Rule on Inducements - COBS Provision: Difference between revisions

Revision as of 09:16, 29 May 2015

In a Nutshell™:

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.)

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)).

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-In a nutshell:
+In a {{nutshell}}:
-{{box|
-{{fcaprov|2.3.1}} A {{fcaprov|firm}} must not give or receive any fee, commission or non-monetary benefit ('''benefit''') in relation to business carried on for a {{fcaprov|client}} other than:
+{{nuts|COBS|2.3.1}}
-:(1) '''Client Benefits''': a benefit paid to or by the client; or
-:(2) '''Third Party Benefits''': a benefit 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 benefit is designed to enhance the quality of the service to the client; or
-:(3) '''Ancillary Benefits''': benefits 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.
-}}
 {{cobssnap|2.3.1}}