BCOBS Banking: Conduct of Business sourcebook

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BCOBS 1

Application

BCOBS 1.1

General application

01/11/2009

The general application rule

BCOBS 1.1.1

This sourcebook applies to a firm with respect to the activity of accepting deposits from banking customers carried on from an establishment maintained by it in the United Kingdom and activities connected with that activity.

01/11/2009

Limitations on the general application rule

BCOBS 1.1.2

The general application rule is modified in the chapters of this sourcebook for particular purposes.

01/11/2009

BCOBS 1.1.3

Except as provided for in BCOBS 1.1.4R, this sourcebook does not apply to:

(1) payment services where Part 5 and 6 of the Payment Services Regulations apply; or
(2) a person or firm which has permission for accepting deposits but only for the purposes of, or in the course of, an activity other than accepting deposits.

01/11/2009

BCOBS 1.1.4

(1) Chapters 2, 5 and 6 of BCOBS (except for BCOBS 5.1.11 R to BCOBS 5.1.19 R) apply to payment services where Parts 5 and 6 of the Payment Services Regulations apply.
(2) Chapter 3 of BCOBS applies to payment services where Parts 5 and 6 of the Payment Services Regulations apply with the modifications set out in BCOBS 3.1.2 R(2).
(3) A firm will not be subject to BCOBS to the extent that it would be contrary to the United Kingdom's obligations under a European Community instrument.

01/11/2009
Future version of BCOBS 1.1.4 after 01/12/2009

BCOBS 1.1.5

BCOBS 5.1.13 R does not apply to a credit union.

01/11/2009
Future version of BCOBS 1.1.5 after 06/03/2011

Exclusion of liability

BCOBS 1.1.6

A firm must not seek to exclude or restrict, or rely on any exclusion or restriction of, any duty or liability it may have to a banking customer unless it is reasonable for it to do so and the duty or liability arises other than under the regulatory system.

01/11/2009

BCOBS 1.1.7

The general law, including the Unfair Terms Regulations, also limits the scope for a firm to exclude or restrict any duty or liability to a consumer.

01/11/2009

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Legal Instruments that change this Chapter Application

BCOBS 2

Communications with banking customers
and financial promotions

BCOBS 2.1

Purpose and Application: Who and what?

01/11/2009

BCOBS 2.1.1

Principle 6 requires a firm to pay due regard to the interests of its customers and treat them fairly. Principle 7 requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading. This chapter reinforces these requirements by requiring a firm to pay regard to the information needs of banking customers when communicating with, or making a financial promotion to, them and to communicate information in a way that is clear, fair and not misleading.

01/11/2009

BCOBS 2.1.2

In addition to the general application rule (BCOBS 1.1.1 R), this chapter applies to the communication, or approval for communication, to a person in the United Kingdom of a financial promotion of a retail banking service unless it can lawfully be communicated by an unauthorised person without approval.

01/11/2009

BCOBS 2.1.3

This chapter applies to a firm:

(1) communicating with a banking customer in relation to accepting deposits;
(2) communicating a financial promotion that is not an excluded communication; or
(3) approving a financial promotion.

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BCOBS 2.2

The fair, clear and not misleading rule

01/11/2009

BCOBS 2.2.1

A firm must take reasonable steps to ensure that a communication or a financial promotion is fair, clear and not misleading.

01/11/2009

BCOBS 2.2.2

The fair, clear and not misleading rule applies in a way that is appropriate and proportionate taking into account the means of communication and the information that it is intended to convey. So a communication addressed to a banking customer who is not a consumer may not need to include the same information, or be presented in the same way, as a communication addressed to a consumer.

01/11/2009

BCOBS 2.2.3

The rules in SYSC 3 (Systems and Controls) and SYSC 4 (General organisational requirements) require a firm to put in place systems and controls or policies and procedures in order to comply with the rules in COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Systems and controls and approving and communicating financial promotions) and this chapter of BCOBS.

01/11/2009

BCOBS 2.2.4

Section 397 (Misleading statements and practices) of the Act creates a criminal offence relating to certain misleading statements and practices.

01/11/2009

BCOBS 2.3

Other general requirements for communications and financial promotions

01/11/2009

BCOBS 2.3.1

A firm must ensure that each communication made to a banking customer and each financial promotion communicated or approved by the firm:

(1) includes the name of the firm;
(2) is accurate and, in particular, does not emphasise any potential benefits of a retail banking service without also giving a fair and prominent indication of any relevant risks;
(3) is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to whom it is directed, or by whom it is likely to be received; and
(4) does not disguise, diminish or obscure important information, statements or warnings.

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BCOBS 2.3.2

The name of the firm may be a trading name or shortened version of the legal name of the firm, provided the banking customer can identify the firm communicating the information.

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BCOBS 2.3.3

In deciding whether, and how, to communicate information to a particular target audience, a firm should take into account the nature of the retail banking service, the banking customer's likely or actual commitment, the likely information needs of a reasonable recipient, and the role of the communication or financial promotion in the sales process.

01/11/2009

BCOBS 2.3.4

If a communication or a financial promotion names the FSA as the regulator of a firm and refers to matters not regulated by the FSA, the firm should ensure that the communication or financial promotion makes clear that those matters are not regulated by the FSA.

01/11/2009

BCOBS 2.3.5

When communicating information, a firm should consider whether omission of any relevant fact will result in information given to the banking customer being insufficient, unclear, unfair or misleading.

01/11/2009

BCOBS 2.3.6

The Credit Institutions (Protection of Deposits) Regulations 1995 may apply in relation to communications with a banking customer.

01/11/2009

BCOBS 2.3.7

If a communication or a financial promotion compares a retail banking service with one or more other retail banking service (whether or not provided by the firm), the firm must ensure that the comparison is meaningful and presented in a fair and balanced way.

01/11/2009

BCOBS 2.3.8

If a communication or a financial promotion in relation to a retail banking service refers to a particular tax treatment or rate of interest payable, a firm must ensure that a prominent statement that the tax treatment or the rate of interest payable:

(1) depends on the individual circumstances of each banking customer; and
(2) may be subject to change in the future;

is either included in that communication or financial promotion, or provided to the banking customer on paper or in another durable medium in good time before the banking customer is bound by the contract for that retail banking service.

