Client’s best interest rule: Difference between revisions
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the much talked-about, seldom iunderstood, TCF provision. To be read in conjuction with the FCA’s “PRIN” general principles and, for those of you, my pretties, who like to dive ''deeper'', the [[File:FCA DP18-5 discussion paper.pdf|FCA’s discussion paper on conflicts of interest]] published in July 2018. | |||
The general principles in play here are: | |||
*Principle 2 '''Skill, care and diligence''' – A firm must conduct its business with due skill, care and diligence. | |||
*Principle 6 '''Customers' interests''' – A firm must pay due regard to the interests of its customers and treat them fairly. | |||
*Principle 7 '''Communications with clients''' – A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. | |||
*Principle 8 '''Conflicts of interest''' – A firm must manage [[conflicts of interest]] fairly, both between itself and its customers and between a customer and another client. | |||
*Principle 9 '''Customers: relationships of trust''' – A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment. | |||
There is much general lofty aspiration here, but not much by way of flesh on the bones. This, generally, is how the [[JC]] likes regulations — self explanatory, and demanding the application of common sense — but it does lead nervous compliance officers, who, having been beaten and bloodied in the foregoing decade don’t always have much of a conceptualisation of common sense — to adopt a bunker mentality. So a few remarks about what the fairness requirement should not mean. You know how we like disclaimers, folks, and this being turf into which the better angels of [[Magic circle law firm|the professional advisorate]] tend not to rush — consider our disclaimer absolute. Take the following as youj find it, and don’t blame me if you wind up in jail. | |||
===== It shouldn’t mean you have to offer the same product, on the same terms, to everyone. ===== | |||
That would be madness. But you see it advanced. | |||
:''If we offer this groundbreaking product — ''tranched synthetic collateralised emissions credit derivatives, denominated in [[bitcoin]]''<ref>Laugh, but this once happened. Expecting it to be a jaunty icebreaker, the JC once suggested this to a commodity structurer in London — I mean a ''leveraged exposure to hot air'', right? hahaha!!! — But he looked sadly and said, “we tried that but we couldn’t get the rating agencies over the line. Pity; the P&L projections were awesome.”</ref> to one special client, then we will have to offer it to ''everyone''. | |||
Revision as of 09:49, 7 September 2020
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The JC’s Reg and Leg resource™
UK Edition
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the much talked-about, seldom iunderstood, TCF provision. To be read in conjuction with the FCA’s “PRIN” general principles and, for those of you, my pretties, who like to dive deeper, the FCA’s discussion paper on conflicts of interest published in July 2018.
The general principles in play here are:
- Principle 2 Skill, care and diligence – A firm must conduct its business with due skill, care and diligence.
- Principle 6 Customers' interests – A firm must pay due regard to the interests of its customers and treat them fairly.
- Principle 7 Communications with clients – A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
- Principle 8 Conflicts of interest – A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
- Principle 9 Customers: relationships of trust – A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.
There is much general lofty aspiration here, but not much by way of flesh on the bones. This, generally, is how the JC likes regulations — self explanatory, and demanding the application of common sense — but it does lead nervous compliance officers, who, having been beaten and bloodied in the foregoing decade don’t always have much of a conceptualisation of common sense — to adopt a bunker mentality. So a few remarks about what the fairness requirement should not mean. You know how we like disclaimers, folks, and this being turf into which the better angels of the professional advisorate tend not to rush — consider our disclaimer absolute. Take the following as youj find it, and don’t blame me if you wind up in jail.
It shouldn’t mean you have to offer the same product, on the same terms, to everyone.
That would be madness. But you see it advanced.
- If we offer this groundbreaking product — tranched synthetic collateralised emissions credit derivatives, denominated in bitcoin[1] to one special client, then we will have to offer it to everyone.
- ↑ Laugh, but this once happened. Expecting it to be a jaunty icebreaker, the JC once suggested this to a commodity structurer in London — I mean a leveraged exposure to hot air, right? hahaha!!! — But he looked sadly and said, “we tried that but we couldn’t get the rating agencies over the line. Pity; the P&L projections were awesome.”