conduct of business sourcebooks
Located in the business standards section on FCA handbook. Relates to how advisers interact with clients
What 3 types of clients are in COBS
- Eligible counterparties: governments, banks and other financial institutions.
- Professional clients: all other bodies except eligible counterparties.
- Retail clients: for customers, provides highest level of investor protection
What are the different categories of advisors
Independent advise - advise from a firm relating to mortgages, pension etc.
Restricted advise - not deemed to be independent by FCA
Panel
Selection of trusted providers based on their products and service level
Basic advise
Providing advise on stakeholder products using a process that involves putting scripted questions to a retail client
What is execution-only business
Involves customer making their own investment section and telling firm to execute their wishes - no advise given
What is financial promotion
An invitation to engage in investment activity
Real-time financial promotion
Non written such as personal visits and telephone conversations
Non real-time financial promotion
Written such as newspaper or websites
Rules relating to financial promotion
- comparisons: comparisons with other products need to meaningful and fair
- Past performance: past performer info must be clear and warns customers
- Unsolicited promotions (cold calls): only for packaged products and must meet guidelines
What are the rules relating to adviser charges
- must not accept any commission from third party
- should be based on service provided not the product/provider recommended
- must be explained as part of disclosure
- continuing charges must be agreed with customer
What information must be provided at the outset
Contact information
Methods of communication
Authorisation
Advise type
Investment management
Client money or investments
Charging structure/method
Charges payable
Details of complaints procedure including FOS & FSCS
What is designated investment business
Dealing with investment assets on behalf of client
What is a suitability report
Needs to be submitted to the client before transaction.
Explains why the particular product was recommended by the adviser, it explains
- their personal/financial circumstances
- their needs and priorities
- their attitude to risk
What are key information documents (KID)
Must be provided if customer is buying packed retail and insurance-based investment product