01/11/2009

BCOBS 2.3.9

When designing a financial promotion, a firm may find it helpful to take account of the British Bankers' Association/Building Societies Association Code of Conduct for the Advertising of Interest Bearing Accounts.

01/11/2009

BCOBS 2.4

Structured deposits, cash deposit ISAs and cash deposit CTFs

01/11/2009

BCOBS 2.4.1

If a financial promotion relates to a structured deposit, rules in COBS 4.6 (Past, simulated past and future performance) will also apply.

01/11/2009

BCOBS 2.4.2

If a financial promotion relates to a cash deposit ISA or cash deposit CTF, COBS 4.7.1 R (Direct offer financial promotions) also applies.

01/11/2009

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Legal Instruments that change this Chapter Communications with banking customers and financial promotions

BCOBS 3

Distance communications

BCOBS 3.1

Distance marketing

01/11/2009

Application

BCOBS 3.1.1

This section applies to a firm that carries on any distance marketing activity from an establishment in the United Kingdom, with or for a consumer in the United Kingdom or another EEA State.

01/11/2009

The distance marketing disclosure rules

BCOBS 3.1.2

(1) Subject to (2), a firm must provide a consumer with the distance marketing information (BCOBS 3 Annex 1 R ) in good time before the consumer is bound by a distance contract or offer.
(2) Where a distance contract is also a contract for payment services to which the Payment Services Regulations apply, a firm is required to provide to the consumer only the information specified in rows 7 to 12, 15, 16 and 20 of BCOBS 3 Annex 1 R.

[Note: articles 3(1) and 4(5) of the Distance Marketing Directive]

01/11/2009

BCOBS 3.1.3

A firm must ensure that the distance marketing information, the commercial purpose of which must be made clear, is provided in a clear and comprehensible manner in a way appropriate to the means of distance communication used with due regard, in particular, to the principles of good faith in commercial transactions and the legal principles governing the protection of those who are unable to give their consent, such as minors.

[Note: article 3(2) of the Distance Marketing Directive]

01/11/2009

BCOBS 3.1.4

When a firm makes a voice telephony communication to a consumer, it must make its identity and the purposes of its call explicitly clear at the beginning of the conversation.

[Note: article 3(3)(a) of the Distance Marketing Directive]

01/11/2009

BCOBS 3.1.5

A firm must ensure that information on contractual obligations to be communicated to a consumer during the pre-contractual phase is in conformity with the contractual obligations which would result from the law presumed to be applicable to the distance contract if that contract is concluded.

[Note: article 3(4) of the Distance Marketing Directive]

01/11/2009

Terms and conditions, and form

BCOBS 3.1.6

A firm must communicate to the consumer all the contractual terms and conditions and the information referred to in the distance marketing disclosure rules (BCOBS 3.1.2R to 3.1.5R) in a durable medium available and accessible to the consumer in good time before the consumer is bound by any distance contract or offer.

[Note: articles 4(5) and 5(1) of the Distance Marketing Directive]

01/11/2009

BCOBS 3.1.7

A firm will provide information, or communicate contractual terms and conditions, to a consumer if another person provides the information, or communicates the terms and conditions, to the consumer on its behalf.

01/11/2009

Commencing performance of the distance contract

BCOBS 3.1.8

The performance of the distance contract may only begin after the consumer has given his approval.

[Note: article 7(1) of the Distance Marketing Directive]

01/11/2009

Exception: successive operations

BCOBS 3.1.9

In the case of a distance contract comprising an initial service agreement, followed by successive operations or a series of separate operations of the same nature performed over time, the rules in this chapter only apply to the initial agreement.

[Note: article 1(2) of the Distance Marketing Directive]

01/11/2009

BCOBS 3.1.10

(1) If there is no initial service agreement but the successive operations or separate operations of the same nature performed over time are performed between the same contractual parties, the distance marketing disclosure rules (BCOBS 3.1.2R to 3.1.5R) will only apply:

(a) when the first operation is performed; and
(b) if no operation of the same nature is performed for more than a year, when the next operation is performed (the next operation being deemed the first in a new series of operations).

[Note: recital 16 and article 1(2) of the Distance Marketing Directive]

(2) In this section:

(a) "initial service agreement" includes the opening of a bank account;
(b) "operations" includes the deposit or withdrawal of funds to or from a bank account; and
(c) adding new elements to an initial service agreement, such as the ability to use an electronic payment instrument together with an existing retail banking service, does not constitute an "operation" but an additional contract to which the rules in this chapter apply.

[Note: recital 17 of the Distance Marketing Directive]

01/11/2009

Exception: voice telephony communications

BCOBS 3.1.11

In the case of voice telephony communication, and subject to the explicit consent of the consumer, only the abbreviated distance marketing information ( BCOBS 3 Annex 2 R ) needs to be provided during that communication. However, a firm must still provide the distance marketing information (BCOBS 3 Annex 1 R ) in a durable medium available and accessible to the consumer in good time before the consumer is bound by any distance contract or offer, unless another exception applies.

[Note: articles 3(3)(b) and 5(1) of the Distance Marketing Directive]

01/11/2009

Exception: means of distance communication not enabling disclosure

BCOBS 3.1.12

A firm may provide the distance marketing information (BCOBS 3 Annex 1 R ) and the contractual terms and conditions in a durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a consumer's request using a means of distance communication that does not enable the provision of that information in that form in good time before the consumer is bound by any distance contract or offer.

[Note: article 5(2) of the Distance Marketing Directive]

01/11/2009

Exception: contracts for payment services

BCOBS 3.1.13

Where a distance contract covers both payment services and non-payment services, the exception in BCOBS 3.1.2R (2) applies only to the payment services aspects of the contract. A firm taking advantage of this exception will need to comply with the information requirements in Part 5 of the Payment Services Regulations.

