Entire Section

  • COB 2.4.1 COB 2.4.1

    (1) For the purpose of Rule 2.3.3(1)(b), an Authorised Firm must, subject to (4), when first establishing a relationship with a Person as a Professional Client, inform that Person in writing of:
    (a) that Person's right to be classified as a Retail Client;
    (b) the higher level of protection available to Retail Clients; and
    (c) the time within which the Person may elect to be classified as a Retail Client.
    (2) If the Person does not expressly elect to be classified as a Retail Client within the time specified by the Authorised Firm, the Authorised Firm may classify that Person as a Professional Client.
    (3) If a Person al classified as a Professional Client by an Authorised Firm expressly requests the Authorised Firm to be re-classified as a Retail Client, the Authorised Firm must, subject to (4), re-classify such a Person as a Retail Client.
    (4) If an Authorised Firm does not provide Financial Services to Retail Clients, it must inform the Person of this fact and any relevant consequences.
    Derived from DFSA RM149/2015 (Made 11th February 2015) [VER24/04-15]

    • COB 2.4.1 Guidance

      1. The obligation in Rule 2.4.1(1) applies to an Authorised Firm when it first provides, or intends to provide, a Financial Service to a Professional Client.
      2. Once an Authorised Firm has first classified a Person as a Professional Client, under the procedures in Rule 2.3.3(1), that Professional Client has a right at any subsequent time to ask, under Rule 2.4.1(3), to be re-classified as a Retail Client to obtain a higher level of protection. Although the right to ask the firm to be re-classified as a Retail Client is available to the Professional Client, as a matter of good practice:
      a. the firm should also periodically review whether the circumstances relating to the particular Client remain the same; and
      b. if the firm becomes aware of any circumstances which would warrant a re-classification of the Client, initiate the process with the Clientto give that Clienta more appropriate classification.
      3. Where an existing Professional Client is offered a new Financial Service or new financial product, a re-classification might be appropriate if:
      a. the new Financial Service or financial product is substantially different to those previously offered to that Client; and
      b. the Client's experience and understanding appears not to extend to the new Financial Service or financial product.
      4. An Authorised Firm cannot provide Financial Services to a Retail Client unless it has a Retail Endorsement on its Licence. However, such a firm may refer to another appropriately licensed firm any Person who elects to opt-in as a Retail Client.
      Derived from DFSA RM149/2015 (Made 11th February 2015) [VER24/04-15]