Cancellation of client contracts
Cancellation of client contracts

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Cancellation of client contracts
  • Cancellable contracts
  • Start of cancellation period
  • Disclosing the right to cancel
  • Exercising a right to cancel
  • Record keeping
  • Termination
  • Payment for services provided before cancellation
  • Shortfall
  • Obligations on cancellation
  • More...

This Practice Note explains the rules for the cancellation of client agreements. The rules, which are contained in chapter 15 of the Financial Conduct Authority's (FCA) Conduct of Business sourcebook (COBS 15) are relevant for:

  1. most firms who provide retail financial products based on 'designated investments' (as defined in the glossary to FCA Handbook), and

  2. firms who have distance contracts with consumers for 'designated investment business' (as defined in the glossary to FCA Handbook) or as part of the activity of issuing electronic money

COBS 15 implements Article 6 of Directive 2002/65/EC (the Distance Marketing Directive) and Article 186 of Directive 2009/138/EC (the Solvency II Directive).

Cancellable contracts

The following contracts can be cancelled by consumers within the time limits indicated:

Where one transaction gives a consumer more than one right to cancel, firms need to give them the longest cancellation period applicable

Firms can give consumers longer or additional rights, but these rights need to be at least as favourable to the consumer.

Start of cancellation period

Cancellation time limits begin either:

  1. from the day contacts are concluded (except for life policy contracts, where the time limit begins from the time when consumers are informed contracts are sealed), or

  2. from the day consumers receive the contractual terms and conditions and any other pre-contractual information required under COBS or the Packaged Retail and Insurance-based Investment Products Regulation (Regulation (EU) 1286/2014) (PRIIPs Regulation)

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