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Client Agreement Requirements

Under the new professional investor system, which will come into effect on 25 March 2016, intermediary companies will be entitled to certain exemptions from the code`s requirements for professional institutional investors and professional business investors (according to the new paragraph 15.2 of the code). This includes the discretion to waive the need to enter into a client agreement when dealing with these categories of professional investors in accordance with the new 15.4 paragraph of the Code. Intermediaries dealing with Corporate Professional Investors must meet the valuation requirements set out in paragraph 15.3A and new paragraph 15.3B of the code in order to avail themselves of the exemptions in paragraph 15.4. The findings of the consultation confirm that when an intermediary decides to enter into a client agreement with institutional Professional Investors and Corporate Professional Investors, it is not necessary to include the new clause, since the requirement for a customer agreement may be waived.8 However, it is not certain that an intermediary will have to comply with the new paragraphs 15.3A and 15.3B if the client agreement is reached with a professional business investor. 46 (2) Investment firms provide the information required under Sections 47 to 50 in a timely manner before providing investment or ancillary services to clients or potential clients. For as comprehensive a customer agreement as possible, you should add details on how all disputes between you and the customer are resolved. This part of your contract is not just for your client. There may be times when you have to move away from a project, and with a termination contract, the whole process will be much smoother. With professional billing, you can simplify your business finances while creating trust for your customers.

Given its importance, the theme of the new CFS “tightening clause” (which must be included in the client contracts of financial intermediaries) has been presented in several previous editions of this review. Sections 47 to 50 of the MiFID-Org Regulation require a company to inform a customer of the information: after giving detailed advice, the CFS has issued a new clause that intermediaries must include in all customer agreements. The new clause stipulates that intermediaries must ensure that any financial product offered or recommended to a client for sale, taking into account their financial situation, investment experience and investment objectives, is appropriate for the client. It is well-founded, but differs from the requirement for intermediaries to ensure the adequacy of recommendations or invitations to clients (the aptitude requirement) covered by paragraph 5.2 of the Code of Conduct for persons licensed or registered with the Securities and Futures Commission (Code). The new clause gives investors the contractual right to claim damages under the client contract if the intermediary does not meet the requirement. While the final result and the entry into force of changes to the customer agreement are not yet available, intermediaries should be aware of the need to amend customer agreements. It would be wise for intermediaries to verify compliance with the new paragraph 6.5 of the code, even though these provisions may not come into force for some time.

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