Transitional Provisions and Schedules
COBS TP 1
Transitional Provisions relating to Client Categorisation
| (1) | (2) | (3) | (4) | (5) | (6) |
| Material to which the transitional provision applies | Transitional provision | Transitional provision: dates in force | Handbook provisions: coming into force | ||
| Overview of transitional provisions for client categorisation | |||||
| 1.1 | COBS 3 | G |
(1) COBS TP 1.2 contains default transitional categorisation provisions in relation to the existing clients of a firm on 1 November 2007. In many cases, they allow a client to be automatically provided with the nearest equivalent categorisation under COBS 3 to their previous categorisation. (2) COBS TP 1.3 explains how the transitional provisions for client categorisation relate to the requirement for a firm to act if it becomes aware that an elective professional client no longer satisfies the initial conditions for its categorisation.(3) The default provisions do not prevent a firm categorising such a client differently in accordance with COBS 3. COBS TP 1.4 provides guidance on how some of the procedural requirements in COBS 3 apply in some such cases. (4) COBS TP 1.5 contains transitional notification obligations, which apply if the default provisions do not allow that client to be provided with the nearest equivalent categorisation or a firm chooses not to take advantage of those provisions in relation to a client. (5) COBS TP 1.6 contains a transitional notification obligation that applies to a firm that, in relation to MiFID or equivalent third country business, takes advantage of the default transitional categorisation provisions to classify a client as a per se professional client. (6) COBS TP 3.9 contains transitional categorisation provisions in relation to clients of a firm that are taken on between 1 November 2007 and 30 June 2008 in relation to business that is not MiFID or equivalent third country business.
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From 1 November 2007 indefinitely | 1 November 2007 |
| Categorisation of existing clients | |||||
| 1.2 | COBS 3 | R |
(1) An existing client that was correctly categorised as a private customer immediately before 1 November 2007 is a retail client unless and to the extent it is given a different categorisation by the firm under COBS 3. (2) An existing client that was correctly categorised as an intermediate customer immediately before 1 November 2007:
(a) is an elective professional client if it was an expert private customer that had been re-classified as an intermediate customer on the basis of its experience and understanding; or (b) is otherwise a per se professional client;
unless and to the extent it is given a different categorisation by the firm under COBS 3.(3) An existing client that was correctly categorised as a market counterparty immediately before 1 November 2007 is:
(a) for eligible counterparty business that is not MiFID or equivalent third country business, an eligible counterparty; and (b) otherwise, a per se professional client;
unless and to the extent it is given a different categorisation by the firm under COBS 3. |
From 1 November 2007 indefinitely | 1 November 2007 |
| [Note: Article 71(6) of, and third paragraph of section II.2 of Annex II to, MiFID] | |||||
| 1.3 | COBS 3 | G | Under COBS 3.5.9 R, if a firm becomes aware that a client no longer fulfils the initial conditions that made it eligible for categorisation as an elective professional client, the investment firm must take the appropriate action. In the case of a client that has been classified as an elective professional client under COBS TP 1.2R(2)(a), the initial conditions are those that applied to the client's initial categorisation as an intermediate customer. | From 1 November 2007 indefinitely | 1 November 2007 |
| Former inter-professional business | |||||
| 1.4 | COBS 3 | G | The requirement to provide notices under COBS 3.3.1 R only applies in relation to new clients. The requirement to obtain confirmation under COBS 3.6.4 R (2) only applies in relation to prospective counterparties. These obligations are therefore not relevant to the extent that an existing client with whom a firm conducted inter-professional business before 1 November 2007 is categorised as an eligible counterparty under COBS 3 in relation to eligible counterparty business. | From 1 November 2007 indefinitely | 1 November 2007 |
| Transitional notification obligations | |||||
| 1.5 | COBS 3 | R | (1) If a firm does not categorise a client that was a private customer immediately before 1 November 2007 as a retail client, it must notify that client of its categorisation as a professional client or eligible counterparty, as appropriate, on or before that date, or if later, before conducting any further business to which COBS applies for that client. (2) If a firm does not categorise a client that was an intermediate customer immediately before 1 November 2007 as a professional client, it must notify that client of its categorisation as a retail client or eligible counterparty, as appropriate, on or before that date, or if later, before conducting any further business to which COBS applies for that client. (3) If a firm does not categorise a client that was a market counterparty immediately before 1 November 2007 as an eligible counterparty, it must notify that client of its categorisation as a retail client or professional client on or before that date, or if later, before conducting any further business to which COBS applies for that client. |
From 1 November 2007 indefinitely | 1 November 2007 |
| [Note: article 28(1) of the MiFID implementing Directive] | |||||
| 1.6 | COBS 3 | R | If a firm, in relation to MiFID or equivalent third country business, categorises a client who would not otherwise have been a professional client as a professional client under COBS TP 1.2(2)(b) or (3)(b), it must inform that client about the relevant conditions for the categorisation of clients. This notification must be made on or before 1 November 2007, or if later, before conducting any further business to which COBS applies for that client. | From 1 November 2007 indefinitely | 1 November 2007 |
| [Note: article 71(6) of MiFID] | |||||
| 1.7 | G | A notice to a professional client under COBS TP 1.6 should inform that client:
(a)that they have been categorised as a professional client; and(b) of the main differences between the treatment of a retail client and a professional client.