01/11/2009

Consumer's right to request paper copies and change the means of communication

BCOBS 3.1.14

At any time during the contractual relationship, the consumer is entitled, at his request, to receive the contractual terms and conditions on paper. The consumer is also entitled to change the means of distance communication used unless this is incompatible with the contract concluded or the nature of the service provided.

[Note: article 5(3)of the Distance Marketing Directive]

01/11/2009

Unsolicited services

BCOBS 3.1.15

(1) A firm must not enforce, or seek to enforce, any obligations under a distance contract against a consumer, in the event of an unsolicited supply of services, the absence of a reply not constituting consent.
(2) This rule does not apply to the tacit renewal of a distance contract.

[Note: article 9 of the Distance Marketing Directive]

01/11/2009

Mandatory nature of a consumer's rights

BCOBS 3.1.16

If a consumer purports to waive any of the consumer's rights created or implied by the rules in this section, a firm must not accept that waiver, nor seek to rely on or enforce it against the consumer.

[Note: article 12 of the Distance Marketing Directive]

01/11/2009

Contracts governed by law of a third party state

BCOBS 3.1.17

If a firm proposes to enter into a distance contract with a consumer that will be governed by the law of a country outside the EEA, the firm must ensure that the consumer will not lose the protection created by the rules in this chapter if the distance contract has a close link with the territory of one or more EEA States.

[Note: articles 12 and 16 of the Distance Marketing Directive]

01/11/2009

BCOBS 3.2

E Commerce

01/11/2009

Application

BCOBS 3.2.1

This section applies to a firm carrying on an electronic commerce activity from an establishment in the United Kingdom with or for a person in the United Kingdom or another EEA State.

01/11/2009

Information about the firm and its products or services

BCOBS 3.2.2

A firm must make at least the following information easily, directly and permanently accessible to the recipients of the information society services it provides:

(1) its name;
(2) the geographic address at which it is established;
(3) the details of the firm including its e-mail address, which allow it to be contacted rapidly and communicated with in a direct and effective manner;
(4) an appropriate statutory status disclosure statement (GEN 4 Annex 1 R), together with a statement which explains that it is on the FSA Register and includes the FSA registration number;
(5) if it is a professional firm, or a person regulated by the equivalent of a designated professional body in another EEA State:

(a) the name of the professional body (including any designated professional body) or similar institution with which it is registered;
(b) the professional title and the EEA State where it was granted;
(c) a reference to the applicable professional rules in the EEA State of establishment and the means to access them; and
(d) where the firm undertakes an activity that is subject to VAT, its VAT number.

[Note: article 5(1) of the E-Commerce Directive]

01/11/2009

BCOBS 3.2.3

If a firm refers to price, it must do so clearly and unambiguously, indicating whether the price is inclusive of tax and delivery costs.

[Note: article 5(2) of the E-Commerce Directive]

01/11/2009

BCOBS 3.2.4

A firm must ensure that commercial communications which are part of, or constitute, an information society service, comply with the following conditions:

(1) the commercial communication must be clearly identifiable as such;
(2) the person on whose behalf the commercial communication is made must be clearly identifiable;
(3) promotional offers must be clearly identifiable as such, and the conditions that must be met to qualify for them must be easily accessible and presented clearly and unambiguously; and
(4) promotional competitions or games must be clearly identifiable as such, and the conditions for participation must be easily accessible and presented clearly and unambiguously.

[Note: article 6 of the E-Commerce Directive]

01/11/2009

BCOBS 3.2.5

An unsolicited commercial communication sent by e-mail by a firm established in the United Kingdom must be identifiable clearly and unambiguously as an unsolicited commercial communication as soon as it is received by the recipient.

[Note: article 7(1) of the E-Commerce Directive]

01/11/2009

Requirements relating to the placing and receipt of orders

BCOBS 3.2.6

A firm must (except when otherwise agreed by parties who are not consumers):

(1) give an ECA recipient at least the following information, clearly, comprehensibly and unambiguously, and prior to the order being placed by the recipient of the service:

(a) the different technical steps to follow to conclude the contract;
(b) whether or not the concluded contract will be filled in by the firm and whether it will be accessible;
(c) the technical means for identifying and correcting input errors prior to the placing of the order; and
(d) the languages offered for the conclusion of the contract;

(2) indicate any relevant codes of conduct to which it subscribes and information on how those codes can be consulted electronically;
(3) (when an ECA recipient places an order through technological means) acknowledge the receipt of the recipient's order without undue delay and by electronic means; and
(4) make available to the ECA recipient appropriate, effective and accessible technical means allowing the recipient to identify and correct input errors prior to the placing of an order.

[Note: articles 10(1) and 11(1) and (2) of the E-Commerce Directive]

01/11/2009

BCOBS 3.2.7

For the purposes of BCOBS 3.2.6R (3), an order and an acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them.

01/11/2009

BCOBS 3.2.8

Contractual terms and conditions provided by a firm to an ECA recipient must be made available in a way that allows the recipient to store and reproduce them.

[Note: article 10(3) of the E-Commerce Directive]

01/11/2009

Exception: contract concluded by e mail

BCOBS 3.2.9

The requirements relating to the placing and receipt of orders (BCOBS 3.2.6R (3)) do not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications.

[Note: articles 10(4) and 11(3) of the E-Commerce Directive]

01/11/2009

BCOBS 3 Annex 1

Distance marketing information

01/11/2009

This Annex belongs to BCOBS 3.1.2 R (The distance marketing disclosure rules)

Information about the firm

(1)

The name and the main business of the firm, the geographical address at which it is established and any other geographical address relevant for the consumer's relations with the firm.

(2)

Where the firm has a representative established in the consumer's EEA State of residence, the name of that representative and the geographical address relevant for the consumer's relations with that representative.

(3)

Where the consumer's dealings are with any professional other than the firm, the identity of that professional, the capacity in which he is acting with respect to the consumer, and the geographical address relevant to the consumer's relations with that professional.

(4)

The particulars of the public register in which the firm is entered, its registration number in that register and the particulars of the relevant supervisory authority, including an appropriate statutory status disclosure statement (GEN 4), a statement that the firm is on the FSA Register and its FSA registration number.

