2.2 Code of Conduct: Third Parties Flashcards
(45 cards)
What does Chapter 6 cover
Introducing Client TO 3rd party
Does it matter for Chapter 6 if client introduced to 3rd re client matter or not?
No
What do you need in order to introduce client to 3rd under Ch. 6?
Client consent and client fully informed
What, practically speaking, should you consider before introducing client to 3rd
If 3rd appropriately equipped to deal with referral
Two specific cases of referring client to 3rd to think about under Ch.6
Re: financial services and personal injury
Why might referring client to financial service not be in their BI
If FA not independent
What restrictions are there under Ch.6 re: referring client of personal injury case
No prohibited referral fee
What is a prohibited referral fee
Fee cannot be or include claimant’s claim for damages for PI/death
What is not considered a prohibited referral fee
If client being referred = defendant
In what three circumstances does Ch.6 specifically state referral must be in BI of client
M, insurance or protection product (IB(6.1))
When does an arrangement w/ 3rd under Ch.6 generally breach O(6.1 & .3)?
If restricts freedom
What is the issue if S is appointed rep of 3rd and referring clients to 3rd under Ch.6?
Lacks independence
What happens if receiving general commission for referral of client to 3rd?
Account to client for fee by way in IB(1.20) (per O(1.15))
What part of CoC refers to what to do with general commission received for referral
O(1.15)
Three things possible to do with commission to ‘account’ for referral fee under IB(1.20)
Pay, offset, or keep with consent
When are there special considerations for referral fee under Ch.6
If carrying out exempt RA under FSMA
What happens if carrying out exempt RA for referral fee
Account for any benefit under Rule 4.1(c) Scope Rules + record under Rule 6 CoB
When must client be informed in advance of referral fee specifically
If carrying out exempt RA
What chapter covers fee sharing and referrals
Chapter 9
Does a fee sharing/referral arrangement need to be contractual?
No
When can there not be a fee sharing or referral arrangement (in terms of client’s position)
If client subject to criminal Ps, costs publicly funded, or prohibited referral fee
What obligations does firm have to monitor 3rd in fee sharing/referral agreement
Check reputable and continue to be reputable - if not, terminate agreement
When is there a higher risk of independence being compromised in fee sharing/referral agreement
Higher the fee, or if relationship is exclusive
Three things to bear in mind for the Bribery Act 2010
Carry out due diligence, refrain from corporate hospitality, and consider if referral fee = bribe
