Learning Material Sample
Investment and risk12.1 Regulatory aspects - customer advice rules for investmentsIn this section we consider the rules imposed on advisers when providing advice and recommendations to clients in connection with investments. Many of these rules apply to other forms of regulated advice. The Markets in Financial Instruments Directive (MiFID) and the new Conduct of Business Rules (COBS)
The rules for regulated investment businesses are included in the COBS section of the FCA Handbook. The objective of the COBS rules is to establish how staff and representatives of regulated businesses conduct themselves when dealing with customers. The new COBS rules include the MiFID rules. Since 1 November 2007 some firms have been subject to MiFID. The following firms are likely to fall within the scope of MiFID: Investment management firm... Shortened demo course. See details at foot of page. ...estment firms, collective investment schemes, financial advisers, insurance firms)A large undertaking meeting specific quantitative criteria Another institutional investor whose main activity is to invest in financial instruments or designated investments. Retail client Most clients will be classified as retail clients make. They are any clients who are not eligible counterparties or professional clients. Retail clients receive. Professional clients receive less protection and the least protection is accorded to market counterparties. Authorised firms have to must provide their retail and professional clients with a client agreement (sometimes referred to as a terms of business letter).
This agreement has to be given to retail clients before carrying out any investment business or ... Shortened demo course. See details at foot of page. ...nt for the services providedComplaints procedure and availability of compensation via the Financial Services Compensation Scheme Provisions for ending the agreement. Records of terms of business should be kept for at least the standard periods. The recommendations of the Retail Distribution Review (RDR) were implements on 1 January 2013. There is now a distinction made between ‘sales’ and ‘advice’. Independent advisers are now required to offer unbiased, unrestricted advice which is not influenced by product provider or remuneration. Firms which are not independent will be providing restricted advice. Advisers need to choose between offering independent advice or restricted advice.
Independent advice must be based on a comprehensive and fair analysis of the relevant market... Shortened demo course. See details at foot of page. ....Suitability reports are required for many investment transactions. Amongst others these include life policies, pension plans, collective investment schemes, and investment trusts which are relevant to this study material. Risks Firms must not recommend any transaction for a retail client if they have not taken reasonable steps to make sure that the client is fully aware of the nature of the risks involved. Charges Before carrying out any business with a retail client, the firm must disclose in writing to them the basis or amount of its charges. The rules on product disclosure are designed to provide clients with sufficient information in order to be aware of all the features of the contract.
Key features documents Product providers must produce key features documents for all their packaged products. They can be either on paper (hard copy) or in electronic format. <... Shortened demo course. See details at foot of page. ...ven a further 30 days to cancel for appropriate personal pensions, life policies, personal and stakeholder pensions with a 14 day period for unit trust (inside or outside a NISA wrapper) if advice has been given. The customer can then exercise their right to cancel if so desired, by issuing a written notice to the product provider. The COBS rules apply to investment transactions and how they are established. They apply mainly to market makers, but many of them will affect all firms. Relevant principles deal with managing conflicts of intere...
Shortened demo course. See details at foot of page. ...e all reasonable steps to obtain the highest price on sale and the lowest on purchase.Timely execution Where a firm has agreed to execute an order with respect to an investment, it should do so promptly. Communications
When firms deal with customers they must make sure that any communications are clear, fair and not misleading, taking account of the client’s... Shortened demo course. See details at foot of page. ...d care will vary depending upon client circumstances taking account of their knowledge, understanding and experience of the investments being considered and discussed. |
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