|
From 1 November 2007 indefinitely | 1 November 2007 | |
| 1.8 | R | The record-keeping requirements under COBS 3.8.2 R apply in relation to any client categorisations or re-categorisations made under the transitional provisions for COBS 3. | From 1 November 2007 indefinitely | 1 November 2007 | |
| 1.9 | COBS 3 | R |
(1) A new client that could have been correctly categorised as an intermediate customer under the rules in force on 31 October 2007:
(a) may be treated as an elective professional client if it could have been categorised as an expert private customer that had been categorised as an intermediate customer in accordance with COB 4.1.9 R on the basis of its experience and understanding; or
(b) otherwise may be treated as a per se professional client, subject to (3) below.
(2) A firm may categorise as an eligible counterparty or a per se professional client any new client that could have been correctly categorised as an market counterparty under the rules in force on 31 October 2007, provided that the firm may only treat the client as an eligible counterparty for the purposes of eligible counterparty business.
|
From 1 November 2007 to 30 June 2008 | 1 November 2007 |
- 01/11/2007
COBS TP 2
Other Transitional Provisions
| (1) | (2) | (3) | (4) | (5) | (6) |
| Material to which the transitional provision applies | Transitional provision | Transitional provision: dates in force | Handbook provisions: coming into force | ||
| 2.-1 | COBS 4 | R | A firm communicating other than in relation to MiFID business is not required to comply with the financial promotion rules in relation to any financial promotion that: (1) is in writing and was designed to be communicated for longer than three months in similar form; (2) was subject to, and complied with, the relevant rules in COB 3 that were in force on or before 31 October 2007 (or was exempt from them); and (3) continues to be fair, clear and not misleading. |
1 November 2007 to 31 October 2008 | 1 November 2007 |
| 2.1 | COBS 6.1 | G | (1) If a firm provides services of an ongoing nature to an existing client it need not provide information to that client that it would be required to provide under COBS to a new client but which it was not required to provide under COB. (2) Services of an ongoing nature include safekeeping and administration investments and managing investments, |
From 1 November 2007 indefinitely | 1 November 2007 |
| 2.2 | COBS 6.1 | G | (1) If a firm provides a service for an existing client that is not of an ongoing nature and which relates to the same particular type of designated investment as a previous service, the firm need not provide information to that client that it would be required to provide under COBS 6.1 to a new client but which it was not required to provide under COB. (2) But a firm should ensure that the client has received all relevant information in relation to a subsequent transaction, such as details of product charges that differ from those described in respect of a previous transaction. |
From 1 November 2007 indefinitely | 1 November 2007 |
| 2.2A | COBS 6.3 (Disclosing information about services, fees and commission - packaged products) | R | (1) A firm may use the keyfacts logo on an initial disclosure document, a combined initial disclosure document or a fees and commissions statement that complied with the rules in COB 4.3 in effect on 31 October 2007. (2) In this transitional rule, "fees and commissions statement" has the meaning given by the Handbook glossary on 31 October 2007. |
From 1 November 2007 until 1 May 2008 | 1 November 2007 |
| 2.2A | COBS 6.3 (Disclosing information about services, fees and commission - packaged products) | G | Under GEN 5.1.5 R and COBS 6.3.4 R, a firm may not use the keyfacts logo on a document designed to comply with disclosure requirements in COBS unless it is an initial disclosure document, a combined initial disclosure document or a menu prepared in accordance with COBS 6.3. COBS TP 2.2A R allows a firm to use existing stocks of the equivalent documents produced under COB for a transitional period. | From 1 November 2007 until 1 May 2008. | 1 November 2007 |
| 2.3 | COBS 10.1.2 R | R | For business which is not MiFID or equivalent third country business, compliance with COB 3.9.5 R (2) (Prohibited types of direct offer financial promotion) as it was in force on 31 October 2007 is treated as compliance with COBS 10.1.2 R (arranging or dealing in certain derivatives and warrants for retail clients). | From 1 November 2007 to 31 May 2008 | 1 November 2007 |
