Chapter 6 - Client Protection

Question 1

What are the approved exemptions to KYC requirements?

Answer 1

• Other regulated firms in the financial sector.
• Companies listed on a regulated market.
• Beneficial owners of pooled accounts held by notaries or independent legal professionals.
• Public authorities.

Question 2

What categories are usually considered “per se” professional clients?

Answer 2

• Any entity required to be authorised or regulated to operate in the financial markets
• Large undertakings
• governments, certain public bodies, central banks
• institutional investors

Question 3

What is the difference between “per se” and eligible counterparties (ECPs)?

Answer 3

ECP list excludes large undertakings

Question 4

If someone is acting as an Agent for another, who is the Bank’s client?

Answer 4

The Agent

Question 5

How can recategorisation be carried out?

Answer 5

• on a general basis; or

- on more specific terms, for example, in relation to a single transaction only

Question 6

What is the accepted practice for frequency of reconciliations?

Answer 6

As often as necessary

Question 7

If reconciliation shows a discrepancy - who makes up the shortfall?

Answer 7

The bank/firm

Question 8

What is “internal reconciliation”?

Answer 8

Cross-checking the records showing each client’s

entitlement to client money against the records of client money the firm holds

Question 9

What is “external reconciliation”?

Answer 9

Cross-checking the internal client money accounts against the records of third parties (banks, for) with whom client money is held.

Question 10

What is the general rule for client comunication?

Answer 10

Fair, clear and not misleading. The fair, clear and not misleading rule applies in a way that is appropriate
and proportionate, taking into account the means of communication and the information that the
communication is intended to convey

Question 11

How frequently must Invesment Managers provide periodic statements to clients?

Answer 11

At least every 6 months, unless:
- the client may request statements three-monthly instead;
- if they receive deal-by-deal confirmations, and certain higher-risk investments are excluded, the
statement may be sent every 12 months;
- where the client has authorised that their portfolio be leveraged, the statement must be provided
monthly.

Question 12

If investment management companies breach limits for a client, how soon must they inform that client?

Answer 12

End of same business day

Question 13

Can an individual be an appointed representative for Financial Promotion purposes?

Answer 13

Not usually - this status is held by the firm, not individuals