Transitional Provisions and Schedules

Part

COB Conduct of Business

Chapter

Transitional Provisions and Schedules

Printed on: 29/11/2024

Rulebook at: 05/04/2006

Transitional Provisions and Schedules

COB TP 1

Transitional Rules for pre-N2 and ex-Section 43 firms at N2

COB TP 1.1

1.0

Application

1.1

These transitional provisions apply to:

(a)

pre-N2 firms; and

(b)

ex-section 43 firms.

2.0

Purpose

2.1

The FSA is aware that the introduction of COB will impose an additional compliance burden on firms, even when there is an underlying continuity of policy. The FSA wishes to lighten that burden in a manner consistent with its regulatory objectives and the principles of good regulation under the Act. The following rules provide transitional relief which takes three distinct forms:

(a)

extra time provisions (ETPs) which, in practice, give firms additional time after commencement to complete their preparations for the impact of certain provisions in COB;

(b)

technical timing provisions (TTPs) which give relief from certain provisions in COB that require firms to fulfil obligations to customers at periodic intervals. TTPs postpone the impact of these provisions in COB in relation to periods that span N2; and

(c)

timeless (saving) provisions (TSPs) which give firms relief for an indefinite period after N2 from certain provisions in COB relating mainly to terms of business and client agreements COB 4.2 and from provisions in the Handbook generally (including COB) relating to client classification. TSPs allow firms to continue to use, or rely upon, documentation or compliance work that was undertaken in accordance with previous regulator rules in relation to existing clients at N2.

2.2

If a firm's permitted regulated activities are subject to one or more of the transitional provisions in COB , and were carried on before commencement, those regulated activities should be interpreted, where appropriate, as if they were authorised investment business before commencement.

2.3

GEN contains some technical transitional provisions that apply throughout the Handbook and which are designed to ensure a smooth transition at commencement. These include transitional provisions relevant to record keeping and notification rules.

2.4

For the avoidance of doubt, COB TP 1.2, COB TP 1.2 and COB TP 1.2 at COB TP 1.2 override paragraph 9 (Time starting before commencement) of the technical timing provisions in GEN.

2.5

SUP contains transitional provisions, which carry forward written concessions relating to pre-commencement provisions.

3.0

Continuity of contracts

3.1

The FSA is sometimes asked whether a firm should re-negotiate contracts to replace references to its authorisation status or regulatory provisions made under predecessor legislation with references to its status or regulatory provisions made under the Act . Clearly, whether a firm should renegotiate its contracts is a matter for the firm , which needs to be considered in the light of the effect of the contractual provision as a whole. As a general rule, unless the FSA has made particular requirements relating to such matters, the FSA would not expect to see this done for regulatory reasons. Firms may wish to consider whether they need appropriate professional advice.

3.2

Clearly, the interpretation of contractual provisions is a matter for the courts. However, where a firm continues, as a result of the grandfathering process, to enjoy permission which provides it with authority under the Act to carry on regulated activities substantially similar to the investment business it could carry on under its authorisation under predecessor legislation, the FSA would be surprised if a court were to conclude that updating a contractual provision was necessary to enable it to give effect to the intentions of the parties to the contract.

4.0

Definitions

4.1

In these transitional provisions the following words are to have the meaning given to them below:

"corresponding rule" means a rule of the previous regulator of a firm that is substantially similar in purpose and effect to the relevant provision in COB.

"section 43 business" means activities in respect of which the firm would have been an exempted person under section 43 of the Financial Services Act 1986.

"pre-N2firm" means:

(a)

a firm which immediately before commencement was authorised under the Financial Services Act 1986 to carry on investment business in the United Kingdom by virtue of its membership of:

(i)

IMRO;

(ii)

PIA; or

(iii)

SFA;

(b)

a firm which immediately before commencement held an authorisation granted directly by the FSA under the Financial Services Act 1986 to carry on investment business in the United Kingdom immediately before commencement; or

(c)

an employee of such a firm in (a) or (b), including any of its appointed representatives (as defined under section 44 of the Financial Services Act 1986);

but does not include:

(d)

an ex-RPB firm; or

(e)

a firm in relation to its section 43 business.

"transitional period" means the period starting on commencement and finishing on midnight on 30 June 2002, except where otherwise specified.

COB TP 1.2

COB TR 1

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies: The COB provisions in Table COB TP 1.3 with the labels indicated

Transitional provision

Transitional provision: dates in force

Handbook provision: coming into force

1.0

Extra time provisions

1.1

ETP1

Transitional relief

(1) commencement to 30 June 2002, except as specified in (2) and (3) below;
(2) for COB 9.3.105R, from commencement to 31 December 2002;
(3) for COB 3.9.10 R, COB 6.1 to COB 6.8, until a date yet to be specified.

commencement

(1)

A pre-N2 firm will not contravene any of the provisions labelled ETP1 in COB TP 1.3 to the extent that, on or after commencement, it is able to demonstrate that it has complied with the corresponding rule of its previous regulator or, where applicable, the relevant former statutory requirement, subject to any modification, wherever appropriate, to take account of the passing of the Act.

(2)

Paragraph (1) does not apply to the following:

(a)

(from 1 September 2002) COB 6.1.1 (5) to COB 6.1.1 (6) (Application);

(b)

(from 1 September 2002) COB 6.5.50 to COB 6.5.52 (Life policies: requests for quotations for surrender values);

(c)

(from 1 September 2002) COB 6.5.53 to COB 6.5.56 (Open market option).

(d)

(from 1 August 2002) COB 6.5.40 (3)(k) (Further information for life policies, schemes, insurance or equity ISAs, PEPs and stakeholder pensions);

(e)

(from 1 August 2002) COB 6.5.8 to COB 6.5.9 (Stakeholder pension schemes: decision trees);

(f)

(from 6 April 2003) COB 6.6.51 (b) (Rate of return assumptions), COB 6.6.83 (Assumptions for pension annuities), COB 6.6.84 (Assumptions for pension annuities), COB 6.6.90 (3) and COB 6.6.91 (Required assumptions);

(g)

(from 1 November 2002) COB 6.5.40 (3)(m) (Further information for life policies, schemes, insurance or equity ISAs, PEPs and stakeholder pensions);

(h)

(from 1 April 2004) COB 6.1.1A (Application of COB 6.2.26);

(i)

(from 1 April 2004) COB 6.2.26 (Requirement to offer a simplified prospectus for section 264 schemes); and

(j)

(from 1 April 2004 for a mini cash ISA for the tax year 2004/2005 and later tax years) COB 6.5.42 (14) (Information requirements for cash deposit ISAs, friendly society tax-exempt policies, traded life policies and broker funds);

(k)

(from 9 October 2004) any rule in COB inserted or amended by the Distance Marketing Directive Instrument 2004 and, in the case of an amendment, to the extent of such amendment;

(l)

(from 31 October 2004) any rule in COB inserted or amended by the Long-Term Care Insurance Contracts Instrument 2004 and, in the case of an amendment, to the extent of such amendment.

1.1A

ETP1 (for COB 6.1 - COB 6.8)

(1)

The FSA is extending transitional relief for COB 6.1 - COB 6.8 and various other rules in COB, pending the outcome of the review of product disclosure and polarisation. As each of those reviews are completed, the transitional provisions will be revoked or modified to provide an appropriate transition into the new regime. Firms will be given notice of any revocation or modification as part of consultation on the new regime.

commencement until a date yet to be specified.

(2)

Interim changes to these rules may not benefit from this transitional relief.

1.2

ETPs 1 to 9
TTPs 1 to 3
TSPs 1 to 7

It is for a pre-N2 firm to satisfy itself that it has complied with the corresponding rule of its previous regulator or, where applicable, the relevant former statutory requirement. In order to benefit from the relief, a firm must ensure that the rule of its previous regulator which it proposes to comply with is substantially similar to the provision in COB to which it relates.

for ETP 1 as for COB TP 1.1
for ETP 2 to 9 and TTP 1 to 3 commencement to 30 June 2002

commencement

For the assistance of firms , the FSA has compiled tables of derivations indicating the rules of a firm's previous regulator that correspond to the provision in COB being transitioned. Firms may wish to refer to these tables but in doing so should understand that they are not intended to be exhaustive and are produced merely as a guide.