| 2.4 | COBS 10.1.2 R | G | This transitional (COBS TP 2.3R) relates to non-MiFID or equivalent third country business arising out of a direct offer financial promotion of a derivative or warrant (or both) for a retail client. This would include, for example, sports or political spread betting. For such business, a firm may begin to comply with the new appropriateness rules at any time within six months of 1 November so long as, in the meantime, it complies with COB 3.9.5 R (2). | From 1 November 2007 to 31 May 2008 | 1 November 2007 |
| 2.4A | COBS 11.2 | R | COBS 11.2 (Best execution) does not apply to an order from an ISA manager when acting as such which is not a MiFID investment firm or a third country investment firm for the purchase of or sale of units in a regulated collective investment scheme from or to the operator of that scheme. | From 1 November 2007 to 31 October2008 | 1 November 2007 |
| 2.4B | COBS 11.2 | R | COBS 11.2 (Best execution) does not apply to a client order for the purchase of or sale of units in a regulated collective investment scheme directly from or to the operator of that scheme. | From 1 November 2007 to 31 October2008 | 1 November 2007 |
| 2.4C | COBS 12.2 and COBS 12.3 | R | COB 7.16, as it was in force on 31 October 2007, continues to apply to a firm which is not a MiFID investment firm or a third country investment firm which prepares investment research for publication or distribution to its clients, or that publishes or distributes investment research to its clients unless the firm decides to comply with COBS 12.2 and COBS 12.3 sooner than 1 May 2008. | From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.4D | COBS 12.2 and COBS 12.3 | G | The effect of TP 2.4CR is that for a firm which is not a MiFID investment firm or third country investment firm carrying on the activities set out in the transitional rule TP 2.4CR COB 7.16 will continue to apply until 1 May 2008, unless the firm decides to comply with COBS 12.2 and COBS 12.3sooner than1 May 2008. From 1 May 2008 a firm to which TP 2.4CR applies must comply with the investment research provisions in COBS 12.2 and COBS 12.3. | From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.4E | COBS 12.2 and COBS 12.3 | R | If a firm carrying out the activities set out in TP 2.4CR decides to comply with COBS 12.2 and COBS 12.3 sooner than1 May 2008: (1) it must make a record of the date of the decision and the date from which it is to be effective; and (2) from the effective date it must comply with COBS 12.2 and COBS 12.3 |
From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.5 | COBS 13 | R | (1) A firm is not required to prepare a key features document, a key features illustration or the Consolidated Life Directive information for a product if:
(a) the rules would have required the firm to prepare key features for the product if they were still in force; and (b) the firm prepares key features in accordance with the rules as if they were still in force.
(2) A firm is not required to prepare a standardised deterministic projection or an alternative projection for a product in accordance with COBS 13.5.1 R or COBS 13.5.2 R if the firm prepares its projections for life policies, key features schemes, simplified prospectus schemes and stakeholder pension schemes in accordance with the rules as if they were still in force. (3) For the purposes of this rule, 'the rules' are the rules on product disclosure and the customer's right to cancel or withdraw (COB 6) that were in force on 31 October 2007. |
From 1 November 2007 until 31 October 2008 | 1 November 2007 |
| 2.6 | COBS 14.1 and COBS 14.2 | R | A firm is not required to provide a key features document, a key features illustration or the Consolidated Life Directive information for a product if:
(1) the rules would have required the firm to provide a key features document for that product if they were still in force; (2) the firm is satisfied, on reasonable grounds, that providing a key features document in accordance with the rules, as if they were still in force, will not cause:
(a) a client to suffer any prejudice; or (b) the firm to breach its obligations under one or more of the Principles; and
(3) the firm provides a key features document for the product in accordance with the rules as if they were still in force.For these purposes, 'the rules' means the rules on product disclosure and the customer's right to cancel or withdraw (COB 6) that were in force on 31 October 2007. |
From 1 November 2007 until 31 October 2008 | 1 November 2007 |
| 2.7 | COBS 15 | R | Cancellation
(1) In relation to a contract concluded before 1 November 2007 the previous cancellation rules (COB 6.7) continue to apply. (2) In relation to a contract concluded on or after 1 November 2007 any pre-contract disclosure made before that date that complies with the requirements of this sourcebook is to be treated for the purposes of COBS 15 as if made under this sourcebook.