Information about the financial service

(5)

A description of the main characteristics of the service the firm will provide.

(6)

The total price to be paid by the consumer to the firm for the financial service, including all related fees, charges and expenses, and all taxes paid through the firm or, where an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

(7)

Where relevant, notice indicating that the service is related to instruments involving special risks related to their specific features or the operations to be executed, or whose price depends on fluctuations in the financial markets outside the firm's control and that past performance is no indicator of future performance.

(8)

Notice of the possibility that other taxes or costs may exist that are not paid via the firm or imposed by it.

(9)

Any limitations on the period for which the information provided is valid, including a clear explanation as to how long a firm's offer applies as it stands.

(10)

The arrangements for payment and performance.

(11)

Details of any specific additional cost to the consumer for using a means of distance communication.

Information about the contract

(12)

The existence or absence of a right to cancel under the cancellation rules (BCOBS 6) and, where there is such a right, its duration and the conditions for exercising it, including information on the amount which the consumer may be required to pay (or which may not be returned to the consumer) in accordance with those rules, as well as the consequences of not exercising the right to cancel.

(13)

The minimum duration of the contract, in the case of services to be performed permanently or recurrently.

(14)

Information on any rights the parties may have to terminate the contract early or unilaterally under its terms, including any penalties imposed by the contract in such cases.

(15)

Practical instructions for exercising any right to cancel, including the address to which any cancellation notice should be sent.

(16)

The EEA State or States whose laws are taken by the firm as a basis for the establishment of relations with the consumer prior to the conclusion of the contract.

(17)

Any contractual clause on the law applicable to the contract or on the competent court, or both.

(18)

In which language, or languages, the contractual terms and conditions and the other information in this Annex will be supplied, and in which language, or languages, the firm, with the agreement of the consumer, undertakes to communicate during the duration of the contract.

Information about redress

(19)

How to complain to the firm, whether complaints may subsequently be referred to the Financial Ombudsman Service and, if so, the methods for having access to that body, together with equivalent information about any other applicable named complaints scheme.

(20)

Whether compensation may be available from the compensation scheme, or any other named compensation scheme, if the firm is unable to meet its liabilities.

[Note: Recitals 21 and 23 to, and article 3(1) of, the Distance Marketing Directive]

01/11/2009

BCOBS 3 Annex 2

Abbreviated distance marketing information

01/11/2009

This Annex belongs to BCOBS 3.1.11 R

(1)

The identity of the person in contact with the consumer and his link with the firm.

(2)

A description of the main characteristics of the financial service.

(3)

The total price to be paid by the consumer to the firm for the financial service including all taxes paid via the firm or, when an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

(4)

Notice of the possibility that other taxes and/or costs may exist that are not paid via the firm or imposed by him.

(5)

The existence or absence of a right to cancel in accordance with the cancellation rules (BCOBS 6) and, where the right to cancel exists, its duration and the conditions for exercising it, including information on the amount the consumer may be required to pay on the basis of the cancellation rules.

(6)

That other information is available on request and what the nature of that information is.

[Note: article 3(3)(b) of the Distance Marketing Directive]

01/11/2009

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BCOBS 4

Information to be communicated
to banking customers

BCOBS 4.1

Enabling banking customers to make informed decisions

01/11/2009

The appropriate information rule

BCOBS 4.1.1

A firm must provide or make available to a banking customer appropriate information about a retail banking service and any deposit made in relation to that retail banking service:

(1) in good time;
(2) in an appropriate medium; and
(3) in easily understandable language and in a clear and comprehensible form;

so that the banking customer can make decisions on an informed basis.

01/11/2009

BCOBS 4.1.2

(1) In determining:

(a) what is "in good time";
(b) the appropriate medium for communicating information; and
(c) whether it is appropriate to provide information (that is, send or give it directly to the banking customer) or make it available (that is, make it available to obtain at the banking customer's option);

a firm should consider the importance of the information to the decision-making process of the banking customer and the time at which the information may be most useful. Distance communications requirements are also relevant.
(2) For example, (unless BCOBS 3 applies) a firm should provide the terms and conditions of the contract for a retail banking service on paper or in another durable medium in good time before a banking customer is bound by them.
(3) Where a firm proposes to exercise a power to make:

(a) a change to any term or condition of the agreement;
(b) a change to any charge; or
(c) a material change to any rate of interest;

that applies to the retail banking service and that will be to the disadvantage of a banking customer, the firm should provide reasonable notice to the banking customer on paper or in another durable medium before the change takes effect, taking into account the period of notice required by the banking customer to terminate the contract for the retail banking service. Whether a change to a rate of interest is "material" should be determined having regard to the size of the balance of the account and the size of the change in the rate.
(4) Where a firm notifies a banking customer of a material change to a rate of interest that applies to a retail banking service and that will be to the disadvantage of a banking customer, this notification should, where applicable:

(a) refer to the fact that the firm offers a comparable retail banking service for which the banking customer is eligible;
(b) indicate that the banking customer may move to that retail banking service or a retail banking service provided by another firm; and
(c) indicate that the firm will assist the banking customer to move to another retail banking service if he wishes to do so.

(5) Where, under a contract for a retail banking service, an introductory, promotional or preferential rate of interest applies to the retail banking service until a specified future date or the end of a fixed period, a firm should, where appropriate, provide notice of the expiry of the application of that rate of interest to the banking customer on paper or in another durable medium within a reasonable period before that rate of interest ceases to apply.
(6) In determining whether it is appropriate to provide the notice referred to in (5), a firm should consider:

(a) whether there is a material difference between the introductory or promotional rate of interest and the rate of interest that will apply to the retail banking service following the expiry of the introductory or promotional rate of interest;
(b) the size of the balance of the account; and
(c) the period of time that has elapsed since the firm last provided information to the banking customer in relation to the period for which the introductory or promotional rate of interest is applicable and the effect of its expiry.

