Principles of Client Care

Question 1

What the three fundamental principles of client care (three Cs)?

Answer 1

• customer due diligence
• client care letter
• conflict checks

Question 2

What is client due diligence (CDD)?

Answer 2

Identifying your client and verifying their identity on the basis of documents, date or information from a reliable source.

Question 3

When must CDD be carried out?

Answer 3

It must be carried out when:

• establishing a new business relationship
• carrying out an occasional transaction
• if you suspect money laundering or terrorist financing

Question 4

How can you identify your client?

Answer 4

Being told their details such as name and address

Question 5

How do you verify the identity of your client?

Answer 5

Verification can be done by:

• obtaining original documents (passports or utility bills)
• conducting electronic verification
• obtaining information from regulated people (solicitors and banks)

Question 6

Why must you carry out a conflict check?

Answer 6

As you cannot act where there is a conflict of interest

Question 7

What conflicts are you looking for?

Answer 7

• conflict with your own interest
• conflict with another client of the firm (including in different offices)

Question 8

When should you carry out a conflict check?

Answer 8

When taking a new instruction from both new and existing clients

Question 9

Who should conflict checks be carried out against?

Answer 9

• the client’s name (and any parents or subsidiary companies)
• the client’s company number (and that of any parents or subsidiary companies)
• the names of any counter parties to the matter

May also include:

• company name and number of company being bought
• directors of any company

Question 10

When should you send a client care letter?

Answer 10

Should send one at the beginning of a new matter.

Question 11

When should you send a client care letter when the client is a repeat customer?

Answer 11

May be appropriate just to send annual client care letters and then shorter letters when they receive a new instruction for a new matter

Question 12

What information is required to be in a client care letter?

Answer 12

No information is ‘required’ to be in a client care letter.

There is not set format set by the SRA

Question 13

What is information is good practice to be in a client care letter?

Answer 13

• confirmation of client’s instructions and options
• general information on each party’s responsibilities
• cost information
• details of who will be dealing with the matter
• complaints procedure

Question 14

What would be good grounds for terminating a client’s retainer?

Answer 14

• you cannot obtain clear instructions
• continuing to act for the client would break the law or breach the Codes
• client has failed to pay its bills (not previously considered good reason, normal to now have express contractual provision saying retainer will be terminated on failure to pay)

Question 15

What is not a good reason for terminating a retainer?

Answer 15

For your own self-interest

Question 16

When can you not accept instructions?

Answer 16

• accepting instructions would mean you break the law
• if you cannot provide a competent or timely service
• if you are not authorised to act on your client’s behalf