Transact Communication to Clients
8th October 2007
Changes to Transact Terms & Conditions
Over the last two weeks clients holding investments on the Transact Wrap platform will have received a letter from Transact detailing changes to their Terms and Conditions. In spite of the length of the communication, the general message for Fensham Howes clients is that it is "business as usual" and no further action is necessary.
The requirement for Transact to write to clients has come about as a result of the UK adopting the Markets in Financial Instruments Directive (MiFID) from the European Union. The changes are intended to provide greater clarification on the technical aspects of how Transact carries out client instructions to buy and sell investments (covered in point B (4) of the letter).
In the letter Transact are also required to make it clear that, in general, they are not required to assess the suitability of non-complex investments (e.g. units or shares in collective investment schemes) or the service provided or offered to clients. As a result they state that:
‘you will not benefit from the protection of the Financial Services Authority’s rules on assessing suitability’.
For the avoidance of all concern we would like to point out that clients acting on our recommendations are fully protected by the Financial Services Authority (FSA) rules on assessing suitability. We work in partnership with our clients to establish and manage their financial planning strategies, and it is our responsibility to assess the suitability of any instrument we recommend or service we provide. Transact’s statement is only applicable to individuals who engage with them without the guidance of an FSA registered adviser.
The final point is that Transact must now gain formal acceptance from each client of the terms on which it carries out buy and sell instructions. Transact have decided to do this by stating that unless they hear otherwise from a client, they will assume that the client formally accepts the terms. Our general advice to clients with investments held on Transact is that they take no further action in relation to the letter - thus formally accepting the terms.
We continue to monitor the terms and technical aspects of the Transact service, and also the impact of directives such as MiFID. It remains the case, as always, that if you have a query or concern about any communication you receive in relation to your financial affairs then you should not hesitate to contact us.