Conduct of Business Sourcebook - Financial Conduct Authority

Conduct Business Sourcebook

Published: 09/04/2014
COBS took effect from 1 November 2007. It replaced COB (the FSA sourcebook for investment business) and ECO (the specialist sourcebook implementing the Electronic Commerce Directive).

Training

There are several COBS and MiFID e-learning modules currently available through the Industry Training webpages.

Industry Training

Why we changed these rules

COBS was developed to deliver three key aims. Although it covers broadly the same material as the old COB sourcebook, it:

  • is in line with our more outcomes-focussed approach to regulation
  • simplifies the conduct of business regime
  • implements MiFID (and continues to implement other European directive provisions).

Conduct of Business Sourcebook (COBS)

COBS post-implementation review

We committed to undertaking a post-implementation review of the November 2007 introduction of COBS. Our 2008/09 Business Plan confirmed that "the review will assess the success of the new COBS regime against its intended outcomes and in the context of our move to more principles-based regulation. The COBS review will run through to 2010, reflecting our view that it will take time for some outcomes for consumers, firms and markets to become apparent. We will publish the conclusions of the review, and will communicate interim findings in 2008."

We published our Conduct of Business sourcebook (COBS) post-implementation review: 2008 statement on interim findings in December 2008; and our final statement on findings in March 2010.

Supervisory priorities

The changes to our Handbook requirements that took effect from 1 November 2007 are reflected in our on-going supervision of regulated firms. We published our Statement of FSA Supervisory Priorities arising from November Handbook changes in September 2007 to indicate to firms our priority areas of attention.

We undertook a review of MiFID implementation across a sample of wholesale firms between June and November 2008. We published the results of that review "MiFID supervisory priorities – results of wholesale thematic review" in January 2009.

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Simplification of the COB regime

Apart from making COBS more consistent with our risk-based approach to regulation, we have also aimed to make the language, structure and presentation of the sourcebook clearer so that it is easier for users to navigate and understand. COBS is shorter and simpler. We have achieved radical simplification in several areas – some because of the nature of the relevant MiFID provisions and others where we have been able to exercise our own discretion. These areas include financial promotion, the removal of prescribed content for risk warnings, client agreements, dealing, managing and client reporting. In other areas, we have tried to improve significantly the clarity and presentation without changing underlying policy.

We have restructured COBS to fit better with the way that most firms organise their business. There are more chapters in COBS with clearer chapter content making rules easier to locate. We have re-ordered the chapters to start with provisions that are generally applicable and then consecutively tracing the stages of firms' dealings with consumers, from marketing, through closing a contract, and then to post-sale contact.

To improve readability and reduce inadvertent 'gold-plating', we have revisited our implementation of some recent European directives (the Distance Marketing Directive, some elements of the Insurance Mediation Directive and the Electronic Commerce Directive). We have redrafted the relevant directive-driven provisions using the 'copy-out' approach and all copied-out directive-driven requirements are now identified.

Principles-based regulation

The review of the conduct of business regime is a significant milestone for us in our move towards more outcomes-focussed regulation and away from detailed prescriptive rules.

Our April 2007 publication 'Principles-based regulation - Focusing on the outcomes that matter' [PDF] sets out our thinking on our move towards a more principles-based regulatory regime.

Supporting materials

We published our main feedback on most aspects of the conduct of business (COB) review on 31 May 2007 in Policy Statement PS07/6 - Reforming COB regulation. However, the following Policy Statements are also relevant:

  • Policy Statement 07/14 (July 2007). This PS sets out our feedback on the proposals made in CP06/19 for the Article 4 notifications and related matters in certain areas and makes rules and guidance relating to the areas covered by, or associated with, the notifications.
  • Policy Statement 07/18 (October 2007) on responses to CP07/9 - 'Conduct of Business regime: non-MiFID deferred matters'. This was a separate consultation on the application of COBS in areas outside the scope of the Markets in Financial Instruments Directive (MiFID).

More relevant documents.

Relevant industry guidance

To help firms determine how best to meet our expectations under more outcomes-focussed regulation, we see a greater role for sector-specific guidance and support provided by industry associations, professional bodies or groups of firms. We published a Policy Statement in September 2007 on our framework for recognising industry guidance.

We have confirmed the guidelines below (that are relevant to COBS) which are published by MiFID Connect and available on the MiFID Connect website. Our confirmation of these MiFID Connect guidelines means that the FSA will take into account a firm's use of the guidelines when exercising its regulatory functions. But these guidelines are not mandatory and are not FSA guidance.

  • 10 August 2007: Guideline on the application of the suitability and appropriateness requirements under our rules that implement MiFID in the UK.
  • 21 August 2007: Guideline on the application of the investment research requirements under our rules implementing MiFID in the UK.

Additional information

The material we have provided on these COBS webpages (including case studies, FAQs, examples of good and bad practice) is intended to help you understand what we expect in an outcomes-focussed regulatory environment. For information about the status of Handbook guidance and supporting material, please refer to our statement on 'Giving guidance and the status of guidance'.

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Finding FSA documents

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You will find some FSA branded documents on the FCA site.

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