Banking: Conduct Of Business Sourcebook

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Banking: Conduct ofBusiness sourcebook

BCOBS ContentsBanking: Conduct of Business sourcebookBCOBS 11.11 Annex 1BCOBS 22.12.22.2A2.2B2.32.42 Annex 12 Annex 2BCOBS 2A2A.1BCOBS 33.13.23 Annex 13 Annex 2BCOBS 44.14.24.34.4BCOBS–iApplicationGeneral applicationStructured deposit businessCommunications and financial promotionsPurpose and Application: Who and what?The fair, clear and not misleading ruleSummary box for savings accountsGeneral information about overdrafts for personal current accountsOther general requirements for communications and financialpromotionsCash deposit ISAs and cash deposit CTFsForm of Summary Box for Savings AccountsGuidance on presentation of interest-rate information in savings accountsummary boxOptional additional productsRestriction on marketing or providing an optional product for which afee is payableDistance communicationsDistance marketingE CommerceDistance marketing informationAbbreviated distance marketing informationInformation to be communicated to banking customersEnabling banking customers to make informed decisionsStatements of accountInformation to be provided by a non ring-fenced body to individualaccount holdersFurther information to be provided about personal current accountswww.handbook.fca.org.uk Release 5 Mar 2021

BCOBS ContentsBCOBS 55.1Post sale requirementsBCOBS 66.16.26.36.46.5CancellationThe right to cancelExercising the right to cancelEffects of cancellationObligations on cancellationOther applicable legislationBCOBS 77.17.27.37.47.57.67.6A7.77 Annex 1BCOBS 88.18.28.38.4Post saleInformation about current account servicesApplicationWhat information is to be published and how is it to be measured?Account opening informationReplacing a debit cardAvailability of certain services and helplinesPublication of information about major operational or security incidents,and complaints informationPublication of pricing information about personal current accountoverdraftsPublication of information about current accountsPublication of information in a specified formatTools for personal current account customersGeneral and applicationCost calculatorEligibility toolAlertsTransitional provisions and SchedulesTP 1Sch 1Sch 2Sch 3Sch 4Sch 5Sch 6 Release 5Transitional ProvisionsRecord-keeping requirementsNotification requirementsFees and other required paymentsPowers exercisedRights of action for damagesRules that can be waived Mar 2021www.handbook.fca.org.ukBCOBS–ii

BCOBS ContentsBCOBS–iiiwww.handbook.fca.org.uk Release 5 Mar 2021

Banking: Conduct of Business sourcebookChapter 1Application Release 5 Mar 2021www.handbook.fca.org.ukBCOBS 1/1

BCOBS 1 : ApplicationSection 1.1 : General application11.1General applicationThegeneral application rule.1.1.1RThis sourcebook applies to a firm with respect to the activity of acceptingdeposits from banking customers carried on from an establishmentmaintained by it in the United Kingdom and activities connected with thatactivity.Applicationto payment services and electronic money.1.1.1ARIn addition to the general application rule, Chapter 2 of BCOBS applies to afirm (other than a credit union), an electronic money institution, a paymentinstitution and a registered account information service provider with respectto the provision of payment services or issuance or redemption of electronicmoney carried on from an establishment maintained by it or its agent in theUnited Kingdom and activities connected with those activities. These personsare referred to collectively in Chapters 1 and 2 of BCOBS as “providers”.Limitations on the general application rule and BCOBS1.1.1AR.1.1.2RThe general application rule is modified:(1) in the chapters of this sourcebook for particular purposes; and(2) in BCOBS 1 Annex 1 for certain types of firm in relation to the sale ofstructured deposits.1.1.3RExcept as provided for in BCOBS 1.1.4R, this sourcebook does not apply to:(1) payment services where Parts 6 and 7 of the Payment ServicesRegulations apply; or(2) a person or firm which has permission for accepting deposits but onlyfor the purposes of, or in the course of, an activity other thanaccepting deposits.1.1.4BCOBS 1/2R(1) Chapters 2, 2A, 5 and 6 of BCOBS (except for BCOBS 5.1.10AR to BCOBS 5.1.19 R) and BCOBS 4.3 and 4.4 apply to payment serviceswhere Parts 6 and 7 of the Payment Services Regulations apply.www.handbook.fca.org.uk Release 5 Mar 2021

