38 Appendix three Appendix three - Consequences of categorisation as a professional client Regulatory consequences of an adviser firm being classified as a professional client How an adviser can explain the impact of these consequences for the investor 1. Information A. Communication with clients A firm must ensure that its communications with all clients are fair, clear and not misleading and meet the Consumer Understanding outcome. The way in which a firm (DIM) may communicate with professional clients (about itself, its services and products, and its remuneration) may be different from the way in which it communicates with retail clients. A firm’s obligations in respect of the level of detail, medium and timing of the provision of information are different depending on whether the client is a retail or professional client. However, given that the DIM is providing products and services for whom the endusers are retail clients, it must ensure that its communications are targeted at retail, not professional clients. Although the DIM may treat us as a Professional Client, we will treat you, our investor, as a retail client. We will ensure that the risks of any Discretionary Investment Management Service we select is explained to you clearly and the risks are clearly disclosed. Although the DIM may treat us as a Professional Client, its products and services are designed on the basis that the end-users are retail clients. Consequently, it must ensure that its communications can be easily understood by retail clients. B. Information on costs and charges A firm must provide clients with information on costs and associated charges. The information provided may not be as comprehensive for professional clients as it must be for retail clients. Both we and the DIM need to undertake a ‘value assessment’. When selecting to work with a DIM we will review the ‘value assessment’ they provide on their service and take this into account when selecting a discretionary management service. We will provide you with clear information on the costs and charges of any services we provide you as well as the costs and charges involved in any discretionary management service we may select as well as confirmation that the DIM service we are selecting represents fair value. Consequences of categorisation as a professional client
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