COBS 8A Client agreements (MiFID provisions)

This chapter applies to a firm in relation to its MiFID, equivalent third country or optional exemption business.

1. (1) This rule applies to a firm that provides to a client:

   1. (a) an investment service; or

   2. (b) the ancillary service in paragraph 1 of Part 3A of Schedule 2 to the Regulated Activities Order (safekeeping and administration of financial instruments).

2. (2) A firm must enter into a written basic agreement with the client, on paper or another durable medium.

3. (3) The requirement in (2):

   1. (a) only applies to a firm that provides investment advice where the firm will undertake a periodic assessment of the suitability of the financial instruments or services recommended;

   2. (b) does not apply to a firm in relation to providing targeted support.

4. (4) The written agreement in (2) must set out the essential rights and obligations of the firm and the client and must include the following:

   1. (a) a description of the services, and where relevant the nature and extent of any investment advice, to be provided;

   2. (b) if the services covered by the agreement include portfolio management:

      1. (i) the types of financial instruments that may be purchased and sold;

      2. (ii) the types of transactions that may be undertaken on behalf of the client; and

      3. (iii) any instruments or transactions that are prohibited; and

   3. (c) a description of the main features of any services of the type in (1)(b) to be provided, including where applicable:

      1. (i) the role of the firm with respect to corporate actions relating to client instruments; and

      2. (ii) the terms on which securities financing transactions involving client securities will generate a return for the client.

1. (1) A firm must provide a client with:
   1. (a) the terms of any agreement for the provision of investment services or ancillary services; and
   2. (b) the information required by COBS 6.1ZA.5R and COBS 6.1ZA.8R relating to that agreement or to those investment services or ancillary services.

2. (2)

    The firm must provide the terms and information in (1):

   1. (a)

       in good time before the client is bound by the agreement; or

   2. (b)

       if earlier, before the provision of the relevant investment services or ancillary services.

A firm must establish a record that includes the document or documents agreed between it and a client which set out the rights and obligations of the parties, and the other terms on which it will provide services to the client.

[Note: article 25(5) of MiFID]

For the purposes of this chapter, a firm may incorporate the rights and duties of the parties into an agreement by referring to other documents or legal texts.

[Note: article 25(5) of MiFID]