BCOBS 1 : ApplicationSection 1.1 : General application(2) Chapter 3 of BCOBS applies to payment services where Parts 6 and 7of the Payment Services Regulations apply with the modifications setout in BCOBS 3.1.2 R(2).(3) [deleted]1.1.4AGGuidance on the application of the Payment Services Regulations can befound in PERG 15.1.1.5R BCOBS 2.2A, BCOBS 2.2B, BCOBS 4.1.2G(2A) to (2E), (3A), (6A) and (6B), BCOBS 4.1.4AG(2)(a), BCOBS 4.4, BCOBS 5.1.3AG, BCOBS 5.1.3BG, BCOBS 5.1.5AR, BCOBS 5.1.5BG, BCOBS 5.1.13R, BCOBS 7 (except as appliedby BCOBS 7.1.4R) and BCOBS 8 do not apply to a credit union.1.1.5AR BCOBS 2 (Communications and financial promotions) does not apply to theprovision of payment services, the issuance of electronic money or activitiesconnected to those activities by a credit union, except to the extent that theactivity is connected to the activity of accepting deposits from bankingcustomers.Exclusionof liability.1.1.6RA firm or a provider must not seek to exclude or restrict, or rely on anyexclusion or restriction of, any duty or liability it may have to a bankingcustomer, a payment service customer or an electronic money customerunless it is reasonable for it to do so and the duty or liability arises otherthan under the regulatory system.1.1.7GThe general law, including the Unfair Terms Regulations (for contractsentered into before 1 October 2015) and the CRA, also limits the scope for afirm to exclude or restrict any duty or liability to a consumer.Structureddeposits.1.1.8 Release 5GA firm that carries on the activity of accepting deposits which are structureddeposits should refer to BCOBS 1 Annex 1. Mar 2021www.handbook.fca.org.ukBCOBS 1/31

BCOBS 1 : ApplicationSection 1.1 : General application1BCOBS 1/4www.handbook.fca.org.uk Release 5 Mar 2021

BCOBS 1 : ApplicationAnnex 1Structured deposit business1Application of BCOBS to firms selling structured deposits1.1RThe BCOBS provisions shown below do not apply to a MiFID investment firm, a thirdcountry investment firm or a MiFID optional exemption firm in relation to the sale ofstructured deposits subject to the rules specified in COBS 1.1.1AR(2).BCOBS provisionDescriptionBCOBS 2Communications with banking customers andfinancial promotionsBCOBS 4 (other than BCOBS 4.1.4AGand BCOBS 4.3)Information to be communicated to bankingcustomers1.2GA firm to which BCOBS 1 Annex 1 paragraph 1.1R applies should read and understandthe reference to the appropriate information rule in BCOBS 4.1.4AG as referring toCOBS 2.2A.2R.1.3GA MiFID investment firm, a third country investment firm or a MiFID optional exemption firm that sells structured deposits should consider COBS 1.1.1AR to COBS 1.1.1ABR.These rules specify how certain provisions in COBS apply to a firm in relation to thesale of structured deposits.Financial promotions relating to structured deposits1.4G(1) BCOBS 2 contains rules which apply to a firm when it communicates a financial promotion that is not an excluded communication or when the firm approves a financialpromotion.(2) If a financial promotion relates to a structured deposit, rules relating to past, simulated past and future performance in COBS 4.5A or COBS 4.6 will also apply.Structured deposits as PRIIPs1.5G1.6GFirms are reminded that structured deposits are PRIIPs and that the provisions of thePRIIPs Regulation are also relevant to such products. The PRIIPs Regulation requires aperson who advises on, or sells, a PRIIP to provide a retail investor (as defined in thePRIIPs Regulation) with the key information document for that PRIIP.Where a firm is required to provide information in a key information document, itwill not be required to provide the same information under BCOBS 4.1.[Note: BCOBS 1.1.4R(3) and article 13 of the PRIIPs Regulation] Release 5 Mar 2021www.handbook.fca.org.ukBCOBS 1 Annex 1/1

BCOBS 1 : ApplicationAnnex 11BCOBS 1 Annex 1/2www.handbook.fca.org.uk Release 5 Mar 2021

Banking: Conduct of Business sourcebookChapter 2Communications and financialpromotions Release 5 Mar 2021www.handbook.fca.org.ukBCOBS 2/1

