Financial Conduct Authority (FCA) Conduct of Business Sourcebook

The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom, formed as one of the successors to the Financial Services Authority (FSA). The FCA regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets. It focuses on the regulation of conduct by both retail and wholesale financial services firms.

The FCA Conduct of Business Sourcebook (COBS) states that firms must

  • act honestly, fairly and professionally in accordance with the best interests of its client
  • always ensure that communications and financial promotions are fair, clear and not misleading. Nor should they seek to exclude or restrict any duty or liability it may have to a client under the regulatory system or any duty or liability it may have to a client other than under the regulatory system, unless it is honest, fair and professional for it to do so.

The sourcebook applies to a firm with respect to the following activities carried on from an establishment maintained by it, or its appointed representative, in the United Kingdom:

(1)    designated investment business;

(2)    long-term insurance business in relation to life policies;

Relevant COBS rules regarding firm communications, include:

4.10.1 R The rules in SYSC 3 and SYSC 4 require a firm that communicates with a client in relation to designated investment business, or communicates or approves a financial promotion, to put in place systems and controls or policies and procedures in order to comply with the rules in this chapter.

4.11.1 R Record Keeping: financial promotion

(1) A firm must make an adequate record of any financial promotion it communicates or approves, other than a financial promotion made in the course of a personal visit, telephone conversation or other interactive dialogue.

(2) For a telemarketing campaign, a firm must make an adequate record of copies of any scripts used.

(3) A firm must retain the record in relation to a financial promotion relating to:

(a) a pension transfer, pension opt-out or FSAVC, indefinitely;

(b) a life policy, occupational pension scheme3, SSAS, personal pension scheme or stakeholder pension scheme, for six years;

(c) MiFID or equivalent third country business, for five years; and

(d) any other case, for three years.

4.11.2 R A firm should consider maintaining a record of why it is satisfied that the financial promotion complies with the financial promotion rules.

11.6.19 R An investment manager must make a record of each prior and periodic disclosure it makes to its customers in accordance with this section and must maintain each such record for at least five years from the date on which it is provided.

11.8.5 R A firm must take reasonable steps to record relevant telephone conversations, and keep a copy of relevant electronic communications, made with, sent from or received on equipment:

(1) provided by the firm to an employee or contractor; or

(2) the use of which by an employee or contractor has been sanctioned or permitted by the firm;

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