(7) The general law, including the Unfair Terms Regulations, also limits the scope for a firm to use or rely on a variation clause in a contract with a consumer.

01/11/2009

BCOBS 4.1.3

Where a rule in this chapter requires information to be provided on paper or in another durable medium before a banking customer is bound by the terms and conditions of the contract, a firm may instead provide that information in accordance with the distance communication timing requirements (see BCOBS 3.1.11 R and BCOBS 3.1.12 R).

01/11/2009

BCOBS 4.1.4

The appropriate information rule applies before a banking customer is bound by the terms of the contract. It also applies after a banking customer has become bound by them. In order to meet the requirements of the appropriate information rule, information provided or made available by a firm to a banking customer should include information relating to:

(1) the firm;
(2) the different retail banking services offered by the firm which share the main features of the retail banking service the banking customer has enquired about, or which have the product features the banking customer has expressed an interest in, unless the banking customer has expressly indicated that he does not wish to receive that information;
(3) the terms and conditions of the contract for a retail banking service and any changes to them;
(4) the rate or rates of interest payable on any deposit, how and when such interest is calculated and applied and any changes to that rate or those rates;
(5) any charges at any time payable by or on behalf of a banking customer in relation to each retail banking service and any changes to those charges;
(5A) the time at which any funds placed with or transferred to the firm for credit to the banking customer's account will be made available to the banking customer;
(6) a banking customer's rights to cancel a contract for a retail banking service;
(7) how a banking customer may make a complaint (at the time and in the manner required by DISP 1.2);
(8) the terms of any compensation scheme if the firm cannot meet its obligations in respect of the retail banking service;
(9) basic bank accounts but only if the firm offers a basic bank account and the banking customer meets the firm's eligibility criteria for such an account; and
(10) the timescales for each stage of the cheque clearing process.

01/11/2009
Future version of BCOBS 4.1.4 after 01/01/2010

BCOBS 4.1.5

The information required by the appropriate information rule may vary according to matters such as:

(1) the banking customer's likely or actual commitment;
(2) the information needs of a reasonable recipient having regard to the type of retail banking service that is proposed or provided and its overall complexity, main benefits, risks, limitations, conditions and duration;
(3) distance communication information requirements (for example, under the distance communication rules less information can be given during certain telephone sales than in a sale made purely by written correspondence (see BCOBS 3.1)); and
(4) whether the same information has been provided to the banking customer previously and, if so, when that was.

01/11/2009

BCOBS 4.1.6

The existence of cancellation rights does not affect what information it is appropriate to give a banking customer in order to enable him to make an informed purchasing decision.

01/11/2009

BCOBS 4.1.7

If the retail banking service is a cash deposit ISA or a cash deposit CTF, the rules in COBS 13.1 (Preparing product information) and COBS 14.2 (Providing product information to clients) also apply.

01/11/2009

BCOBS 4.2

Statements of account

01/11/2009

BCOBS 4.2.1

(1) A firm must provide or make available to a banking customer on paper or in another durable medium such regular statements of account as are appropriate to the type of retail banking service provided, but need not do so where:

(a) the firm has provided a banking customer with a pass book or other document in a durable medium that records transactions in relation to the retail banking service;
(b) the retail banking service is provided at a distance by means of electronic equipment where the banking customer can access his account balance, view transactions and give instructions in relation to the retail banking service at a distance by such means;
(c) a banking customer has elected not to receive periodic statements of account, and for so long as such election is in force; or
(d) it has reasonable grounds to believe that the banking customer is not resident at the address last known to it as the address of the banking customer and it is not practicable after reasonable inquiry to ascertain the banking customer's address.

(2) A firm must not charge for providing information which is required to be provided by (1).
(3) A firm must provide a banking customer with a true copy of any statement of account provided to him under (1) on paper or in another durable medium within a reasonable period of time following a request to that effect made by or on his behalf.
(4) A firm and a banking customer may agree on a charge for:

(a) providing a copy of a statement of account under (3); or
(b) providing statements of account more frequently than required by (1);

at the request of the banking customer. Any such charge must reasonably correspond to the firm's actual costs.

01/11/2009

BCOBS 4.2.2

A firm should consider indicating the rate or rates of interest that apply to a retail banking service in each statement of account provided or made available to a banking customer in respect of that retail banking service in accordance with BCOBS 4.2.1R.

01/11/2009
Future version of BCOBS 4.2.2 after 06/05/2011

Export chapter as

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BCOBS 5

Post sale

BCOBS 5.1

Post sale requirements

01/11/2009

Service

BCOBS 5.1.1

A firm must provide a service in relation to a retail banking service which is prompt, efficient and fair to a banking customer and which has regard to any communications or financial promotion made by the firm to the banking customer from time to time.

01/11/2009

BCOBS 5.1.2

In determining the order in which to process payment instructions in relation to the retail banking service, a firm must have regard to its obligation to treat banking customers fairly.

01/11/2009

BCOBS 5.1.3

To the extent that it relates to a retail banking service, a firm may find it helpful to take account of the British Bankers' Association "A Statement of Principles: Banks and businesses - working together".

01/11/2009

Dealings with customers in financial difficulty

BCOBS 5.1.4

Principle 6 requires a firm to pay due regard to the interests of its customers and to treat them fairly. In particular, a firm should deal fairly with a banking customer whom it has reason to believe is in financial difficulty.

01/11/2009

Moving a retail banking service

BCOBS 5.1.5

A firm must provide a prompt and efficient service to enable a banking customer to move to a retail banking service (including a payment service) provided by another firm.

01/11/2009

BCOBS 5.1.6

Where a banking customer wishes to move a retail banking service and there are no arrangements between the firm the banking customer wishes to move from and the firm that the banking customer wishes to move to, the service provided by the former firm will extend only to providing a prompt and efficient service in respect of termination of the retail banking service, for example by closing an account and returning any deposit (with interest as appropriate) to the banking customer.

01/11/2009

BCOBS 5.1.7

Where a banking customer wishes to move a retail banking service and there are arrangements between the firm the banking customer wishes to move from and the firm that the banking customer wishes to move to, the service provided by the former firm will include providing a prompt and efficient service in respect of termination of the retail banking service, for example by closing an account, transferring any account balance and making arrangements in respect of any direct debits or standing orders.

