The following Financial Services practice note provides comprehensive and up to date legal information covering:
BREXIT: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance, see Practice Notes: The impact of Brexit on the MiFID II regime, Impact of Brexit: UCITS—quick guide and Impact of Brexit: Insurance distribution-quick guide.
This Practice Note explains the Financial Conduct Authority's (FCA) rules on inducements (for example fees, commission or non-monetary benefits) including rules prohibiting inducements and exceptions to the prohibition.
The UK regulatory regime has always had prescriptive rules on the types of benefits that are payable in respect of dealings in retail investment products. Historically the FCA’s rules on inducements were primarily contained in chapter 2.3 of the FCA’s Conduct of Business Sourcebook (COBS) and implemented inducements requirements contained in:
the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID)
the MiFID implementing Directive (Commission Directive No. 2006/73/EC)
the fourth Undertakings for Collective Investment in Transferable Securities Directive (Directive 2009/65/EU) (UCITS IV) and
the UCITS IV Implementing Directive (Commission Directive 2010/43/EU)
MiFID has been replaced by the recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II Directive) and the Markets in Financial Instruments Regulation (Regulation
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