BCOBS 2 : Communications andfinancial promotions2.12Section 2.1 : Purpose and Application: Whoand what?Purpose and Application: Who andwhat?2.1.1GPrinciple 6 requires a firm to pay due regard to the interests of its customersand treat them fairly. Principle 7 requires a firm to pay due regard to theinformation needs of its clients and communicate information to them in away which is clear, fair and not misleading. Principles 6 and 7 also apply toan electronic money institution, a payment institution and a registeredaccount information service provider with respect to provision of paymentservices and the issuance of electronic money. This chapter reinforces theserequirements by requiring a firm and these other providers to pay regard tothe information needs of banking customers, payment service customers andelectronic money customers when communicating with, or making a financialpromotion or a payment service or electronic money promotion to, them andto communicate information in a way that is clear, fair and not misleading.2.1.2RIn addition to the general application rule ( BCOBS 1.1.1 R), this chapterapplies to the communication, or approval for communication, to a person inthe United Kingdom of a financial promotion of a retail banking serviceunless it can lawfully be communicated by an unauthorised person withoutapproval.2.1.3RThis chapter applies to a firm:(1) communicating with a banking customer in relation to acceptingdeposits;(2) communicating a financial promotion that is not an excludedcommunication; or(3) approving a financial promotion.2.1.3AGThis chapter applies to a provider:(1) communicating with a payment service customer or an electronicmoney customer in relation to the provision of a payment service orthe issuing of electronic money and activities connected with thoseactivities; or(2) communicating a payment service or electronic money promotion.BCOBS 2/2www.handbook.fca.org.uk Release 5 Mar 2021

BCOBS 2 : Communications andfinancial promotions2.1.4 Release 5GSection 2.1 : Purpose and Application: Whoand what?In accordance with BCOBS 1 Annex 1 paragraph 1.1R, BCOBS 2 does notapply to a MiFID investment firm, a third country investment firm or a MiFIDoptional exemption firm in relation to the sale of structured deposits. AMiFID investment firm, a third country investment firm or a MiFID optionalexemption firm is subject to the rules specified in COBS 1.1.1AR(2) in relationto the sale of structured deposits. Mar 2021www.handbook.fca.org.ukBCOBS 2/32

BCOBS 2 : Communications andfinancial promotions2.22Section 2.2 : The fair, clear and notmisleading ruleThe fair, clear and not misleadingrule2.2.1RA firm or other provider must take reasonable steps to ensure that acommunication, financial promotion or payment service or electronic moneypromotion is fair, clear and not misleading.2.2.2GThe fair, clear and not misleading rule applies in a way that is appropriateand proportionate taking into account the means of communication and theinformation that it is intended to convey. So a communication addressed to abanking customer, a payment service customer or an electronic moneycustomer who is not a consumer may not need to include the sameinformation, or be presented in the same way, as a communication addressedto a consumer.2.2.3GThe rules in SYSC 3 (Systems and Controls) and SYSC 4 (Generalorganisational requirements) require a firm to put in place systems andcontrols or policies and procedures in order to comply with the rules in COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R(Direct offer financial promotions), COBS 4.10 (Systems and controls andapproving and communicating financial promotions) and this chapter ofBCOBS.2.2.4GPart 7 (Offences relating to Financial Services) of the Financial Services Act2012 create criminal offences relating to certain misleading statements andpractices.2.2.5GA communication, financial promotion or payment service or electronicmoney promotion should not describe a feature of a product or service as"guaranteed", "protected" or "secure", or use a similar term unless:(1) that term is capable of being a fair, clear and not misleadingdescription of it; and(2) the firm or other provider communicates all of the informationnecessary, and presents that information with sufficient clarity andprominence, to make the use of that term fair, clear and notmisleading.2.2.5ABCOBS 2/4GA communication, or payment service or electronic money promotionrelating to a currency transfer service is likely to be misleading if it presentsan exchange rate in a way that is likely to give the impression that the ratewww.handbook.fca.org.uk Release 5 Mar 2021

BCOBS 2 : Communications andfinancial promotionsSection 2.2 : The fair, clear and notmisleading ruleis available to a person or a class of persons if that rate is unlikely to beobtained by that person or class of persons with respect to a typicaltransaction.22.2.5BGThe inclusion of wording in a communication or payment service orelectronic money promotion to the effect that an exchange rate shown isnot available to particular customers will not necessarily prevent thepresentation of the exchange rate being misleading.2.2.6GA communication or a financial promotion that refers to sums available byway of an authorised non-business overdraft agreement should make clearthat such sums constitute borrowing or credit. Release 5 Mar 2021www.handbook.fca.org.ukBCOBS 2/5

