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.



FCA provide guidance on SMF16/17 appointments
Richard Foster Compliance FCA, ML, PI, training
Firms should have heads of compliance and money laundering reporting officers (MLROs) who are suitably competent and capable of effectively performing the roles. It is appropriate to carefully consider how individuals can demonstrate this ahead of seeking regulatory approval. The FCA have recently issued guidance which should help firms decide if an individual candidate is […]