Firms are advised that should they wish to take advantage of the transitional provisions set out in this section, the onus is on the firm to be able to demonstrate that in any given case it has in fact complied with the corresponding rules of its previous regulator or, as the case may be, the former statutory requirement.

1.3

ETPs 1 to 9
TTPs 1 to 3
TSPs 1 to 7

Firms will have noted from the wording of COB TP 1.1 that they should treat the corresponding rules of their previous regulator as modified to the extent necessary to ensure that the provision can operate effectively notwithstanding the enactment of the Act. Firms will need to adopt a common sense approach in interpreting the corresponding rules of their previous regulator and modify them accordingly. For example, references in such rules to a firms previous regulator should be read as if they referred to the FSA. Other modifications may not be as straightforward, such as where the concept of an indirect customer is not carried forward under the new legislation. In cases of difficulty, firms are encouraged to approach the FSA for its views.

for ETP 1 as for COB TP 1.1
for ETP 2 to 9 and TTP 1 to 3 commencement to 30 June 2002
indefinitely for TSPs

commencement

1.4

ETP2

[deleted]

1.5

ETP1

Expired

1.6

ETP3

Expired

1.7

ETP3

Expired

1.8

ETP4

Expired

1.9

ETP4

Expired

1.10

ETP5

Expired

1.11

ETP6

Expired

1.12

ETP7

Client Money
An ex-section 43 firm need not comply with the provisions labelled ETP7 in Table COB TP 1.3 in relation to its section 43 business until the expiry of a period of 12 months following commencement, provided it continues to comply with the requirements of the Grey Paper (version June 1999), as published by the FSA, relating to the segregation of money and other assets belonging to counterparties.

until a date yet to be specified

commencement

1.13

ETP8

Expired

1.14

ETP8

Expired

1.15

ETP9

Group business disapplication for ex-IMRO firms and ex-SFA firms

Commencement until a date yet to be specified

commencement

(1)

This paragraph applies to a pre-N2 firm which immediately before commencement was a member of IMRO or SFA.

(2)

COB 1.3.1 R applies to an ex-IMRO firm in (1) as if it provided as follows:
"COB applies to firms with respect to the carrying on of:

(1)

all regulated activities except:

(a)

to the extent that a provision of COB provides for a narrower application; and

(b)

activities which fall within article 69 of the Regulated Activities Order (Groups and joint enterprises), notwithstanding, in respect of article 69, article 4(4) of that Order (Specified activities: general: investment firms); and

(2)

unregulated activities to the extent specified in any provision of COB.".

(3)

COB 1.3.1 R applies to an ex-SFA firm in (1) as if it provided as follows:
"COB applies to firm with respect to the carrying on of:

(1)

all regulated activities except:

(a)

to the extent that a provision of COB provides for a narrower application: and

(b)

in relation to all of COB other than COB 7.13 (Personal account dealing) and the rules in COB requiring records to be made and retained, activities which fall within article 69 of the Regulated Activities Order (Groups and joint enterprises), notwithstanding, in respect of article 69, article 4(4) of that Order (Specified activities: general: investment firms); and

(2)

unregulated activity to the extent specified in any provision of COB.".

1.16

ETP9

The purpose of ETP 9 is to carry forward for ex-IMRO firms and ex-SFA firms the former regulatory treatment of intra-group investment business, which is carried on in conjunction with investment business for third parties. The effect of that treatment was that under the IMRO rulebook the rules do not apply to the business done for group companies which fell within the group business exemption in paragraph 18 of Schedule 1 to the Financial Services Act 1986. The effect of that treatment under the SFA rulebook was that with the exception of the rules relating to compliance (of which the personal account dealing and record keeping rules are carried forward in COB) the conduct of business rules did not apply to the business done for group companies that fell within the group business exemption. Effectively it was only the non-group third party element of such firms' investment business that was subject to the relevant rules. COB would not have carried forward this group business disapplication for such firms, were it not for the introduction of ETP 9.
Note that during the transitional period the FSA will be consulting on its proposals how this issue should be treated in COB after 30 June 2002.

commencement until a date yet to be specified

commencement

2.0

Technical timing provisions

2.1

TTP1

Expired

2.2

TTP2

Expired

2.3

TTP3

Expired

2.4

TTP1, 2 and 3

Expired

3.0

Timeless (saving) provisions

3.1

TSP1

Confirmation of compliance and approval

A pre-N2 firm will not contravene any of the provisions labelled TSP1 in Table COB TP 1.3 to the extent that it is able to demonstrate that, on or after commencement, it has carried out the confirmation exercise referred to in COB 3.6.1 R (Confirmation of compliance), for an investment advertisement issued or approved before commencement, in accordance with the corresponding rule of its previous regulator.

indefinitely

commencement

3.2

TSP2

Terms of business and client agreements

(1)

Subject to (2) and (3), a pre-N2 firm will not contravene any of the provisions in Table COB TP 1.3 labelled TSP2 to the extent that, on or after commencement, it is able to demonstrate that it has continued to use, or rely upon, terms of business (including a client agreement), or a soft commission agreement, given to, or made with, a client before the end of the transitional period in accordance with the corresponding rule of its previous regulator.

indefinitely

commencement

(2)

If the basis on which a pre-N2 firm conducts, or proposes to conduct, its designated investment business for a client changes after commencement in a way not contemplated by the original terms of business and where the original terms of business allow the firm to amend its terms without the customer's consent, the firm must provide the client with amended terms of business in accordance with COB 4.2.13 R (Amendment of terms of business).

(3)

A pre-N2 firm must take reasonable steps to ensure that a private customer to whom it has provided terms of business (including a client agreement ) before commencement is notified in writing of the matters set out in COB 4.2.15E (2), (21) and (22) as soon as practicable after commencement.

3.3

TSP2

(1)

Firms should note that COB 4.2 also benefits from an ETP1 as set out in COB TP 1.1. The purpose of this is to allow firms additional time, after commencement , to amend their terms of business for new clients taken on after N2.

indefinitely

commencement

(2)

Where a pre-N2 firm has started, but has not concluded, negotiating terms of business with a client before commencement, it may rely on COB TP 1.1 even if the terms of business are not agreed until after commencement.

(3)

COB TP 1.3 does not require the firm to provide a client with amended terms of business where the change in the terms was contemplated in the original terms of business.

(4)

Further to Principle 7 (Communications with clients) of the FSA's Principles for Business, a firm should not refuse a customer's reasonable request for new terms of business to reflect the new regime applicable under the Act.

(5)

A pre-N2 firm will comply with COB TP 1.1 if the firm gives written notification to the private customer as part of the firm's next routine communication to the customer. In most circumstances, the FSA expects that a period of between three and six months from commencement should give sufficient time for a pre-N2 firm to notify a private customer under this rule. For example, a pre-N2-firm might notify under COB TP 1.1 much sooner than six months after commencement when it provides private customers with risk warnings in respect of warrants and derivatives or non-readily realisable investments (COB 5.4 Customers' understanding of risk).

(6)

A pre-N2 firm's only routine communication with a private customer might occur more that six months after commencement. For example, a long-term insurer providing customers with the annual statement might only communicate with some customers (particularly 'dormant' customers) annually or less frequently. In such limited circumstances, a period of up to six months might be too restrictive an interpretation of the requirement to take reasonable steps to notify private customers as soon as practicable after commencement. This is exceptional and a period of up to six months from commencement will be sufficient in most cases.

(7)

The FSA wishes to minimise any unnecessary repetition or duplication of notifications flowing from COB TP 1.1. A pre-N2 firm acting under COB TP 1.1 may reasonably fulfil its notification obligation to a private customer through the pre-N2 firm's agent or intermediary who services the private customer and is authorised by the FSA, or through the pre-N2 firm's appointed representative who services the private customer and for whom the pre-N2 firm is responsible as principal under section 39 of the Act (Exemption). But a pre-N2 firm will retain responsibility for fulfilling the notification requirement in COB TP 1.1.

(8)

COB TP 1.1 requires notification in writing. This may be done by using electronic media, subject to COB 1.8 (Application to electronic media). The requirement will not be discharged, however, simply by publishing a notice in a national or local newspaper.

