CRED 11
Conduct of business
CRED 11.1
Introduction
- 01/12/2004
Conduct of business
CRED 11.1.1
See Notes
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CRED 11.1.2
See Notes
- (1) The rules and guidance set out in COB mainly apply to designated investment businesses and, as stated in COB 1.3.2 G (2), have limited application to deposits.
- (2) The only parts of COB that set out rules and guidance on deposits, other than for a cash deposit ISA, are those relating to financial promotion in COB 3 and those relating to distance contracts for accepting deposits in COB 2.6 (General provisions related to distance contracts), COB 6.7 (Cancellation and withdrawal), COB 6.4.25 R (Entering into a distance contract for accepting deposits). Guidance on the way in which those requirements apply to credit unions is set out in CRED 11.4 (Entering into a distance contract for accepting deposits).
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CRED 11.1.3
See Notes
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CRED 11.1.4
See Notes
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Electronic commerce activities
CRED 11.1.5
See Notes
The E-Commerce Directive sourcebook (ECO) contains rules and guidance applicable to a credit union which carries on an electronic commerce activity; that is, a credit union which accepts deposits, or carries on certain other activities, by way of an information society service. An information society service is, generally speaking and subject to certain exclusions, a service that:
- (1) is normally provided for remuneration;
- (2) is provided at a distance;
- (3) is so provided by means of electronic equipment for the processing (including digital compression) and storage of data; and
- (4) is so provided at the individual request of a recipient of the service.
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CRED 11.1.6
See Notes
- 01/12/2004
CTF providers
CRED 11.1.7
See Notes
- 01/01/2007
CRED 11.2
Financial promotion
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CRED 11.2.1
See Notes
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CRED 11.2.2
See Notes
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CRED 11.2.3
See Notes
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CRED 11.2.4
See Notes
In addition to the limited application of COB 3, a number of exemptions from the rules and guidance on financial promotions are listed in COB 3.2.5 R. Some exemptions are particularly relevant to credit unions namely exemptions (2), (4) and (5):
- (1) Exemption (2): A financial promotion which can lawfully be communicated by an unauthorised communicator without approval.
- (2) Exemption (4): A "one off" non-real time financial promotion or a "one off" solicited real time financial promotion. If the conditions set out in (a) to (c) are satisfied, a financial promotion is to be regarded as "one off"; if not, the fact that any one or more of these conditions is met is to be taken into account in determining if a financial promotion is "one off", but a financial promotion may be regarded as "one off" even if none of the conditions are met; the conditions are that:
- (a) the financial promotion is communicated only to one recipient or only to one group of recipients in the expectation that they would engage in any investment activity jointly;
- (b) the identity of the product or service to which the financial promotion relates has been determined having regard to the particular circumstances of the recipient;
- (c) the financial promotion is not part of an organised marketing campaign.
- (3) Exemption (5): A financial promotion which contains only one or more of the following:
- (a) the name of the firm;
- (b) the name of an investment;
- (c) a contact point (address including an e-mail address, telephone or facsimile number);
- (d) a logo;
- (e) a brief, factual description of the firm's activities;
- (f) a brief, factual description of the firm's fees;
- (g) a brief, factual description of the firm's investment products;
- (h) the price of yield of investments and the charges.
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CRED 11.2.5
See Notes
- 01/12/2004
CRED 11.2.6
See Notes
The requirement on a firm under COB 3.8.4 R (1) is that it should be able to show that it has taken reasonable steps to ensure that a non-real time financial promotion is clear, fair and not misleading. This is supported by further detailed rules including an evidential provision COB 3.8.5 E):
- (1) A firm should take reasonable steps to ensure that, for a non-real time financial promotion:
- (a) its promotional purpose is not in any way disguised or misrepresented;
- (b) any statement of fact, promise or prediction is clear, fair and not misleading and discloses any relevant assumptions;
- (c) any statement of opinion is honestly held and, unless consent is impracticable, given with the consent of the person concerned;
- (d) the facts on which any comparison of contrast is made are verified, or, alternatively, that relevant assumptions are disclosed and that the comparison or contrast is presented in a fair and balanced way, which is not misleading and includes all factors which are relevant to the comparison or contrast;
- (e) it does not contain any false indications, in particular as to:
- (i) the firm's independence; or
- (ii) the firm's resources and scale of activities; or
- (iii) the scarcity of any investment of service;
- (f) the design, content or format does not disguise, obscure or diminish the significance of any statement, warning or other matter which the financial promotion is required by this chapter to contain;
- (g) it does not include any reference to approval by the FSA or any government body, unless such approval has been obtained in writing from the FSA or that body (see also GEN 1.2 (Referring to approval by the FSA));
- (h) it does not omit any matters the omission of which causes the financial promotion not to be clear, fair and not misleading; and
- (i) the accuracy of all material statements of fact in it can be substantiated.
- (2)
- (a) Compliance with COB 3.8.5 E(1) may be relied on as tending to show compliance with COB 3.8.4 R(1).
- (b) Contravention of COB 3.8.5 E(1) may be relied on as tending to show contravention of COB 3.8.4 R(1).
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CRED 11.3
Statutory status disclosure
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CRED 11.3.1
See Notes
- 01/12/2004
CRED 11.3.2
See Notes
- 01/12/2004
CRED 11.4
Entering into a distance contract for accepting deposits
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CRED 11.4.1
See Notes
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CRED 11.4.2
See Notes
- 01/12/2004
Pre-contract disclosure requirements
CRED 11.4.3
See Notes
- 01/12/2004
CRED 11.4.4
See Notes
- 01/12/2004
Exemptions
CRED 11.4.5
See Notes
The exemptions referred to in CRED 11.4.3 G are set out in COB 6.4.27 R to COB 6.4.31 R. They are relevant:
- (1) where the contract is concluded by telephone and the retail customer gives explicit consent to receiving a more limited range of information. COB 6.4.27 R (1) sets out the information to be provided in such cases. Full information has to be provided, in a durable medium, immediately after conclusion of the distance contract (COB 6.4.27 R (2));
- (2) where a means of communication (other than telephone) is used which does not enable provision of required information in a durable medium before conclusion of the contract; in this case full information must also be provided in a durable medium immediately after conclusion of the distance contract (COB 6.4.29 R);
- (3) where there is an initial service agreement and the contract is in relation to a successive or separate operation of the same nature under that agreement, or there is no initial service agreement and the contract is in relation to a successive or separate operation of the same nature and is being performed no more than one year from the date of performance of the last operation ( COB 6.4.30 R to COB 6.4.31 R; and see COB 1.10.2 G).
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CRED 11.4.6
See Notes
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Cancellation
CRED 11.4.7
See Notes
- 01/12/2004
CRED 11.4.8
See Notes
The only exemptions from the right to cancel are when:
- (1) the price of the service depends on fluctuations in the financial market outside the credit union's control which may occur during the cancellation period; or
- (2) the contract has already been fully performed with the retail customer's consent before he exercises his right to cancel; or
- (3) the credit union has an initial service agreement with the retail customer and the contract is in relation to a successive operation or separate operation of the same nature under that agreement (see COB 1.9.2 G (3))
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CRED 11.4.9
See Notes
- 01/12/2004
CRED 11.4.10
See Notes
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