Savings and investments
See also
A comprehensive set of FAQs to help you with the key rules as of 1 November 2007.
Overview
Chapter 4 of the Conduct of Business Sourcebook (COBS 4) contains rules and guidance that govern the promotion of investment products and structured deposits.
Firms must follow these rules to ensure the financial promotions they issue are fair, clear and not misleading.
The rules mainly apply to financial promotions but some, such as the overarching 'fair, clear and not misleading' rule, apply to all communications to retail clients or professional clients. Examples of 'non-promotional communications' are 'information only' individual letters to clients and annual or regular statements.
Changes from 1 November 2007
The Conduct of Business rules were changed on 1 November 2007. The new rules are the result of a review of the financial promotions regime, which took account of our move to more principles-based regulation, COB simplification and the need to implement the Markets in Financial Instruments Directive (MiFID). Although MiFID was not the main driver of the review, it was consistent with our aims. So, we have adopted many of its provisions for non-MiFID business.
Many of the rules in our new Conduct of Business Sourcebook (COBS) have substantially the same effect as those in the old sourcebook (COB) but are more high level and less detailed. However, there are some important differences so firms need to ensure they are familiar with the new rules.
The new rules give firms the flexibility and responsibility to design systems, controls and processes that best allow them to reflect the needs of their clients, products and sales processes. They should enable firms to produce marketing campaigns which are targeted and relevant.
Case studies
We have developed a series of case studies to help firms understand the implications of the COBS rules and more principles-based regulation.
The case studies should be read alongside COBS 4 (see also PERG 8 and 13). They are designed to show how our financial promotion rules for investment products and services might operate in practice. They cover some, but not all, of the questions we would expect firms to ask themselves in designing promotions. It is important to note the rules need to be applied on a case-by-case basis.
These example promotions are not intended to be copied as examples of good practice. Indeed some examples, such as the one in Case Study 1, may have defects other than those identified.
The first three case studies are centred on a fictitious marketing campaign by MPBR Asset Management, to show how the same rules might apply to different promotions at different stages of a campaign. The fourth case study looks at past performance.
- Case study 1: Fluency's high-level promotion
- Case study 2: Fluency's more detailed promotion
- Case study 3: Fluency's direct offer financial promotion
- Case study 4: Invest4fun.com
The appopriateness test
These two case studies illustrate some of the questions and answers. They are intended to reflect real-life scenarios and provide material, including questions, which firms may find useful when considering the issues raised. Inevitably, these issues are not exhaustive.
We have also included examples of good and poor practice. Generally, these are to help firms and their management reach decisions on how to achieve the desired outcomes.
- Case study 1: Assessing appropriateness
- Case study 2: General and personalised communications