3.4

TSP3

Know your customer and suitability

indefinitely (as regards (1) and (2))

commencement

(1)

Subject to (2), a pre-N2 firm will not contravene any of the provisions labelled TSP3 in Table COB TP 1.3 to the extent that it is able to demonstrate that, on or after commencement, it has continued to use, or rely upon, a record of a private customer's personal and financial circumstances made in accordance with the corresponding rules of its previous regulator, and in doing so has had regard to the guidance set out in COB 5.2.6 G.

(2)

The relief in (1) will apply only so long as there is no relevant change in the customer's personal and financial circumstances.

(3)

Paragraph (2) applies only for relevant changes of which a firm ought reasonably to be aware assuming compliance with COB 5.2.5 R (Requirement to know your customer)

indefinitely from 1 January 2003 (as regards (3))

3.5

TSP4

Suitability and customers' understanding of risk

A pre-N2 firm will not contravene any of the provisions labelled TSP4 in Table COB TP 1.3 to the extent that it is able to demonstrate that, on or after commencement, it uses, or relies upon, a suitability letter or, as the case may be, a risk warning or disclosure, given to a customer in accordance with the corresponding rule of its previous regulator, in relation to a transaction or series of transactions executed or arranged before the expiry of the transitional period.

indefinitely

commencement

3.6

TSP4

Firms should note that the requirements in COB 5.2 and COB 5.3 relating to the production of suitability letters and risk warnings also benefit from an ETP1 provision.

indefinitely

commencement

3.7

TSP5

Scheme documents for an unregulated collective investment scheme

A pre-N2 firm that is an operator will not contravene any of the provisions labelled TSP5 in Table COB TP 1.3 to the extent that it is able to demonstrate that, on or after commencement, it has continued to use, or rely upon, a scheme document provided to a participant before the expiry of the transitional period, in accordance with the corresponding rule of its previous regulator.

indefinitely

commencement

3.8

TSP6

Notice and consents

(1)

A pre-N2 firm will not contravene any of the provisions labelled TSP6 in Table COB TP 1.3 to the extent that it is able to demonstrate that, on or after commencement, it has continued to use or rely upon a valid notice or consent which, before the expiry of the transitional period, was given to, given by or obtained from a client or counterparty in accordance with the corresponding rule of its previous regulator, or, where applicable, the relevant former statutory instrument.

indefinitely

commencement

(2)

A pre-N2 firm will not contravene any of the provisions labelled TSP in the Table COB TP 1.3 to the extent that it is able to demonstrate that, on or after commencement, its auditors have provided its previous regulator with written confirmation of the type required by COB 9.3.42R (2)(a) in accordance with the corresponding rule of its previous regulator.

3.9

TSP7

Cancellation

The Financial Services (Cancellation) Rules 1994 and the Financial Services (Non-Life Cancellation) Rules 1997 continue to apply in respect of investment agreements, as defined in section 44(9) of the Financial Services Act 1986, entered into before commencement.

indefinitely

commencement

3.10

TSP7

COB 6.7 (Cancellation and withdrawal) applies in the case of an investment agreement entered into before commencement but which, on or after that date, is subsequently varied.

indefinitely

commencement

COB TP 1.3

COB TR 2: Rules benefiting from transitional relief (pre-N2 and ex-section 43 firms) G

This Table belongs to COB TP 1.2

COB Rule

Rule Heading

Label

ETP

TSP

Chapter 1 Applications and general provisions

1.3 General application: what?

1.3.1R

ETP9

Chapter 2 Rules which apply to all firms conducting designated investment business

2.2 Inducements and soft commission

2.2.8R

Requirements when using a soft commission agreement

ETP1

TSP2

2.2.12R

Allowable benefits provided under a soft commission agreement

ETP1

2.2.16R

Prior disclosure

ETP1

Chapter 3 Financial promotion (whole chapter)

ETP1

TSP7

3.6 Confirmation of compliance

3.6.1R

Confirmation of compliance

ETP1

TSP1

3.6.3R

Withdrawing confirmation

ETP1

TSP1

3.6.5R

Communicating a financial promotion where another firm has confirmed compliance

ETP1

TSP1

Chapter 4 Accepting customers

4.2 Terms of business and client agreements with customers (whole section)

ETP1

TSP2

Chapter 5 Advising and selling

5.2 Know your customer

5.2.5R

Requirement to know your customer

ETP1

TSP3

5.2.9R

Record keeping: personal and financial circumstances

ETP1

TSP3

5.2.10R

Record keeping: execution-only pension opt-outs and pension transfers

ETP1

TSP3

5.3 Suitability

TSP4

5.3.5R

Requirement for suitability generally

ETP1

5.3.14R

Requirement for a suitability letter: other specific requirements

ETP1

5.3.19R

Exceptions from requirement to provide a suitability letter

ETP1

5.3.20R

Suitability of broker funds

ETP1

5.3.21R

Suitability of pension transfers and opt-outs

ETP1

5.3.22R

ETP1

5.3.23R

ETP1

5.3.24R

ETP1

5.3.25R

ETP1

5.3.26R

ETP1

5.3.27R

ETP1

5.3.28R

Suitability of personal pension schemes: promotions to employees

ETP1

5.4 Customers' understanding of risk

TSP4

5.4.3R

Requirement for risk warnings

ETP1

TSP4

5.7 Disclosure of charges, remuneration and commission

5.7.3R

Disclosure of charges

ETP1

5.7.5R

Disclosure of commission (or equivalent) for packaged products

ETP1

5.7.9R

Exceptions to the disclosure for packaged products

ETP1

5.7.10R

ETP1

5.7.15R

ETP1

Chapter 6 Product disclosure and the customers' right to cancel or withdraw (whole chapter)

ETP1

TSP7

6.7 Cancellation and withdrawal (whole section)

ETP1

TSP6

6.9 With-profits guides (whole section)

Chapter 8 Reporting to customers

8.1 Confirmation of transactions

8.1.3R

Requirement to confirm a transaction

ETP1

8.1.6R

Exceptions to the requirement to despatch a confirmation

ETP1

8.1.7R

ETP1

8.1.8R

ETP1

8.1.11R

When a confirmation may omit certain information

ETP1

8.1.12R

When a transaction is treated as executed

ETP1

8.1.14R

Record keeping requirements

ETP1

8.2 Periodic statements

8.2.4R

Requirement for a periodic statement

ETP1

8.2.6R

Exceptions from the requirement to provide a periodic statement

ETP1

8.2.9R

Record keeping requirements

ETP1

Chapter 10 Operators of collective investment schemes

10.3 Modification of the allocation rule

10.3.1R

ETP1

10.4 Suitability of the portfolio of an unregulated collective investment scheme

10.4.3R

ETP1

10.6 Scheme documents for an unregulated collective investment scheme

10.6.2R

Provision of scheme documents to private customers

ETP1

TSP5

10.6.5R

TSP5

10.7 Periodic statements for an unregulated collective investment scheme (whole section)

ETP1

01/01/2006

COB TP2

Client classification transitional provisions at N2

COB TP 2.1

COB TR 3: Client Classification Provisions

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies: All rules in the Handbook

TRANSITIONAL PROVISION

Transitional provision: dates in force

Handbook provision: coming into force

1.0

Timeless (saving) provisions for the Handbook (including COB)

1.1

Rules in the Handbook unless the contrary intention appears

Client Classification
(1) This paragraph applies only to a pre-N2 firm and in relation to any person who became a client of the firm before commencement (in this rule referred to as an "existing client").
(2) If a firm before commencement classified an existing client , other than another firm or overseas financial services institution, as a market counterparty in accordance with the rules of its previous regulator, it will not contravene a rule in the Handbook by treating the client as a market counterparty, unless (3) applies.
(3) If the client in (2) has been classified as a market counterparty only in relation to a particular transaction or type of transaction, the firm must from commencement classify that client in accordance with COB 4.1.
(4) If a firm before commencement classified an existing client, other than another firm or overseas financial services institution, or a client within COB TR 1 1.6, as a non-private customer in accordance with the rules of its previous regulator, it will not contravene a rule in the Handbook by treating that client as an intermediate customer.
(5) The firm may, notwithstanding (4), classify the client in (4) as a market counterparty provided the firm complies with COB 4.1.12 R (2) (Large intermediate customer classified as a market counterparty).
(6) If a firm before commencement classified an existing client, other than another firm or overseas financial services institution, as a private customer in accordance with the rules of its previous regulator, it will not contravene a rule in the Handbook by treating that client as a private customer.
(7) The firm may, notwithstanding (6), classify the client in (6) as an intermediate customer provided the firm complies with COB 4.1.9 R (Expert private customer classified as an intermediate customer).
(8) If a firm before commencement classified an existing client, other than another firm or overseas financial services institution, as an ordinary business investor in accordance with the rules of its previous regulator , it will not contravene a rule in the Handbook by treating that client as an intermediate customer.

