• COBS 2.6.1 COBS 2.6.1 Option for a Professional Client to be classified as a Retail Client

    (a) A Professional Client has the right to elect to be classified as a Retail Client. An Authorised Person must, when first establishing a relationship with such a Person as a Professional Client, inform that Person of:
    (i) that Person's right to be classified as a Retail Client;
    (ii) the higher level of protection available to Retail Clients; and
    (iii) the time within which the Person may elect to be classified as a Retail Client.
    (b) If the Person does not expressly elect to be classified as a Retail Client within the time specified by the Authorised Person, the Authorised Person may classify that Person as a Professional Client.
    (c) If such a Person already classified as a Professional Client by an Authorised Person expressly requests the Authorised Person to be re-classified as a Retail Client, the Authorised Person must re-classify such a Person as a Retail Client.
    (d) If an Authorised Person does not provide Regulated Activities to Retail Clients, it must inform the Person of this fact and any relevant consequences.

    • Guidance

      1. The obligation in Rule 2.6.1(a) applies to an Authorised Person when it first carries on or intends to carry on a Regulated Activity where this involves provision of a service to a Professional Client.
      2. Once an Authorised Person has first classified a Person as a Professional Client, that Professional Client has a right at any time thereafter to ask to be re-classified as a Retail Client to obtain a higher level of protection. Although the right to ask the Authorised Person to be re-classified as a Retail Client is available to the Professional Client, as a matter of good practice:
      (i) the Authorised Person should also periodically review whether the circumstances relating to the particular Client remain the same; and
      (ii) if the Authorised Person becomes aware of any circumstances which would warrant a re-classification of the Client, initiate the process with the Client to give that Client a more appropriate classification.
      3. An Authorised Person cannot provide Regulated Activities to a Retail Client unless it has a Retail authorisation on its Financial Services Permission. However, such an Authorised Person may refer any Person who opts to be treated as a Retail Client to another Authorised Person with the appropriate Financial Services Permission.