Client Agreements Flashcards
Before entering into an agreement, or providing any services, relating to designated investment business with a retail client and MiFID business with regard to a professional client what must a firm provide a client with?
o Terms and conditions
o Information about the firm and its services
under which circumstances must information/ T&Cs be provided to clients?
BEFORE entering into an agreement, or providing any services, relating to designated investment business with a RETAIL CLIENT and MiFID busines with regard to a PROFESSIONAL CLIENT,
Under which circumstances may T&Cs / Information about a firm ad its services be provided after the client is bound?
bound if the agreement is via a distance communication – e.g. via a website)
When a client enters an agreement what must be kept in terms of record keeping?
o Must record that this information has been sent out
o The LONGER or 5 years, or duration of the relationship
o (indefinitely for pension transfer, opt-out and FSAVC
What section of what regulation is this from? It is ILLEGAL to communicate an invitation or inducement to engage in investment activity (a financial promotion) unless:
FSMA Section 21 Restriction
List the unless
It is ILLEGAL to communicate an invitation or inducement to engage in investment activity (a financial promotion) unless:
It is issued by an authorised person; or
The content is approved by an authorised person (they are fully accountable for everything within that promotion)
What is the focus of FSMA Section 21 essentially on?
Retail clients
Under FSMA Section 21 what must all content be? And what must a firm to do achieve compliance with this?
Fair, clear and not misleading
o Make it clear if capital is at risk
o For quoted yields, give a balanced impression of both the short- and long-term prospects for the investment
o For complex charging structures, include sufficient information taking into the account the needs of the recipients
o Names the FCA as its regulator
o For packaged products or stakeholder products not produced by the firm, give a fair, clear and not misleading impression of the producer or manager of the underlying investment.
Under FSMA section 21 Specifically when communicating with retail clients, what does a firm need to ensure about information?
o Includes the name of the firm
o Does not emphasise benefits without giving an indication of risks
o Is likely to be understood by the average member of the group it is directed at
o Does not disguise, diminish or obscure important statements or warnings
Under FSMA section 21 when making comparisons, what must these be/ include?
For comparisons, they must be meaningful and balanced, and the source of the information must be included
Under FSMA section 21 for tax treatment, what must these include?
For Tax Treatments, that the treatment depends on individual circumstances must be prominently displayed.
Under FSMA section 21 when showing past performance, what must these include?
o Must include at least the immediately preceding five years (or the whole period if product price less)
o Must include prominent warning that past performance is not a reliable indicator of future performance
Under FSMA section 21 when giving a direct offer financial promotion what must these include if likely being received by a retail client?
Information in the rules on information disclosure; and
Additional appropriate information so the client is able to take investment decisions on an informed basis
What is a direct offer
recipient bound in a deal by responding e.g. on a website
What are the conditions when firms can make a cold call?
The recipient has an existing client relationship and envisages a call (e.g. opt in tick boxes)
The call relates to a generally marketable packaged product (regulated collective investment schemes – not one that offers high volatility)
The call involves regulated investments that are readily realisable securities (liquid)
When making a cold call what time should these take place?
An appropriate time of day
When making a cold call what should the caller identify
Themselves, the firm and the reason for contact
What must be given to the client on a cold call?
Clarify whether the client would like to continue
If an appointment is arranged on a cold call what must be given?
A contact point (if appointment arranged so they have a chance to change their mind)
Records for what must be kept indefinitely?
pension transfer, opt-out or FSAVC
Records for what must be kept for six years?
Life policies and pensions
Records for what must be kept for three years?
Non-MiFID business
Records for what must be kept for five years?
MiFID business
What can and can’t investment advisors do in terms of charging and renumeration?
o From 2013 retail advisers cannot earn commission set by the retail product provider
o Firms now receive adviser charges agreed with the client in advance
What is the Temporary product intervention Rules (Financial Services Act 2012)
o FCA can ban products that pose unacceptable risks to consumers
o Bans may be up to 12 months without consultation
