Financial Conduct Authority (FCA) UK Regulation Sample Exam

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When is a client agreement required for non-MiFID designated investment business?

For professional clients only
Upon client request
For a retail client
For any type of client

The correct answer is: For a retail client

A client agreement is specifically required for retail clients in the context of non-MiFID designated investment business due to the additional protections and regulatory requirements that apply to consumers compared to professional clients. Retail clients are typically deemed to have less experience and resources, which necessitates clear terms and conditions outlined in a written agreement to ensure they understand the nature of the investment services being provided and their rights within the relationship. This requirement fosters transparency and aligns with the aim of protecting consumers by making sure they are fully informed before entering into any investment agreements. By having a structured client agreement in place, firms can ensure that retail clients receive the appropriate level of service and that their interests are safeguarded in accordance with FCA regulations.