Rule on Inducements - COBS Provision: Difference between revisions
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This is the {{tag|FCA}}’s general {{cobsprov|Rule on Inducements}} —and more to the point, avoiding them — and as you’ll see it is cast with an eye to the {{fcaprov|client}}’s best interests. Compare with specific rules on [[Use of dealing commissions - COBS Provision|use of dealing commissions]], which some might say are no more than an articulation of these, but others would say are quite a lot more restrictive, but which relate only to {{cobsprov|firm}}s which act as {{cobsprov|investment manager}}s - potentially a key difference, because it would not catch a [[broker]] or [[dealer]] to the extent it accepted orders from an investment manager who was not an FCA regulated {{cobsprov|firm}} (i.e., a foreigner). To be clear, in this case the general {{cobsprov|rule on inducements}} would continue to apply to the [[broker]]: just not the more detailed {{cobsprov|use of dealing commissions}} rules. | This is the {{tag|FCA}}’s general {{cobsprov|Rule on Inducements}} —and more to the point, avoiding them — and as you’ll see it is cast with an eye to the {{fcaprov|client}}’s best interests. Compare with specific rules on [[Use of dealing commissions - COBS Provision|use of dealing commissions]], which some might say are no more than an articulation of these, but others would say are quite a lot more restrictive, but which relate only to {{cobsprov|firm}}s which act as {{cobsprov|investment manager}}s - potentially a key difference, because it would not catch a [[broker]] or [[dealer]] to the extent it accepted orders from an investment manager who was not an FCA regulated {{cobsprov|firm}} (i.e., a foreigner). To be clear, in this case the general {{cobsprov|rule on inducements}} would continue to apply to the [[broker]]: just not the more detailed {{cobsprov|use of dealing commissions}} rules. | ||
Revision as of 14:07, 27 April 2017
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The JC’s Reg and Leg resource™
UK Edition
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This is the FCA’s general Rule on Inducements —and more to the point, avoiding them — and as you’ll see it is cast with an eye to the client’s best interests. Compare with specific rules on use of dealing commissions, which some might say are no more than an articulation of these, but others would say are quite a lot more restrictive, but which relate only to firms which act as investment managers - potentially a key difference, because it would not catch a broker or dealer to the extent it accepted orders from an investment manager who was not an FCA regulated firm (i.e., a foreigner). To be clear, in this case the general rule on inducements would continue to apply to the broker: just not the more detailed use of dealing commissions rules.
Want to take your client to Wimbledon? Forget about it.
2.3.1 in a Nutshell™ (COBS edition)
2.3.1 A firm cannot give or take any benefit relating to client business except:
- (1) Client Benefits: one the client pays for/receives directly; or
- (2) Third Party Benefits: a third party pays/receives if:
- (a) No impairment: it does not impair the firm’s duty to act in the client’s best interests; and
- (b) Full disclosure: the firm fully discloses it before providing it; and
- (c) Service enhancement: it enhances the quality of the firm’s service to the client; or
- (3) Ancillary Benefits: one that facilitates designated investment business or ancillary services and doesn’t conflict with the client’s interests (eg custody, clearing or exchange fees, legal fees, etc.)
See also
- COBS 11.6.3 et seq. regarding (Use of dealing commission), and also corporate access.
- 2.3.1 - the Rule on Inducements
Conduct of Business
This is an article about the FCA’s conduct of business rules, known by its chapter in the FCA Sourcebook, COBS, which implement, among other things, MiFID (directive 2004/39/EC (EUR Lex) and implementing directive 2006/73/EC (EUR Lex)).