Rule on Inducements - COBS Provision

Section 2.3.1, COBS Rules

COBS Rules
Template:COBS Section 2.3.1
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In a nutshell:

2.3.1 A firm must not pay or accept any fee in relation to business carried on for a client other than:

(1) Client Fees: a fee paid to or by the client; or

(2) Third Party Fees: a fee paid or provided to or by a third party if:

(a) No impairment: it does not impair the firm's duty to act in the client’s best interests; and

(b) Full disclosure: it is clearly and comprehensively disclosed to the client before providing the service; and

(c) Service enhancement: the fee is designed to enhance the quality of the service to the client; or

(3) Ancillary fees: fees which enable designated investment business or ancillary services, such as custody costs, exchange fees, regulatory levies or legal fees, and which cannot give rise to conflicts with a clients’ best interests.

Commentary

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)).