01/11/2009

BCOBS 5.1.8

A firm may find it helpful to take account of the European Banking Industry Committee Common Principles for Bank Account Switching and the British Bankers' Association/ Building Societies Association/ Tax Incentivised Savings Association Cash ISA Transfers: Guidelines.

01/11/2009
Future version of BCOBS 5.1.8 after 06/05/2011

Lost and dormant accounts

BCOBS 5.1.9

A firm must make appropriate arrangements to enable a banking customer, so far as is possible, to trace and, if appropriate, to have access to a deposit held (or formerly held) in a retail banking service provided by the firm. This applies even if:

(1) the banking customer may not be able to provide the firm with information which is sufficient to identify the retail banking service concerned; or
(2) the banking customer may not have carried out any transactions in relation to that retail banking service for an extended period of time.

01/11/2009

BCOBS 5.1.10

If a firm participates in the scheme under the Dormant Bank and Building Society Accounts Act 2008, it must inform a banking customer of this fact and provide appropriate information regarding the terms of the scheme on entering into communications with a banking customer regarding a dormant account.

01/11/2009

Firm's liability for unauthorised payments

BCOBS 5.1.11

(1) Where a banking customer denies having authorised a payment, it is for the firm to prove that the payment was authorised.
(2) Where a payment from a banking customer's account was not authorised by the banking customer, a firm must, within a reasonable period, refund the amount of the unauthorised payment to the banking customer and, where applicable, restore the banking customer's account to the state it would have been in had the unauthorised payment not taken place.

01/11/2009

Banking customer's liability for unauthorised payments

BCOBS 5.1.12

(1) Subject to (2) and (3), a firm may, in an agreement for a retail banking service, provide for a banking customer to be liable for an amount up to a maximum of £50 for losses in respect of unauthorised payments arising:

(a) from the use of a lost or stolen payment instrument; or
(b) where the banking customer has failed to keep the personalised security features of the payment instrument safe, from the misappropriation of the payment instrument.

(2) A firm may, in an agreement for a retail banking service, provide for a banking customer to be liable for all losses in respect of unauthorised payments:

(a) where a banking customer has acted fraudulently; or
(b) (subject to (3)) where a banking customer has intentionally, or with gross negligence, failed to comply with his or her obligations under the agreement for the retail banking service in relation to the issue or use of the payment instrument or to take all reasonable steps to keep its personalised security features safe.

(3) Except where a banking customer has acted fraudulently, a firm must not, in an agreement for a retail banking service, seek to make a banking customer liable for any losses in respect of unauthorised payments where:

(a) the unauthorised payment arises after the banking customer has notified the firm of the loss, theft, misappropriation or unauthorised use of the payment instrument;
(b) the firm has failed to ensure that appropriate means are available at all times to enable the banking customer to notify it of the loss, theft, misappropriation or unauthorised use of a payment instrument; or
(c) the payment instrument has been used in connection with

(i) a distance contract; or
(ii) a distance selling contract other than an excepted contract.

(4) Except as provided in (1) to (3), a firm must not, in an agreement for a retail banking service, seek to make a banking customer liable for any consequential loss in respect of an unauthorised payment.

01/11/2009

Value date

BCOBS 5.1.13

(1) The reference date used by a firm for the purpose of calculating interest on funds credited to an account of a banking customer held with it must be no later than:

(a) the business day on which the funds are credited to the account of the firm; or
(b) in the case of cash placed with a firm for credit to a banking customer's account in the same currency as that account, immediately after the firm receives the funds.

(2) Paragraph (1) does not apply to funds credited to a banking customer's account by means of a paper cheque.

01/11/2009

Non-execution or defective execution of payments

BCOBS 5.1.14

(1) Where a banking customer claims that a payment has not been correctly executed, it is for the firm to prove that the payment was authenticated, accurately recorded, entered in the firm's accounts and not affected by a technical breakdown or some other deficiency.
(2) In paragraph (1) "authenticated" means the use of any procedure by which a firm is able to verify the use of a specific payment instrument, including its personalised security features.

01/11/2009

BCOBS 5.1.15

(1) Where a payment from an account of a banking customer is executed in accordance with the payment routing information provided in respect of that payment, it shall be treated as correctly executed by each firm involved in executing the payment.
(2) Where incorrect payment routing information has been provided to a firm in respect of a payment:

(a) BCOBS 5.1.16R and BCOBS 5.1.17R do not apply in relation to that payment; and
(b) the firm must make reasonable efforts to recover the funds involved in the transaction.

(3) A firm and a banking customer may agree on a charge for taking the steps referred to in (2)(b). Any such charge must reasonably correspond to the firm's actual costs.

01/11/2009

BCOBS 5.1.16

(1) Where a banking customer instructs or requests a firm to make a payment from his or her account and the payment is not correctly executed, the firm must, without undue delay:

(a) refund to the banking customer the amount of the non-executed or defective payment; and
(b) where applicable, restore the banking customer's account to the state in which it would have been had the defective payment not taken place;

unless:

(c) the firm can prove that the amount of the payment was received by another firm (referred to in this rule as "firm B") with which the relevant account of the intended recipient is held.

(2) Where (1)(c) applies, firm B must:

(a) immediately make available the amount of the payment to the intended recipient; and
(b) where applicable, credit the corresponding amount to the intended recipient's account.

01/11/2009

BCOBS 5.1.17

Where:

(1) an instruction or request for a payment to be made from a banking customer's account is given by the intended recipient of that payment to a firm;
(2) that firm can prove that it correctly transmitted the instruction or request to the firm with which the relevant account of the banking customer is held (in this rule referred to as "firm A"); and
(3) the payment is not correctly executed;

firm A must, as appropriate and without undue delay:

(4) refund to that banking customer the amount of the payment; and
(5) restore that banking customer's account to the state in which it would have been had the defective payment not taken place.