indefinitely

varies depending on the rule concerned

1.2

Rules in the Handbook unless the contrary intention appears

Firms should note that COB TP 2.1 does not require them to take positive steps to re-classify clients falling within the scope of the rule at N2 for the purposes of compliance with COB 4.1.4 R (Requirement to classify). COB TP 2.1 has the effect of automatically re-classifying these clients except as otherwise stated.

indefinitely

varies depending on the rule concerned

1.3

Rules in the Handbook unless the contrary indication appears

There are no transitional rule regarding classification by a firm ("F") of a client who is a firm or overseas financial services institution ("C1"). In such cases the effect of COB 4.1.7 R is that C1 will be a market counterparty of F, unless COB 4.1.7 R (2) apply. If C1 wishes to be classified as an intermediate customer for inter-professional business from commencement, the requirement for agreement under COB 4.1.7 R (2)(c) could, for example, be satisfied if:(a) C1 notifies F in writing that it wishes to be classified as an intermediate customer for that purpose and that F's agreement will be implied if F continues to do business with C1 after commencement; and(b) F has not notified C1 in writing that it does not agree to that classification.

indefinitely

varies depending on the rule concerned

1.4

Rules in the Handbook unless the contrary intention appears.

For the assistance of firms , the FSA has prepared a client classification mapping table, which explains the link between pre-N2 client categories and the client classification in COB . This is to be found in Annex E of the Policy Statement on Transitional Arrangements for the Conduct of Business Sourcebook issued in July 2001.

1.5

Rules in the Handbook unless the contrary intention appears.

If a firm treats a client as a private customer , or as an intermediate customer , or as a market counterparty in accordance with COB TP 1.1 or COB TP 1.1, it will not contravene a rule in the Handbook by doing so.

01/04/2005

COB TP3

Transitional Rules for ex-RPB firms

COB TP 3.1

1.0

Application

1.1

This section applies to firms who are ex-RPB firms.

2.0

Purpose

2.1

The FSA is aware that the introduction of COB will impose an additional compliance burden on firms, even where there is an underlying continuity of policy. The FSA wishes to lighten that burden in a manner consistent with its statutory objectives and the principles of good regulation under the Act. Transitional measures are being produced for parts of COB which take three distinct forms. First, firms are in practical terms being given additional time after the commencement day, until 30 November 2002, to complete their preparations for the impact of certain COB rules. Secondly, relief is being given in relation to certain rules that require firms to fulfil obligations to customers at periodic intervals, so as to postpone the impact of the COB provisions in relation to periods that span N2. Thirdly, firms are being given relief for an indefinite period after N2 for certain COB provisions so as to allow firms to continue to use, or rely upon, documentation or compliance work undertaken in accordance with rules of their previous regulator in relation to existing customers at N2.

2.2

If a firm's permitted regulated activities are subject to one or more of the transitional provisions in COB, and were carried on before commencement, those regulated activities should be interpreted , where appropriate , as if they were authorised investment business before commencement.

2.3

2.4

For the avoidance of doubt, TTP1 at COB TP 3.1 overrides paragraph 9 (Time starting before commencement ) of the technical timing provisions in GEN.

3.0

Continuity of contracts

3.1

The FSA is sometimes asked whether a firm should renegotiate contracts to replace references to its authorisation status under predecessor legislation with reference to its status under the Act. Clearly, whether a firm should renegotiate its contracts is a matter for the firm which needs to be considered in the light of the effect of the contractual provision as a whole. As a general rule , however , the FSA would not expect to see this done for regulatory reasons.

3.2

Clearly, the interpretation of contractual provisions is a matter for the courts. However, where a firm continues, as a result of the grandfathering process, to enjoy permission which provides it with authority under the Act to carry on regulated activities substantially similar to the investment business it could carry on under its authorisation under predecessor legislation, the FSA does not view it as necessary to update the contractual provisions.

4.0

Definitions

4.1

In these transitional provisions the following words are to have the meaning given to them below:

"corresponding rule" means a rule of the previous regulator of a firm that is substantially similar in purpose and effect to the relevant provision in COB.

"ex-RPB firm" means a firm which immediately before commencement was authorised under the Financial Services Act 1986 to carry on investment business in the United Kingdom by virtue of a certificate from a recognised professional body under section 16 of the 1986 Act.

COB TP 3.2

COB TR 4: COB Transitional Provisions (for ex-RPB firms)

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies: The COB provisions in Table COB TR 5 with the label indicated

Transitional provision

Transitional provision: dates in force

Handbook provision: coming into force

1.0

Extra time provisions

1.1

ETP1

Expired

1.2

ETPs 1 to 3 (inclusive)
TTP 1
TSPs 1 to 4 (inclusive)

It is for an ex-RPB firm to satisfy itself that it has complied with the corresponding rule of its previous regulator or, where applicable, relevant former statutory requirement. In order to benefit from the relief, a firm must ensure that the rule of its previous regulator which it proposes to comply with is substantially similar to the COB provision to which it relates. For the assistance of firms the FSA has compiled tables of derivations indicating the rules of a firm's previous regulator that correspond to the COB provisions being transitioned. Firms may wish to refer to these tables but in doing so should understand that they are not intended as exhaustive and are produced merely by way of a guide. Firms are advised that should they wish to take advantage of the transitional measures set out in this section, the onus is on them to be able to demonstrate that in any given case they have in fact complied with the corresponding rules of their previous regulators or, as the case may be, former statutory requirement.

commencement to 30 November 2002 (for ETPs and TTPs)Indefinitely (for TSPs)

commencement

1.3

ETPs 1 to 3( inclusive)
TTP 1
TSPs 1 to 4 (inclusive)

Firms will have noted from the wording of COB TP 1.1 that they should treat the corresponding rules of their previous regulator as modified to the extent necessary to ensure that the provision can operate effectively notwithstanding the enactment of the Act. Firms will need to adopt a common sense approach in interpreting the corresponding rules of their previous regulator and should modify them accordingly. For example, references in such rules to a firm's previous regulator should be read as if they referred to the FSA. Other modifications may not be as straightforward. In cases of difficulty, firms are encouraged to approach the FSA for its views.

commencement to 30 November 2002 (for ETPs and TTPs)Indefinitely (for TSPs)

commencement

1.4

ETP2

Expired

1.5

ETP2

Expired

1.6

ETP3

Expired

1.7

ETP3

Expired

2.0

Technical timing provisions

2.1

TTP1

Expired

2.2

TTP1

Expired

3.0

Timeless (saving) provisions

3.1

TSP1

Confirmation of compliance and approval An ex-RPB firm will not contravene any of the provisions labelled TSP1 in COB TP 3.1 to the extent that it is able to demonstrate that, on or after commencement, it has carried out the confirmation exercise referred to in COB 3.6.2 G (2), for an investment advertisement issued or approved before commencement, in accordance with the corresponding ruleof its previous regulator.

Indefinitely

commencement

3.2

TSP2

Terms of business and customer agreements

Indefinitely

commencement

(1) Subject to (2) and (3), an ex-RPB firm will not contravene any of the provisions in COB TP 3.1 labelled TSP2 to the extent that, on or after commencement , it is able to demonstrate that it has continued to use, or rely upon, terms of business (including a client agreement) given to, or made with, a client in accordance with the corresponding rule of its previous regulator.

(2) If the basis on which an ex-RPB firm conducts or proposes to conduct its designated investment business for a client changes after the commencement day, it must provide the client with amended terms of business in accordance with COB 4.2.13 R .

(3) An ex-RPB firm must take reasonable steps to ensure that a private customer to whom it has provided terms of business (including a client agreement) before commencement is notified in writing of the matters set out in COB 4.2.15E (21) and (22) as soon as practicable after commencement.

3.3

TSP2

(1) Firms should note that COB 4.2 also benefits from an ETP1 extra-time provision as set out in COB TR 3.1R. The purpose of this is to allow firms additional time, after commencement , to amend their terms of business for new clients taken on after N2.

