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Client’s best interest rule: Difference between revisions
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{{ | {{a|cobs|{{subtable|{{COBS Section 2.1}}}}}} | ||
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''. | |||