COB 3.4.2

(1) Subject to (2), an Authorised Firm must not recommend to a Client a financial product or financial service, or execute a Transaction on a discretionary basis for a Client, unless the Authorised Firm has a reasonable basis for considering the recommendation or Transaction to be suitable for that particular Client. For this purpose, the Authorised Firm must:
(a) undertake an appropriate assessment of the particular Client's needs and objectives, and, financial situation, and also, to the extent relevant, risk tolerance, knowledge, experience and understanding of the risks involved; and
(b) take into account any other relevant requirements and circumstances of the Client of which the Authorised Firm is, or ought reasonably to be aware.
(2) An Authorised Firm may, subject to (3) and (4), limit the extent to which it will consider suitability when making a recommendation to, or undertaking a Transaction on a discretionary basis for or on behalf of, a Professional Client if, prior to carrying on that activity, the Authorised Firm:
(a) has given a written warning to the Professional Client in the form of a notice clearly stating that the Authorised Firm will consider suitability only to the extent specified in the notice; and
(b) the Professional Client has given his express consent, after a proper opportunity to consider the warning, by signing that notice.
(3) Where an Authorised Firm manages a Discretionary Portfolio Management Account for a Professional Client, it must ensure that the account remains suitable for the Professional Client, having regard to the matters specified in (1) (a) and (b).
(4) If an Authorised Firm has, before the Commencement Date, given a written warning to a Professional Client in the form of a notice stating that it will not consider suitability, the firm must, no later than 6 months after the Commencement Date, either:
(a) issue a new warning that meets the requirements in (2); or
(b) carry out a full suitability assessment in accordance with (1).
(5) In (4), Commencement Date means the day on which Rule-Making Instrument No. 259 of 2019 comes into force.
Derived from DFSA RM56/2008 (Made 1st July 2008). [VER14/07-08]
[Added] DFSA RMI259/2019 (Made 1st January 2020). [VER34/01-20]