Indefinitely

commencement

(2) Where an ex-RPB firm has started, but not concluded, negotiating terms of business with a client before commencement , it may rely on COB TR 3.2(1) R even if the terms of business are not agreed until after commencement.

(3) COB TR 3.2(2)R does not require the firm to provide a client with amended terms of business where the change in the terms was contemplated in the original terms of business.

3.4

TSP3

Know your customer and suitability

Indefinitely

commencement

(1) Subject to (2), an ex-RPB firm will not contravene any of the provisions labelled TSP3 in COB TP 1.3to the extent that it is able to demonstrate that, on or after commencement, it has continued to use, or rely upon, a record of a private customer's personal and financial circumstances made in accordance with the corresponding rules of its previous regulator, and in doing so has had regard to the guidance set out in COB 5.2.6 G.

(2) The relief in (1) will only apply so long as there is no relevant change in the customer 's personal and financial circumstances.

3.5

TSP4

Suitability and customers' understanding of risk An ex-RPB firm will not contravene any of the provisions labelled TSP4 in COB TP 1.3 to the extent that, on or after commencement , it uses, or relies upon, a suitability letter or, as the case may be, a risk warning or disclosure, given to a customer in accordance with the corresponding rule of its previous regulator, in relation to a transaction or series of transactions executed or arranged prior to commencement.

Indefinitely

commencement

3.6

TSP4

Firms should note that the requirements in COB 5.2 and COB 5.3 relating to the production of suitability letters and risk warning also benefit from an ETP1 provision.

Indefinitely

commencement

COB TP 3.3

COB TR 5: COB rules benefiting from transitional relief for ex-RPB firms

This Table belongs to COB TR 4

COB Rule

Rule Heading

Assignation

ETP

TTP

TSP

CHAPTER 3 FINANCIAL PROMOTION (whole chapter)

ETP1
ETP2

3.6 Confirmation of compliance and approval

3.6.1R

Confirmation of compliance

ETP1

TSP1

3.6.2R

Withdrawing confirmation

ETP1

TSP1

3.6.5R

Communicating a financial promotion where another firm has confirmed compliance

ETP1

TSP1

CHAPTER 4 ACCEPTING CUSTOMERS

4.2 Terms of business and customer agreements

ETP1

TSP2

CHAPTER 5 ADVISING AND SELLING

5.2 Know your customer

ETP1

TSP3

5.3 Suitability

ETP1

TSP4

5.4 Customers' understanding of risk

5.4.3R

Requirement for risk warnings

ETP1

TSP4

5.5 Information about the firm

ETP3

CHAPTER 8 REPORTING TO CUSTOMERS

8.1 Confirmation of transactions

8.1.3R

Requirement to confirm a transaction

ETP1

8.1.6R

Exceptions to the requirements to dispatch a confirmation

ETP1

8.1.7R

ETP1

8.1.8R

ETP1

8.1.11R

When a confirmation may omit certain information

ETP1

8.1.12R

When a transaction is treated as arranged

ETP1

8.1.14R

Record keeping requirements

ETP1

8.2 Periodic statements

8.2.4R

Requirement for a periodic statement

ETP1

TTP1

8.2.9R

Record keeping requirements

ETP1

TTP1

CHAPTER 9 CLIENT ASSETS

9.1 Custody (whole chapter)

ETP1

9.1.35 (3)-(5)R

TSP4

9.1.40R

TSP4

9.1.49R

Client agreement

TSP2

9.1.51R

TSP2

9.1.54R

Risk disclosures

TSP4

9.1.57R

TSP4

9.1.58R

TSP4

9.1.69R

Custodian agreement

TSP2

9.1.74R

Stock lending

TSP2

01/04/2005

COB TP 4

Miscellaneous transitional provisions applying to all firms

COB TP 4.4

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies

Transitional provision

Transitional provision: dates in force

Handbook provision: coming into force

COB 6.5.40 R (3)(k) and (l)

Expired

COB 6.5.18 and COB 6.6

Expired

From 1 November 2002 to 5 April 2003

1 November 2002

COB 6.8.26and COB 6.8.28

Expired

COB 3.8.4 R (3), 3.9.7R (1), COB 3.13.4 R

Expired

COB 4.2.15E (2), 4.3.15E (22), COB 5.5.3 R, COB 5.5.5 E, COB 5.5.9 R - COB 5.5.12 R

R, E, G

A firm is not required to comply with the amendments to the rules in column (2) made by the Statutory Status Disclosure Instrument 2003 until 1 October 2004; to the extent that a firm continues to rely upon terms of business (including a client agreement) given to or made with a client before 1 October 2004, the firm does not need to comply with the amendments to COB 4.2.15 E made by that Instrument until the firm's terms of business is next updated.

From 1 March 2003

1 March 2003

COB 8.1.15 E (2), COB 10.6.8 E (1)

The amendments to COB 8.1.15E(2) and COB 10.6.8E(1) and (8) made by the Statutory Status Disclosure Instrument 2003 do not apply to a firm:
(1) in relation to a confirmation of a transaction under COB 8.1 (Confirmation of transactions); and
(2) in relation to the scheme documents referred to in COB 10.6 (Scheme documents for an unregulated collective investment scheme);
until, as appropriate, the firm's system for producing confirmations or the scheme documents are next updated by the firm.

From 1 March 2003

1 March 2003

COB 4.2.5 R

ATS terms of business
A service company, or a firm that is undertaking oil market activity or other energy market activity, that operates an ATS as at the day on which COB 4.2.17 E comes into force is not required to provide terms of business to a customer who has commenced using the ATS before that day.

Indefinitely

1 January 2004

COB 4.2.5 R and COB 4.2.10 R

A firm need not, by reason of COB 4.2.17 E , amend, or give notice of an amendment to, its terms of business to include provision about the additional matters in COB 4.2.17 E in respect of a customer to whom it has provided terms of business before the day on which COB 4.2.17 E comes into force.

Indefinitely

1 January 2004

Rules in the Handbook

Classification of CISs. If a firm at any time before 1 September 2003 classified a collective investment scheme in accordance with COB 4.1 (Client classification) as in force at that time, it will not contravene any of the rules in the Handbook by treating the scheme in accordance with that classification.

From 1 September 2003

Various

COB 7.1.14 R

UCITS management company COB 7.1.14 R does not take effect in relation to any discretionary management undertaken in accordance with a client agreement entered into before 12 February 2004.

From 13 February 2004 to 12 February 2007

13 February 2004

COB 5.4.4 E (6)

Expired

COB 3.9.31 R (3)

Expired

COB 6.2.46 R

Simplified prospectus requirements for section 264 schemes
A firm may comply with COB 6.2.22 R (Schemes) instead of COB 6.2.46 R (Requirement to offer a simplified prospectus for section 264 schemes), if the EEA State in which the recognised scheme is established has not implemented the obligations of the UCITS Directive in relation to the simplified prospectus, until the earlier of:
(1) the date that the relevant obligations of the UCITS Directive have been implemented in that EEA State; and
(2) 30 September 2004 or, if later, the date when the relevant provisions of the UCITS Directive have been implemented in the UK.

From 1 April 2004 until 30 September 2004, or, if later, the date when the relevant provisions of the UCITS Directive have been implemented in the UK

1 April 2004

COB 6.11.9

Annual report to with-profits policyholders
A firm must produce its first report to with-profits policyholders under COB 6.11.9 in respect of the part of its financial year that follows the date on which PRU 7.4 (With-profits Insurance Capital Component) comes into force.

From 30 April 2004

30 April 2004

COB 6.6.51 R, COB 6.6.52 R, COB 6.6.84 R

As an alternative to complying with the provisions of COB 6.6.51 R, COB 6.6.52 R or COB 6.6.84 R, a firm will satisfy its obligations if it complies with the version of the rule in force on 20 April 2005.

21 April 2005 - 1 August 2005

21 April 2005

COB 6.2.26 R to COB 6.2.45 R

Simplified prospectus requirements for simplified prospectus schemes
A firm need not comply with the rules specified in column (2) to the extent that it complies with the provisions of COB 6.2 (Provision of key features or simplified prospectus) that relate to key features schemes and ensures that every key features for the scheme which is offered to a client or provided to a private customer is produced in accordance with the applicable requirements of COB 6.5 (Content of key features and important information: life policies, key features schemes, ISA cash deposit components and stakeholder pension schemes).