|
1 November 2007 for 6 months | From 1 November 2007 |
| 2.8 | COBS 16.3 (Periodic statements) | G | This transitional rule applies in relation to a periodic reporting period for a periodic statement that includes 1 November 2007. A firm may choose to comply with either COBS 16.3 or COB 8.2 in providing any periodic statement in relation to which this rule applies. |
From 1 November 2007 indefinitely | 1 November 2007 |
| 2.8A | COBS 18 | R | COB, as it was in force on 31 October 2007, continues to apply to the following activities and firms in relation to business which is not MiFID or equivalent third country business and COBS does not apply during the transitional period unless the firm decides to comply with COBS sooner than1 May 2008: (1) Energy market activity and oil market activity; (2) activities referred to in the general application rule related to: (a) commodity futures; (b) commodity options; (c) contracts for differences related to an underlying commodity; or (d) other futures or contracts for differences which are not related to commodities, financial instruments or cash, which is not energy market activity or oil market activity; (3) corporate finance business; (4) a firm which is an operator of a collective investment scheme; (5) Lloyd's market activities; (6) depositaries; (7) OPS firms |
From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.8B | COBS 18 | G | The effect of TP 2.8AR is that for firms carrying on the activities set out in the transitional rule TP 2.8AR COB will continue to apply until 1 May 2008, unless the firm decides to comply with COBS sooner than1 May 2008. From 1 May 2008 a firm to which TP 2.8AR applies must comply with COBS as set out in COBS 18. | From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.8C | COBS 18 | R | If a firm carrying out the activities set out in TP 2.8AR decides to comply with COBS sooner than 1 May 2008: (1) it must make a record of the date of the decision and the date from which it is to be effective; and (2) subject to TP 2.8AR, from the effective date it must comply with COBS as set out in the relevant parts of COBS 18. |
From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.8D | COBS 18 | G | In accordance with transitional rules TP 2.8AR and TP 2.8CR, the following provisions of COB will continue to apply to a firm carrying out the activities set out in TP 2.8AR that decides to comply with COBS before 1 May 2008: (1) COB 2.4 (Chinese walls); (2) COB 5.10 (Corporate finance business issues); and (3) COB 7.1 (Conflicts of interest and material interest) |
From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.8E | COBS 18 | R | A decision by a firm carrying out activities set out in TP 2.8AR to comply with COBS before 1 May 2008 must be made in relation to all the COBS provisions applicable to it. The firm may not 'cherry pick'. | From 1 November 2007 to 30 April 2008 | 1 November 2007 |
| 2.9 | COBS 20.2.1 G - COBS 20.2.41 G ; COBS 20.2.53 R - COBS 20.2.60 G (Treating with-profits policyholders fairly) | R | The provisions listed in column (2) do not apply to a firm if, and to the extent that, they are inconsistent with an arrangement that was formally approved by the FSA, a previous regulator or a court of competent jurisdiction, on or before 20 January 2005. | From 1 November 2007 indefinitely | 1 November 2007 |
| 2.10 | COBS 20.2.42R (3) (Policyholder advocate: appointment and role) | R | The provision listed in column (2) does not apply to a firm if it is already carrying out a reattribution and the process is substantially underway to the extent that it has on or before 31 October 2007 appointed a policyholder advocate. | From 1 November 2007 - until completion of the firm's reattribution | 1 November 2007 |
| 2.11 | COBS TP 2.9 | G | The rules and guidance on treating with-profits policyholders fairly (COBS 20.2.1 G - COBS 20.2.41 G; COBS 20.2.53 R - COBS 20.2.60 G) may be contrary to, or inconsistent with, some arrangements that were formally approved by the FSA, a previous regulator or a court of competent jurisdiction, on or before 20 January 2005. The effect of TP 2.9 is that these rules do not apply to such arrangements if, and to the extent that, it is inconsistent with them. A firm should be mindful, however, that, even if some or all of these rules are disapplied, the firm is still subject to the rules in the rest of the Handbook, including Principle 6. |
From 1 November 2007 indefinitely | 1 November 2007 |
| 2.12 | COBS | R | COB 2.4 (Chinese walls) and COB 7.1 (Conflicts of interest) as they were in force on 31 October 2007 continue to apply to designated investment business carried on by a firm which is not MiFID or equivalent third country business. | From 1 November 2007 indefinitely | 1 November 2007 |
| 2.13 | COBS | R | COB 5.10 (Corporate finance business issues) as it was in force on 31 October 2007 continues to apply to corporate finance business carried on by a firm which is not MiFID or equivalent third country business . | From 1 November 2007 indefinitely | 1 November 2007 |
- 01/11/2007
COBS Sch 1
Record keeping requirements
- 01/11/2007
[to follow]
- 01/11/2007
COBS Sch 2
Notification requirements
- 01/11/2007
[to follow]
- 01/11/2007
COBS Sch 3
Fees and other required payments
- 01/11/2007
See Notes
[to follow]
- 01/11/2007
COBS Sch 4
Powers exercised
- 01/11/2007
See Notes
[to follow]
- 01/11/2007
COBS Sch 4.2
See Notes
- 01/11/2007
COBS Sch 5
Rights of action for damages
- 01/11/2007
[to follow]
- 01/11/2007
COBS Sch 6
Rules that can be waived
- 01/11/2007
See Notes
[to follow]
- 01/11/2007