Part

COBS Conduct of Business Sourcebook

Chapter

Insurance mediation

Printed on: 15/10/2024

Rulebook at: 06/01/2008

COBS 7

Insurance mediation

COBS 7.1

Application

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COBS 7.1.1

handbook-rule

This chapter applies to a firm carrying on insurance mediation in relation to a life policy, but only if the State of the commitment is an EEA State.

[Note: articles 1 and 12 (4) and (5) of the Insurance Mediation Directive]

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COBS 7.2

Information to be provided by the insurance intermediary

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COBS 7.2.1

handbook-rule
  1. (1) Prior to the conclusion of any initial life policy and, if necessary, on amendment or renewal, a firm must provide a client with at least the following information:
    1. (a) its name and address;
    2. (b) the fact that it is registered on the FSA register and its FSA register number (or, if it is not on the FSA register , the register in which it has been included and the means for verifying that it has been registered);
    3. (c) whether it has a direct or indirect holding representing more than 10% of the voting rights or capital in a given insurance undertaking (that is not a pure reinsurer);
    4. (d) whether a given insurance undertaking (other than a pure reinsurer) or its parent undertaking has a direct or indirect holding representing more than 10% of the voting rights or capital in the firm; and
    5. (e) the procedures which allow a client and other interested parties to register complaints about the firm with the firm and the Financial Ombudsman Service or, if the Financial Ombudsman Service does not apply, information about the out-of-court complaint and redress procedures available for the settlement of disputes between the firm and its clients.
  2. (2) In addition, a firm must inform a client, concerning the life policy that is provided, whether:
    1. (a) it gives advice on the basis of a fair analysis of the market; or
    2. (b) it is contractually obliged to conduct its insurance mediation business exclusively with one or more insurance undertakings and, if that is the case, that the client can request the names of those insurance undertakings; or
    3. (c) it is not contractually obliged to conduct its insurance mediation business exclusively with one or more insurance undertakings and does not give advice on the basis of a fair analysis of the market and, if that is the case, that the client can request the names of the insurance undertakings with which the firm may and does conduct business.
  3. (3) If a client asks a firm to provide the names of the insurance undertakings with which the firm conducts, or may conduct, business (COBS 7.2.1 R (2)), the firm must provide it.

[Note: article 12(1) of the Insurance Mediation Directive]

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Interface with the initial disclosure document

COBS 7.2.2

handbook-guidance
A firm will satisfy elements of the requirement immediately above if it provides an initial disclosure document to a client (see COBS 6.3).
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COBS 7.2.2A

handbook-rule
A firm may provide an initial disclosure document to a client who buys a non-advised life policy.
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Fair analysis for advised sales

COBS 7.2.3

handbook-rule

When a firm informs a client that it gives advice on the basis of a fair analysis of the market, it must give that advice on the basis of an analysis of a sufficiently large number of life policies available on the market to enable the firm to make a recommendation, in accordance with professional criteria, regarding which life policy would be adequate to meet the client's needs.



[Note: article 12(2) of the Insurance Mediation Directive]

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Specifying demands and needs

COBS 7.2.4

handbook-rule
  1. (1) Prior to the conclusion of any specific life policy, a firm must at least specify, in particular on the basis of the information provided by the client, the demands and needs of that client. Those demands and needs must be modulated according to the complexity of the relevant policy.
  2. (2) This rule does not apply when a firm makes a personal recommendation in relation to a life policy.

[Note: article 12(3) of the Insurance Mediation Directive]

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COBS 7.2.5

handbook-guidance
Firms are reminded that they are obliged to take reasonable steps to ensure that a personal recommendation is suitable for the client and that, whenever a personal recommendation relates to a life policy, a suitability report is required (COBS 9).
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Means of communication to clients

COBS 7.2.6

handbook-rule

All information to be provided to a client in accordance with the rules in this chapter must be communicated:

  1. (1) in a durable medium available and accessible to the client;
  2. (2) in a clear and accurate manner, comprehensible to the client; and
  3. (3) in an official language of the State of the commitment or in any other language agreed by the parties.

[Note: article 13(1) of the Insurance Mediation Directive]

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Additional requirement: telephone selling

COBS 7.2.7

handbook-rule

In the case of telephone selling, the prior information given to a client must be in accordance with the distance marketing disclosure rules (COBS 5.1). Moreover, information must be provided to the client in accordance with the means of communication to clients rule (COBS 7.2.6 R) immediately after the conclusion of the life policy.

[Note: article 13(3) of the Insurance Mediation Directive]

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Exceptions: client request or immediate cover

COBS 7.2.8

handbook-rule

The information referred to in the means of communication to clients rule (COBS 7.2.6 R) may be provided orally where the client requests it, or where immediate cover is necessary. In those cases, the information must be provided to the client in accordance with that rule immediately after the conclusion of the life policy.



[Note: article 13(2) of the Insurance Mediation Directive]

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