From 1 May 2005

30 September 2005

COB 7.18.1 R to COB 7.18.16 R

Use of dealing commission
In relation to any soft commission agreement an investment manager may have on 1 January 2006, the manager may comply with the rules in COB 2.2.8 R to COB 2.2.20 R (1) (instead of the rules specified in column (2)) until:
(1) the date of the expiry of that agreement; or
(2) if earlier, 30 June 2006.

From 1 January 2006 to 30 June 2006

01/01/2006

COB TP5

Distance Marketing Directive transitional rules (applicable to all firms)

COB TP 5.1

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies

Transitional provision

Transitional provision: dates in force

Handbook provision: coming into force

Delayed amendment of COB for non-distance contracts

COB

The amendments to COB made by the Distance Marketing Directive Instrument 2004 on 9 October 2004 do not apply in relation to business which does not involve the conclusion of a distance contract with a retail customer, provided that the firm complies with the requirements of COB in force immediately before 9 October 2004, taking account of any amendments which come into force after that date.

From 9 October 2004 for 12 months

Already in force

Exception for provision of key features to EEA customers

COB 6.2.21R(1)(a) and COB 6.2.24 (1)

(1)

There is no requirement for key features to be provided for a new life policy, variation to a life policy or in respect of a scheme if, at the time he signs the application, the customer:

From 9 October 2004, indefinitely

Already in force

(a)

(in the case of a life policy) is habitually resident in an EEA State other than the United Kingdom; or

(b)

(in the case of a scheme) is not present in the United Kingdom;

provided that the conditions in (2) are satisfied.

(2)

The conditions referred to in (1) are that:

(a)

the EEA State in which the private customer is (as applicable) habitually resident or present imposes requirements on the communication of precontract information (beyond the minimum required by Community legislation) when doing the designated investment business concerned from an establishment in the United Kingdom; and

(b)

the firm complies with COB 6.4.25, in respect of the packaged product, as if references to "accepting deposits" and "deposits" were references to "designated investment business" and "packaged products" respectively.

Non-investment insurance contracts: compliance with DMD Regulations or ICOB

When an insurer effects or carries out, or a firm manages the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's in relation to, a non-investment insurance contract which is a distance contract, then either:

From 9 October 2004 until 14 January 2005

(1)

the Distance Marketing Regulations apply as if the insurer or firm was an unauthorised person; or

(2)

(if the insurer has elected) the rules in ICOB which implement the DMD apply.

An election under (2) is irrevocable and applies in relation to all such contracts. The insurer must make a record of the election and retain it for 6 years from 14 January 2005.
In this transitional provision:
"ICOB" means the Insurance: Conduct of Business sourcebook; and
"non-investment insurance contract" means a contract of insurance which is a general insurance contract or a pure protection contract but which is not a long-term care insurance contract.

Delayed amendment of the Handbook for distance contracts

Handbook

(1)

The amendments to the Handbook made by the Distance Marketing Directive Instrument 2004 and the Distance Marketing (Amendment) Instrument 2004 do not apply to a firm unless it has elected to comply with them.

From 9 October 2004 until 31 October 2004

Already in force

(2)

An election under (1) is irrevocable. The firm must make a record of the election and retain it for 6 years from 31 October 2004.

01/04/2005

COB TP6

Transitional rules for depolarisation (applicable to all firms)

COB TP 6.1

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies

Transitional provision

Transitional provision: dates in force

Handbook provision: coming into force

COB

From 1 December 2004 to 31 May 2005, a firm may, subject to TR 7.6, comply with COB as if it were not amended by the Depolarisation Instrument 2004, unless the firm is a product provider in which case it must comply with , as it applies to a product provider, from 1 December 2004

From 1 December 2004 to 31 May 2005

1 December 2004

COB rules amended by the Depolarisation Instrument 2004

(1)

Subject to COB TP 6.1 and COB TP 6.1, the Depolarisation Instrument 2004 may apply to a firm as follows.

From 1 December 2004 to 31 May 2005

1 December 2004

(2)

A firm may elect at any time from 1 December 2004 to 31 May 2005, to comply with COB as amended by the Depolarisation Instrument 2004.

(3)

A firm must notify the FSA in writing of an election in (2) and of the date prior to 31 May 2005 from which it will commence compliance with COB as amended by the Depolarisation Instrument 2004.

(4)

A firm may make different elections in (2) for each appointed representative that acts on its behalf but can only make a single election in respect of each single appointed representative.

COB rules amended by the Depolarisation Instrument 2004

A firm must, in relation to any private customer to whom it has begun to provide services in respect of a packaged product before 14 January 2005 or, if applicable, the date of an election in COB TP 6.1, complete the provision of that service in accordance with COB as it applied before amendment by the Depolarisation Instrument 2004.

From 1 December 2004

1 December 2004

COB 4 Annex 2 and COB 5.5.5 E

A firm may continue to rely upon compliance with COB 4 Annex 2 and COB 5.5.5 E (including to the extent that a firm issues a financial promotion that complies with COB 4 Annex 2) provided:

From 1 December 2004 until 30 November 2005

1 December 2004

(1)

the information given to a private customer is not contradicted by any information given to the customer by way of an initial disclosure document or a fees and commission statement and;

(2)

any financial promotion complies with COB 3.8.19 R as amended by the Depolarisation Instrument.

COB 2.2.6 G

The FSA will not regard a firm as being in contravention of COB 2.2.3 Rif it gives or receives assistance in conducting the review of past business in pension transfers and opt outs provided the provision or receipt of such a benefit does not conflict with any duty the recipient owes to its customers.

From 1 December 2004 to 31 May 2006

1 December 2004

COB as amended by the Depolarisation Instrument 2004

Notwithstanding COB TP 6.1 and COB TP 6.1, a firm which does not elect under COB TP 6.1 to comply with COB as amended by the Depolarisation Instrument 2004 must, from 14 January 2005, comply with:

14 January 2005 until 31 May 2005

14 January 2005

(1)

COB 1.2.1 R, COB 1.4.12 R and COB 4.3.19 R to COB 4.3.26 R, as amended by the Depolarisation Instrument 2004;

(2)

COB 4.3.19 R to COB 4.3.25 R as amended by the Depolarisation Instrument 2004 but as if they applied to a firm carrying out the activities in COB 4.3.19R (1)(a) with or on behalf of private customers;

(3)

COB 5.2.12 R to COB 5.2.14 R as amended by the Depolarisation Instrument 2004; and

(4)

COB 5.3.14 R (1) and COB 5.3.18A R to COB 5.3.18C R, as amended by the Depolarisation Instrument 2004;

unless the firm is an insurer, in which case it does not need to comply with the provisions specified in (2), (3) and (4).

The effect of COB TP 6.1 is that from 14 January 2005, if a firm has not elected to comply with the new COB provisions, the firm is in any event required to comply with the requirements of the IMD as set out in the provisions referred to in COB TP 6.1.
As regards the information requirements of the IMD, firms have the choice (by virtue of COB 4.3.23 G) of providing the minimum information set out in COB 4.3.19 R or using an initial disclosure document.

01/04/2005

COB TP7

Transitional rules for carrying on with-profits business

COB TP 7.1

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies

Transitional provision

Transitional provision: dates in force

Handbook provision: coming into force

COB 6.10.24A G; COB 6.10.29; COB 6.10.37; COB 6.12.1 R to COB 6.12.15; and COB 6.12.45 R to COB 6.12.116 G

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 30 June 2005

30 June 2005

COB 6.12.16 G to COB 6.12.44 G

The provisions listed in column (2) of this table 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 31 December 2005

31 December 2005

Paragraphs 1 and 2

COB 6.12 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 COB TP 7.1 is that COB 6.12 does not apply to such arrangements if, and to the extent that, it is inconsistent them. A firm should be mindful, however, that, even if some or all of COB 6.12 is disapplied, the firm is still subject to the rules in the rest of the Handbook, including Principle 6.

