FCA rules state firms must disclose both:
(a) The generic charging structure used (COBS 6.1A.11); and
(b) The total adviser (client specific) charge payable (COBS 6.1A.24).
(a) will be disclosed in ‘up front’ disclosure documents, such as initial disclosure documents, proposition documents or terms of business.
(b) will typically be disclosed in client specific documents, like fee agreements, engagement letters or client agreements.
In accordance with COBS 6.1A.25, a firm may include the information required by the rule on disclosure of total adviser charges (b) in a suitability report. ATEB would urge caution in this respect however and our recommendation is that the total adviser charge be disclosed in a separate, additional document, but confirmed in the suitability report. There are numerous reasons for this:
- The FCA rule requires the disclosure of (b) ‘as early as practicable’; while this is not defined, we suggest it should be as early as is feasibly possible because it cements the financial agreement between you and the client. If you disclose (b) in the suitability report, you have already undertaken significant work to prepare the recommendation before disclosing the total charge to the client and hence the client may dispute or refuse to agree to the charge.
- Although recommended, not all suitability reports will be issued pre-sale. Post sale SRs may not meet the ‘as early as practicable’ requirement.
- There are numerous additional and specific requirements for the disclosure of (b) (see COBS 6.1A.24 onwards and the FCA disclosure assessment template); therefore, a specifically designed document’ like a fee agreement, will better cater for these requirements.
Finally, and to be clear, you should always disclose all fees and charges in the suitability report; however, to avoid potential non-disclosure and breach of the total adviser charges rule (b), we recommend that a separate and tailored document be used for this purpose, which should be issued early in the advice process.



CIPs and Independence – what’s all the fuss about?
Paul Jay Compliance 2020, FCA, MiFID, Pension, PI, platform, Switch, Update
Many firms are now operating their own preferred investment solution – a Centralised Investment Proposition (CIP) – which they seemingly recommend to most, if not all, of their clients. Firms regularly raise questions with ATEB around the use of a CIP. What firms are usually concerned about is whether this impinges upon their ability to […]