COBS 15 – Client Reporting Requirements
1. Chapter Summary
COBS 15 sets out the rules firms must follow when providing clients with reports on their investments and transactions. This chapter ensures transparency by requiring firms to deliver clear, timely, and accurate information on client portfolios, investment performance, and costs and charges. These requirements are crucial for enabling clients to monitor their investments effectively and make informed decisions, while maintaining trust in financial services.
2. Applicability
Applies primarily to firms conducting MiFID business and providing investment services or portfolio management to retail clients. The reporting requirements focus on investment firms offering discretionary management, advisory, or execution-only services with client-facing portfolios. Professional clients and eligible counterparties may have reduced or different reporting obligations.
3. Key Rules and Their Meaning
- COBS 15.2.1R – Reporting Obligations Firms must provide clients with periodic reports containing information about the investments held, their value, transactions executed, and any costs or charges incurred. In practice: Clients receive clear, understandable summaries to track their holdings and assess service quality.
- COBS 15.3.1R – Content of Reports Reports must include at least: details of the portfolio holdings, valuation, costs and charges breakdown, and a narrative explanation if applicable. Nuance: The content should be comprehensive but tailored to client understanding, avoiding jargon.
- COBS 15.4.1R – Frequency of Reports Reports must be delivered at least annually or more frequently if agreed or required by the client or product type. Meaning: Ensures clients stay informed without unnecessary over-reporting.
- COBS 15.5.1R – Delivery Method and Timing Firms must deliver reports in a durable medium and within prescribed timeframes after the reporting period ends. In practice: This includes electronic delivery where agreed, and ensuring accessibility for clients.
4. Interpretation Notes / FCA Expectations
- FCA guidance stresses the importance of clear, accurate, and balanced information in client reports to avoid confusion or misleading impressions.
- Firms should ensure cost and charge disclosures are sufficiently detailed to enable clients to understand the impact on returns.
- The FCA expects firms to keep evidence of report delivery and client acknowledgements for compliance verification.
- Reports should be consistent with other communications and financial promotions to avoid mixed messages.
5. Practical Considerations for Firms
- Develop standardized report templates that meet content and format requirements.
- Implement systems for automated and timely generation and delivery of client reports.
- Maintain records demonstrating delivery dates, client consent for electronic communication, and any client queries or follow-up actions.
- Train client-facing staff to explain report contents clearly and manage client expectations.
- Include internal controls and audits to ensure ongoing compliance with reporting obligations.
6. Related Handbook References
- COBS 10 – Financial promotions and communications with clients
- COBS 13 – Client categorisation and appropriateness (relevance for tailored reporting)
- COBS 14 – Suitability requirements impacting reporting content
- PRIN 2A – FCA Principles for Businesses emphasizing transparency and client interests
- SYSC 10 – Systems and controls for compliance monitoring
7. Regulatory Focus / Enforcement Risk
- The FCA frequently reviews client reporting standards as failures can lead to client detriment and market distrust.
- Key risk areas include incomplete cost disclosures, late or non-delivery of reports, and overly complex or unclear report language.
- Firms should prioritize robust controls around data accuracy and timely communication to mitigate enforcement risk.
- Recent FCA thematic reviews underscore the increasing importance of cost transparency and narrative explanations in reports.