From 30 June 2005

01/04/2005

COB Sch 1

Record keeping requirements

01/12/2004

COB Sch 1.1

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

31/10/2004

COB Sch 1.2

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

31/10/2004

COB Sch 1.3

Handbook reference

Subject of record

Contents of record

When record must be made

Retention period

COB 2.2.20 R (1)

Periodic reports

Details of soft commission agreements

Date of periodic statement

3 years (from termination of relevant soft commission agreement)

COB 2.2.20 R (2)

Disclosable commission

Each payment

Date of payment

6 years

COB 2.2.20 R (3)

Indirect benefits given to an independent intermediary

Each benefit

Date from which benefit was conferred

6 years

COB 3.7.1 R

Non-real time financial promotion - each: Pension transfer Pension opt-out FSAVC

Name of individual who confirmed compliance or approved the financial promotion. See COB 3.7.2 G (1) for other contents

Date of confirmation or approval

Indefinitely

COB 3.7.1 R

Non-real time financial promotion - each: Life policy Pension contract Stakeholder pension scheme

Name of individual who confirmed compliance or approved the financial promotion. See COB 3.7.2 G (1) for other contents

Date of confirmation or approval

6 years

COB 3.7.1 R

Non-real time financial promotion - any other case

Name of individual who confirmed compliance or approved the financial promotion. See COB 3.7.2 G (1) for other contents

Date of confirmation or approval

3 years

COB 4.1.16 R

Classification of each client - if relevant to: Pension transfers Pension opt-outs FSAVCs

Sufficient information to support classification

When the client relationship begins or upon re-classification , to include annual review where necessary

Indefinitely

COB 4.1.16 R

Classification of each client - if relevant to: Life policies Pension contracts

Sufficient information to support classification

When the client relationship begins or upon re-classification , to include annual review where necessary

6 years (from end of client relationship)

COB 4.1.16 R

Classification of each client - any other case

Sufficient information to support classification

When the client relationship begins or upon re-classification , to include annual review where necessary

3 years (from end of client relationship)

COB 4.2.14 R

Terms of business for: Pension transfer Pension opt-out FSAVC

Each term of business provided and any amendments

As soon as in force

Indefinitely

COB 4.2.14 R

Terms of business for: Life policy Pension contract Stakeholder pension scheme

Each term of business provided and any amendments

As soon as in force

6 years (from the date on which the customer ceases to be a customer)

COB 4.2.14 R

Terms of business: any other case

Each term of business provided and any amendments

As soon as in force

3 years (from the date on which the customer ceases to be a customer)

COB 4.3.11 R

Fees and commission statement

At the time a firm sets its fees and commission statements

6 years from the date on which the record is superseded by a more up-to-date record

[deleted]

COB 5.1.6C R

The scope and range (or ranges) of advice each of the firm's appointed representatives is permitted to give

The scope of advice and range (or ranges) of packaged products in respect of which an appointed representative is permitted to advise.

At the time the appointed representative is appointed and on each change to the permitted scope and range (or ranges) of advice

6 years from the date on which the record is superseded by a more up-to-date record

COB 5.1.6E R

The scope of the advice on investments a firm provides and its range of packaged products

At the time the record changes

6 years from the date on which the record is superseded by a more up-to-date record

COB 5.1.6F R

Range of packaged products

When the range changes

6 years from the date on which the record is superseded by a more up-to-date record

COB 5.2.9 R

Private customer's details for a pension transfer, pension opt-out, FSAVC

Personal and financial circumstances

On giving advice

Indefinitely

COB 5.2.9 R

Private customer's details for a life policy, pension contract or stakeholder pension scheme

Personal and financial circumstances

On giving advice

6 years

COB 5.2.9 R

Private customers details for any other case

Personal and financial circumstances

On giving advice

3 years

COB 5.2.10 R

Private customer: Opt out or transfer from an OPS on an execution only basis

Execution only transaction, no investment advice given

Upon execution

Indefinitely

COB 5.3.19A R

Private customer: Suitability relating to a pension opt-out or transfer, or FSAVC

Suitability letter

After letter sent

Indefinitely

COB 5.3.19A R

Private customer:
Suitability relating to a life policy, pension contract, or stakeholder pension scheme

Suitability letter

After letter sent

6 years

COB 5.3.19A R

Private customer:Suitability relating to any other case

Suitability letter

After letter sent

3 years

COB 5.3.25 R

Private customer instructs a pension opt-out or transfer contrary to advice of firm

Firm's advice to customer and customer instructions to firm to proceed

Upon execution

Indefinitely

[deleted]

COB 5.3.27 R

Statistics of pension opt-out, pension transfer or FSAVC transactions involving private customers

Separate records per customer

On arranging the transaction

Indefinitely

COB 5.3.28 R

Direct offer personal pension scheme

Record of justification for promotion

On making the promotion

6 years

COB 5A.3.4 R

The scope of basic advice which a firm's appointed representative is permitted to give (including the range of stakeholder products on which each appointed representative advises.)

The scope of basic advice each appointed representative is permitted to advise

At the time an appointed representative is permitted to provide basic advice.

6 years from the date on which the record is superseded by a more up-to-date record

COB 5A.3.6R (1)

A firm's scope and range of stakeholder products

When a firm commences providing basic advice

6 years from the date on which the record is superseded by a more up-to-date record

COB 5A.3.6R (4)

The range of stakeholder products on which a firm's basic advice to a private customer is based

When a firm commences providing basic advice

6 years from the date on which the advice is given

COB 6.5.52

Non-tradable life policy

Sufficient information to support classification that own policies are not tradable

Upon assessment of the firm's position and every 6 months thereafter

Indefinitely

COB 6.6.19

Projections relating to a life policy, pension contract or stakeholder pension scheme

A projection provided to a customer

As soon as proposal proceeds

6 years

COB 6.6.19

Projections relating to a pension transfer or pension opt-out

A projection provided to a customer

As soon as proposal proceeds

Indefinitely

COB 6.6.19

Projections relating to any other case

A projection provided to a customer

As soon as proposal proceeds

3 years

COB 6.7.47

Cancellation or withdrawal:
Pension transfer, opt-out or FSAVC

To include a copy of any receipt of notice issued to the customer and the customer's original notice instructions

Upon notice of cancellation or withdrawal being served to firm, its appointed representative or agent

Indefinitely

COB 6.7.47

Cancellation or withdrawal:
Life policy, pension contract or stakeholder pension scheme

To include a copy of any receipt of notice issued to the customer and the customer's original notice instructions

Upon notice of cancellation or withdrawal being served to firm, its appointed representative or agent

6 years (from the date when the firm became aware that notice of cancellation had been served)

COB 6.7.47

Cancellation or withdrawal:
Any other case

To include a copy of any receipt of notice issued to the customer and the customer's original notice instructions

Upon notice of cancellation or withdrawal being served to firm, its appointed representative or agent

3 years (from the date when the firm became aware that notice of cancellation had been served)

COB 6.8.18 (1)

Firm effecting or carrying out pure protection contracts
which are life policies

Adequate details of information provided

After information provided

6 years

COB 7.7.6 E (4)

Allocation of aggregated transactions in a series of transactions all executed within one business day

The time each transaction is made

On executing an aggregated transaction

COB 7.7.14 R (1)

An aggregated transaction that includes a customer order

Identity of each customer; whether transaction is in whole or in part for discretionary managed investment portfolio and any relevant proportions

On executing an aggregated transaction

3 years

COB 7.7.14 R (2)

Firm aggregating a number of client orders that include a customer order

Intended basis of allocation

As soon as is practicable

3 years

COB 7.7.14 R (3)

Aggregation of one or more customer orders and an own account order

Intended basis of allocation

Before the transaction is executed

3 years

COB 7.7.16 R

Allocation of an aggregated transaction that includes the execution of a customer order

Date and time of allocation; relevant designated investment; identity of each customer and market counterparty and the amount allocated to each customer and market counterparty; agreement to extend allocation period for intermediate customers under COB 7.7.6 E (2)(b)

Date on which the order is allocated

3 years

COB 7.7.17 R

Re-allocation

Basis and reason for any re-allocation

At the time of the re-allocation

3 years

COB 7.9.7 R

Lending to private customers

Assessment of a private customer's financial standing and the date when the information was last updated/checked

Upon assessment

3 years (from the date on which the credit arrangement ceased)

COB 7.12.3 R and COB 7.12.6 E

Customer orders

Customer's name (or other designation)/account number; date and time of receipt or decision by the firm to deal; who received the order or made the decision to deal; the designated investment; the number of/total value of the designated investment including any price limit; whether sale or purchase; any other instructions received.

