4.2.1. Requirement to enter into a client agreement

Subject to COB 4.2.3, an Authorised Firm must not carry on a Regulated Activity with or for a Person unless:

1. (a) the Authorised Firm has provided to that Person the key information specified in Schedule 2 in good time before the service is provided to enable the Person to make an informed decision relating to the relevant Regulated Activity; and
2. (b) if the Person is classified as a Retail Client, there is a written client agreement entered into between the Authorised Firm and that Person.

Guidance: Meaning of "key information"

In this COB 4.2, "key information" means the information specified in Schedule 2.

4.2.2. Relationship between key information and client agreement

An Authorised Firm may either:

• (a) provide a person with a copy of the proposed client agreement containing the key information; or
• (b) provide the key information separately from the client agreement.

4.2.3. Where it is impracticable to provide key information or enter into a client agreement

An Authorised Firm may provide a Financial Product or Financial Service to a Retail Client or Professional Client without having to provide key information and/or enter into a client agreement in accordance with COB 4.2.1 where it is impracticable to do so, provided that the Authorised Firm:

• (a) first explains to the Client why it is impracticable to enter into a client agreement; and
• (b) enters into a client agreement as soon as practicable thereafter.

Guidance: Example of where it may be impracticable

It may be impracticable to provide the key information or enter into a client agreement if a Client requests the Authorised Firm to execute a transaction on a time-critical basis.

4.2.4. Records of explanation to the Client

Where an Authorised Firm has given the explanation referred to in COB 4.2.3(a) verbally, it should maintain sufficient records to enable the Authorised Firm to demonstrate to the AFSA that it has provided that explanation to the Client.