01/11/2009

BCOBS 5.1.18

Where a firm is required to give a refund or take other remedial action under BCOBS 5.1.16R or BCOBS 5.1.17R, it must also refund:

(1) any charges for which a banking customer is responsible; and
(2) any interest which a banking customer must pay;

as a consequence of the non-execution or defective execution of the payment.

01/11/2009

BCOBS 5.1.19

Where the non-execution or defective execution of a payment by a firm is due to abnormal and unforeseeable circumstances beyond the firm's control, the consequences of which would have been unavoidable despite all efforts to the contrary, BCOBS 5.1.16R to BCOBS 5.1.18R shall not apply with respect to that incorrectly executed payment.

01/11/2009

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Legal Instruments that change this Chapter Post sale

BCOBS 6

Cancellation

BCOBS 6.1

The right to cancel

01/11/2009

Introduction

BCOBS 6.1.1

Except as provided for in BCOBS 6.1.2 R, a banking customer has a right to cancel a contract for a retail banking service (including a cash deposit ISA) without penalty and without giving any reason, within 14 calendar days.

[Note: article 6(1) of the Distance Marketing Directive in relation to distance contracts]

01/11/2009

BCOBS 6.1.2

There is no right to cancel:

(1) a contract (other than a cash deposit ISA) where the rate or rates of interest payable on the deposit are fixed for a period of time following conclusion of the contract;
(2) a contract whose price depends on fluctuations in the financial market outside the firm's control that may occur during the cancellation period; or
(3) a cash deposit CTF (other than a distance contract).

01/11/2009

BCOBS 6.1.3

A firm may provide longer or additional cancellation rights voluntarily but, if it does, these should be on terms at least as favourable to the banking customer as those in this chapter, unless the differences are clearly explained.

01/11/2009

Beginning of cancellation period

BCOBS 6.1.4

The cancellation period begins:

(1) either from the day of the conclusion of the contract for the retail banking service; or
(2) from the day on which the banking customer receives the contractual terms and conditions of the retail banking service and any other pre-contractual information required under this sourcebook, if that is later than the date referred to in (1) above.
[Note: article 6(1) of the Distance Marketing Directive in relation to distance contracts]

01/11/2009

Disclosing the right to cancel

BCOBS 6.1.5

(1) The firm must disclose to a banking customer in good time or, if that is not possible, immediately after the banking customer is bound by a contract for a retail banking service, and in a durable medium, the existence of the right to cancel, its duration and the conditions for exercising it including information on the amount which the banking customer may be required to pay, the consequences of not exercising it and practical instructions for exercising it, indicating the address to which the notification of cancellation should be sent.
(2) This rule applies only where a banking customer would not otherwise receive the information referred to in (1) under a rule in this sourcebook from the firm (such as under BCOBS 3.1.2 R to 3.1.5 R (the distance marketing disclosure rules)).

01/11/2009

BCOBS 6.2

Exercising the right to cancel

01/11/2009

BCOBS 6.2.1

If a banking customer exercises his right to cancel he must, before the expiry of the cancellation period, notify this following the practical instructions given to him. The deadline shall be deemed to have been observed if the notification, if in a durable medium available and accessible to the recipient, is dispatched before the cancellation period expires.

[Note: article 6(6) of the Distance Marketing Directive for distance contracts]

01/11/2009

BCOBS 6.2.2

The firm should accept any indication that the banking customer wishes to cancel as long as it satisfies the conditions for notification. In the event of any dispute, unless there is clear written evidence to the contrary, the firm should treat the date cited by the banking customer as the date when the notification was dispatched.

01/11/2009

Record keeping

BCOBS 6.2.3

The firm must make adequate records concerning the exercise of a right to cancel and retain them for at least three years.

01/11/2009

BCOBS 6.3

Effects of cancellation

01/11/2009

BCOBS 6.3.1

By exercising a right to cancel, a banking customer withdraws from the contract and the contract is terminated.

01/11/2009

Payment for the service provided before cancellation

BCOBS 6.3.2

(1) This rule applies in relation to a contract for a retail banking service that is not a cash deposit ISA or a cash deposit CTF.
(2) When a banking customer exercises the right to cancel he may only be required to pay, without any undue delay, for the service actually provided by the firm in accordance with the contract. The amount payable must not:

(a) exceed an amount which is in proportion to the extent of the service already provided in comparison with the full coverage of the contract;
(b) in any case be such that it could be construed as a penalty.

[Note: article 7(1), (2) and (3) of the Distance Marketing Directive in relation to distance contracts]
(3) The firm may not require a banking customer to pay any amount on the basis of this rule unless it can prove that the banking customer was duly informed about the amount payable and, in the case of a contract which is a distance contract, in conformity with the distance marketing disclosure rules. However, in no case may the firm require such payment if it has commenced the performance of the contract before expiry of the cancellation period without the banking customer's prior request.
[Note: article 7(1), (2) and (3) of the Distance Marketing Directive in relation to distance contracts]

01/11/2009

BCOBS 6.4

Obligations on cancellation

01/11/2009

Firm's obligation

BCOBS 6.4.1

The firm must, without undue delay and within 30 calendar days, return to the banking customer any sums it has received from him except for any amount that the banking customer may be required to pay under BCOBS 6.3.2 R. This period begins from the day on which the firm receives the notification of cancellation.

[Note: article 7(1), (2) and (3) of the Distance Marketing Directive in relation to distance contracts]

01/11/2009

Banking customer's obligation

BCOBS 6.4.2

The firm is entitled to receive from the banking customer any sums or property he has received from the firm without any undue delay and no later than within 30 calendar days. This period begins from the day on which the banking customer dispatches the notification of cancellation.

[Note: article 7(5) of the Distance Marketing Directive in relation to distance contracts]

01/11/2009

BCOBS 6.4.3

Any sums payable under this section on cancellation of a contract are owed as simple contract debts and may be set off against each other.

01/11/2009

BCOBS 6.5

Other applicable legislation

01/11/2009

BCOBS 6.5.1

This chapter applies as modified to the extent necessary for it to be compatible with any enactment, including legislation relating to child trust funds.