When the order arises

3 years (after the date of completion of the transaction)

COB 7.12.3 R and COB 7.12.6 E

Execution of a transaction by a firm

Name/other designation of client (if any); name of counterparty (if known); date and time of execution; who executed the transaction; the designated investment; number of/total value of the designated investment; price and other significant terms; whether sale or purchase

When the firm executes a transaction

3 years (after the date of completion of the transaction)

COB 7.12.3 R and COB 7.12.6 E

The firm instructs another person to deal

Name of the person instructed; terms of instruction and date and time of instruction

When the firm instructs another person to deal

3 years (after the date of completion of the transaction)

COB 7.13.11 R (1)(a)

Personal account dealing

The restrictions upon pa dealing and the basis upon which any permission to deal is made

Whenever the restrictions are placed and from the date of consent

3 years (from the date that the restrictions or basis were communicated to the employee)

COB 7.13.11 R (1)(b)

Personal account dealing

Each permission to deal given by the firm

From the date of consent

3 years (from the date that the permission was given)

COB 7.13.11 R (1)(c)

Personal account dealing

Each notification of the transaction made by the employee to the firm

From the date of notification

3 years (from the date that the notification was made)

COB 7.13.11 R (1)(d)

Personal account dealing

The basis upon which the firm has determined that an employee will not be involved in, or have access to information about, the firm's designated investment business

On determining the basis

3 years (from the date on which the individual ceases to be an employee)

COB 7.16.5 R (2)(b)

Policy for managing conflicts of interest arising as a result of publication or distribution of investment research

Details of the policy

When adopted

Until three years after the policy ceases to have effect

COB 7.17.7 R (3)

Substantiation of a research recommendation

The basis of substantiation of a research recommendation

When producing the research recommendation

COB 7.18.16 R

Periodic disclosure of arrangements entered into

Details of the receipt of appropriate execution or research goods and services

Date of provision of disclosure

5 years (from when the disclosure is provided)

COB 8.1.14 R

Confirmation of transaction

Information provided

On dispatch of confirmation

3 years

COB 8.2.9 R

Periodic statements

Copy of any periodic statement

On date on which it is provided

3 years

COB 8A.5.1 R

Claim under a long-term care insurance contract

Details of the claim; a record of each communication with the policyholder, including the date it was made; the date the claim was settled or rejected.

As soon as practicable

The duration of the claim and 6 years after the insurer's obligations to the policyholder under the long-term care insurance contract have ceased

[deleted]

COB 10.3.3 E (3)

Allocation of aggregated transactions in a series of transactions all executed within one business day

The time each transaction is made

On executing an aggregated transaction

COB 10.3.5 R (1)

Aggregated transaction on behalf of a number of schemes

Identity of schemes concerned, whether transaction was effected proportionally or if a stated proportion was effected for some schemes under its management

On executing an aggregated transaction

COB 10.3.5 R (2)

Aggregated customer orders on behalf of a number of schemes

The intended basis of allocation

As soon as is practicable

COB 10.3.5 R (3)

Aggregated orders of schemes under its management and own account orders

The intended basis of allocation

Before the transaction is executed

COB 10.7.6 R

Periodic statements in relation to unregulated collective investment scheme

Operator to retain copy of any periodic statement it has provided to participants in the scheme

On providing the periodic statement

3 years

COB 11.7.1 R

PTP appointment

Details of the written delegation to a PTP, PTP's undertaking under COB 11.6.1 R (3) and of any variation in the documentation

On the PTP's appointment

3 years (from date of end of the PTP's appointment)

COB 11.8.7 R

Trustee firm following (or rejecting) proper advice in relation to exercise of power of investment

Evidence of compliance with COB 11.8.5 R

Date on which proper advice is received

3 years

01/01/2006

COB Sch 2

Notification requirements

01/12/2004

COB Sch 2.1

Handbook reference

Matter to be notified

Contents of notification

Trigger event

Time allowed

COB 5.3.26 R

pension opt-out and pension transfer transactions

in writing - number of pension opt-outs and pension transfer transactions the firm has arranged in previous 6 monthly period

6-month intervals

as soon as reasonably practicable

COB 5.3.26 R

execution only pension opt-out and pension transfer transactions

in writing - number of transactions arranged if they exceed 1% of all the firm's pension opt-outs or pension transfers arranged during that quarter

3-month intervals

as soon as reasonably practicable

COB 5.3.26 R

pension opt-out and pension transfer transactions

in writing - number of transactions arranged against the firm's advice if they exceed 1% of all the firm's pension opt-outs or pension transfers arranged during that quarter

3-month intervals

as soon as reasonably practicable

COB 5.3.26 R

pension opt-outs and pension transfer transactions

in writing - the number of any transactions arranged on a correspondence - only basis by the firm during that quarter

3-month intervals

as soon as reasonably practicable

COB 5.7.16 E, paragraph 9

failure to follow actuarial advice

reasons for not following actuarial advice and alternative assumptions the firm plans to use

where a firm does not follow its actuary's advice

as soon as reasonably practicable

COB 6.2.22 R (2)

notice of election

in writing - election that scheme will comply with those provisions of COB 6.2 that relate to the simplified prospectus - date from which election is to take effect

election

as soon as reasonably practicable

COB 6.2.46(4)

simplified prospectus and subsequent amendments

in writing - required contents of simplified prospectus

commencement of sale of units

as soon as reasonably practicable

[deleted]

COB 11.6.6 R

delegation of regulated activity by a trustee firm to a PTP

the trustee firm must notify the FSA within 14 days of it first delegating any regulated activity to a PTP and the notification must include the identity of the PTP

upon first delegation of regulated activity

14 days

01/05/2005

COB Sch 3

Fees and other required payments

01/12/2004

COB Sch 3.1

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

01/12/2004

COB Sch 4

Powers Exercised

01/12/2004

COB 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 COB:

Section 118(8) (Market abuse)

Section 138 (General rule-making power)

Section 139 (4) (Miscellaneous ancillary matters)

Section 145 (Financial promotion rules)

Section 147 (Control of information rules)

Section 149 (Evidential provisions)

Section 156 (General supplementary powers)

Section 238(5) (Restrictions on promotion)

Section 247 (Trust scheme rules)

Regulation 6(1) of The Open-Ended Investment Companies Regulations 2001

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

Section 157(1) (Guidance)

14/01/2005

COB Sch 5

Rights of actions for damages

01/12/2004

COB Sch 5.1

The table below sets out the rules in COB 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.

19/01/2003

COB Sch 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.

19/01/2003

COB Sch 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.

19/01/2003

COB Sch 5.4

Right of action under section 150

Chapter/Appendix

Section/Annex

Paragraph

For private person?

Removed?

For other person?

All rules in COB with the status letter "E"

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

Yes

Any other person

Any rule in COB which is directed at ensuring that transactions in designated investments are not effected with the benefit of unpublished information that, if made public, would be likely to affect the price of that designated investment

Yes

Any other person

All other rules in COB

Yes

14/01/2005

COB Sch 6

Rules that can be waived

01/12/2004

COB Sch 6.1

The rules in COB can be waived by the FSA under sections 148 or 250 of the Act (Modification or waiver of rules) or regulation 7 of the OEIC Regulations (Modification or waiver of FSA rules), except for the following rules:

(a)

the rules in COB 1 (Application and general provisions) to the extent that those rules apply or modify other rules in COB which may not be waived;

(b)

the rules in COB 2.3 (Reliance on others) to the extent that those rules apply or modify other rules in which may not be waived;

(c)

COB 2.4.4 R (1), COB 2.4.4 R (3) (to the extent that it relates to COB 2.4.4 R (1)) and COB 2.4.4 R (4);

(d)

COB 3.11.2 R (Unregulated Collective Investment Schemes);

(e)

[deleted];

(f)

[deleted];

(g)

the rules in COB 10 (Operators of collective investment schemes) to the extent that those rules apply or modify other rules in COB which may not be waived;

(h)

the rules in COB 11 (Trustee and depositary activities) to the extent that those rules apply or modify other rules in COB which may not be waived;

(i)

the rules in COB 12 (Lloyd's) to the extent that those rules apply or modify other rules in COB which may not be waived.

01/09/2002