BCOBS 2 : Communications andfinancial promotions2.2ASection 2.2A : Summary box for savingsaccountsSummary box for savings accounts22.2A.1R(1) A firm must ensure that a direct offer financial promotion in relationto a savings account includes a summary box in the form set out in BCOBS 2 Annex 1R.(2) In the case only of a direct offer financial promotion on paper, it issufficient for the purposes of (1) if the direct offer financialpromotion is accompanied by a summary box on a separate sheet.(3) The summary box must contain, in the sequence of rows set out inthe table in BCOBS 2 Annex 1R:(a) the headings prescribed in the first column in the table in BCOBS 2 Annex 1R; and(b) the corresponding information described in the second column inthe table in BCOBS 2 Annex 1R.(4) In the case of a direct offer financial promotion communicated byvoice telephony:(a) this rule (except for this paragraph) does not apply; and(b) the firm must provide each of the items of information describedin the second column in the table in BCOBS 2 Annex 1R (exceptfor the information in the row that includes the heading “Whatwould the estimated balance be after [x] months based on a [x]deposit?”) orally in clear, easily understandable language duringthe telephone communication.(5) The firm must present the summary box in clear, easilyunderstandable language and in a prominent way.(6) In the case of a direct offer financial promotion communicated in anelectronic medium which is constrained by space, a firm may amendthe form of the summary box where to do so would make thepresentation of the information clearer in that particular electronicmedium.(7) Where more than one rate of interest may apply to a savings account,the summary box must show each rate of interest with equalprominence. In particular, the lowest rate of interest that may applyto the savings account must not be given any less prominence in thesummary box than the other rate or rates of interest shown in thesummary box.(8) The summary box must not include any information other than theinformation described in the table in BCOBS 2 Annex 1R.BCOBS 2/6www.handbook.fca.org.uk Release 5 Mar 2021

BCOBS 2 : Communications andfinancial promotionsSection 2.2A : Summary box for savingsaccounts(9) The summary box may relate to more than one savings accountprovided that the information in relation to each respective accountis presented in a separate column in the summary box and is clearlydistinguishable from information in relation to other accounts.2.2A.2G(1) The summary box should be completed in accordance with theguidance set out in the notes to the summary box in BCOBS 2 Annex 1R.(2) The requirement under BCOBS 2.2A.1R is to include the rate or ratesof interest that apply to the savings account in the summary boxitself. It is not, therefore, permissible to simply refer in the summarybox to a separate webpage or document where the rate or rates ofinterest can be found.(3) Where the rate of interest that applies to a savings account maychange depending on the period that has elapsed since it was openedor on whether certain conditions are met, a firm should incorporatethe table set out in BCOBS 2 Annex 2G in the row of the summary boxthat includes the heading “What is the interest rate?” unless it wouldbe misleading to do so.(4) The effect of BCOBS 2.2A.1R(1) is that the summary box must beincorporated in the direct offer financial promotion itself. It is notsufficient, for example, to include in a direct offer financialpromotion that appears on a website a link to a separate pagecontaining the summary box. BCOBS 2.2A.1R(2) provides a limitedexception to this where a direct offer financial promotion is on paper,in which case the summary box may accompany the direct offerfinancial promotion as a separate document.(5) The effect of BCOBS 2.2A.1R(8) is that any additional information inrelation to a savings account that a firm chooses to provide mustappear outside the summary box.(6) A firm may wish to include a statement in close proximity to thesummary box that the information provided in it is a summary of thekey features of the savings account and is not intended to be asubstitute for reading the terms and conditions that apply to theaccount. Release 5 Mar 2021www.handbook.fca.org.ukBCOBS 2/72

BCOBS 2 : Communications andfinancial promotions2.2B22.2BRSection 2.2B : General information aboutoverdrafts for personal current accountsGeneral information aboutoverdrafts for personal currentaccounts(1) A firm must ensure that a direct offer financial promotion includesthe information set out in BCOBS 2.2B.2R if:(a) it relates to an account, other than a current account mortgagewhich:(i) is a payment account within the meaning of the PaymentAccounts Regulations; and(ii) does not fall within paragraph (2); and(b) it is made in writing.(2) An account falls within this paragraph if it is offered on terms that:(a) an agreement which provides authorisation in advance for thebanking customer to overdraw on the account cannot arise; and(b) either:(i) the account cannot become overdrawn without priorarrangement; or(ii) no charge is payable (by way of interest or otherwise) if theaccount becomes overdrawn without prior arrangement; and(c) no charge is payable where the firm refuses a payment due tolack of funds.(3) In the case only of a direct offer financial promotion on paper, it issufficient for the purposes of (1

Banking: Conduct of Business sourcebook BCOBS 1 Application 1.1 General application 1 Annex 1 Structured deposit business BCOBS 2 Communications andfinancial promotions 2.1 Purpose and Application: Who and what? 2.2 The fair, clear and not misleading rule 2.2A Summary box for savings accounts 2.2B General information about overdrafts for personal current accounts 2.3 Other general .

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