01/11/2009

Export chapter as

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Transitional Provisions and Schedules

BCOBS TP 1

Transitional Provision

(1)

(2)

(3)

(4)

(5)

(6)

Materials to which the transitional provision applies

Transitional provision

Transitional provisions: dates in force

Handbook provisions: coming into force

BCOBS

Until midnight on 1 May 2010 a firm may continue to refer to the British Bankers' Association/ Building Societies Association/ APACS Banking Code and/or Business Banking Code in any of its documentation or literature.

1 November 2009 to 1 May 2010

1 November 2009

BCOBS 4.1.1 R

Until midnight on 1 May 2010, a firm need not have regard to BCOBS 4.1.2 G (3)(c) or (4) in interpreting and applying BCOBS 4.1.1 R.

1 November 2009 to 1 May 2010

1 November 2009

BCOBS 4.1.1 R

Until midnight on 1 May 2010, a firm may continue to communicate changes to any rate of interest that applies to a retail banking service to a banking customer in accordance with its obligations under the general law and (where a firm subscribed to the British Bankers' Association/ Building Societies Association/ APACS Banking Code or Business Banking Code on 1 July 2009) the standards set out in those Codes.

1 November 2009 to 1 May 2010

1 November 2009

BCOBS 4.1.1 R

With respect to an introductory, promotional or preferential rate of interest that expires before midnight on 1 May 2010, a firm need not have regard to BCOBS 4.1.2 G (5) or BCOBS 4.1.2 G (6) in interpreting and applying BCOBS 4.1.1 R.

1 November 2009 to 1 May 2010

1 November 2009

BCOBS 5.1.13 R

With respect to funds credited to an account of a banking customer before midnight on 1 February 2010, a firm need not comply with BCOBS 5.1.13 R.

1 November 2009 to 1 February 2010

1 November 2009

01/11/2009
Future version of BCOBS TP 1 after 06/03/2011

BCOBS Sch 1

Record-keeping requirements

01/11/2009

Notes:

The aim of the guidance in the following table is to give the reader a quick overall view of the relevant record-keeping requirements.

It is not a complete statement of those requirements and should not be relied on as if it were.

Handbook reference

Subject of record

When record must be made

Contents of record

Retention period

BCOBS 6.2.3 R

Cancellation: exercise of right

Exercise of the right to cancel

Date of exercise

At least three years

01/11/2009

BCOBS Sch 2

Notification requirements

01/11/2009

There are no requirements for notification in BCOBS.

01/11/2009

BCOBS Sch 3

Fees and other required payments

01/11/2009

There are no requirements for fees or other payments in BCOBS.

01/11/2009

BCOBS Sch 4

Powers exercised

01/11/2009

BCOBS Sch 4.1

The following powers and related provisions in or under the Act have been exercised by the FSA to make the rules in BCOBS:

Section 138 (General rule-making power)

Section 139(4) (Miscellaneous ancillary matters)

Section 145 (Financial promotion rules)

Section 156 (General supplementary powers)

01/11/2009

BCOBS Sch 4.2

The following powers in the Act have been exercised by the FSA to give the guidance in BCOBS:

Section 157(1) (Guidance)

01/11/2009

BCOBS Sch 5

Rights of action for damages

01/11/2009

5.1

The table below sets out the rules in BCOBS contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

5.2

If a "Yes" appears in the column headed "For private person?", the rule may be actionable by a private person under section 150 (or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001/2256)). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given.

5.3

The column headed "For other person?" indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

Rule

Right of action under section 150

For private person?

Removed?

For other person?

Any rule in BCOBS which prohibits an authorised person from seeking to make provision excluding or restricting any duty or liability

Yes

Any other person

All other rules in BCOBS

Yes

01/11/2009

BCOBS Sch 6

Rules that can be waived

01/11/2009

6.1

As a result of regulation 10 of the Regulatory Reform (Financial Services and Markets Act 2000) Order 2007 (SI 2007/1973) the FSA has power to waive all its rules. However, if the rules incorporate requirements laid down in European directives, it will not be possible for the FSA to grant a waiver that would be incompatible with the United Kingdom's responsibilities under those directives.

01/11/2009

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BCOBS Banking: Conduct of Business sourcebook

Used in

Export part as

Application

General application

The general application rule

Limitations on the general application rule

Exclusion of liability

Communications with banking customersand financial promotions

Purpose and Application: Who and what?

The fair, clear and not misleading rule

Other general requirements for communications and financial promotions

Structured deposits, cash deposit ISAs and cash deposit CTFs

Distance communications

Distance marketing

Application

The distance marketing disclosure rules

Terms and conditions, and form

Commencing performance of the distance contract

Exception: successive operations

Exception: voice telephony communications

Exception: means of distance communication not enabling disclosure

Exception: contracts for payment services

Consumer's right to request paper copies and change the means of communication

Unsolicited services

Mandatory nature of a consumer's rights

Contracts governed by law of a third party state

E Commerce

Application

Information about the firm and its products or services

Requirements relating to the placing and receipt of orders

Exception: contract concluded by e mail

Distance marketing information

Abbreviated distance marketing information

Information to be communicatedto banking customers

Enabling banking customers to make informed decisions

The appropriate information rule

Statements of account

Post sale

Post sale requirements

Service

Dealings with customers in financial difficulty

Moving a retail banking service

Lost and dormant accounts

Firm's liability for unauthorised payments

Banking customer's liability for unauthorised payments

Value date

Non-execution or defective execution of payments

Cancellation

The right to cancel

Introduction

Beginning of cancellation period

Disclosing the right to cancel

Exercising the right to cancel

Record keeping

Effects of cancellation

Payment for the service provided before cancellation

Obligations on cancellation

Firm's obligation

Banking customer's obligation

Other applicable legislation

Transitional Provisions and Schedules

Transitional Provision

Record-keeping requirements

Notification requirements

Fees and other required payments

Powers exercised

Rights of action for damages

Rules that can be waived

Communications with banking customers
and financial promotions

Information to be communicated
to banking customers