How to protect yourself
• We want consumers to enjoy the full benefits that these changes can bring, however there are some important things you should be aware of.
• Be alert – you should be vigilant to fraud when using online payment initiation or account information services. If you don’t know who you are talking to, or there is reason to suspect that the provider is not who they claim to be, don’t disclose your banking security credentials, or other personal or financial information.
• Read the details – always read the terms and conditions of a provider of financial services carefully before signing up, this includes the terms and conditions of services provided.
• Be data savvy – make sure you understand and agree with what access you are granting to your account, how the account information will be used and who it may be passed to.
• Check your statements – keep an eye on your bank statements and get in touch with your bank if you don’t recognise a payment.
Data protection
• Companies that access your data need to comply with data protection law. Banks and other payment services providers will be subject to data protection law. For more information please check the AIFC Data Protection Regulations.
• If you have a concern about a breach of data protection law, you can contact AFSA.
The level of conduct/treatment you are entitled to as a Client
Communications with Clients and Financial Promotions
An Authorised Firm must ensure that any communication with a Client in relation to a Financial Product or Financial Service, or any Financial Promotion that it communicates or approves, is fair, clear and not misleading.
Any communication by an Authorised Firm with a Client, or any Financial Promotion that it communicates or approves, must not attempt to limit or avoid any duty or liability it may have to that Client or any other Person under any applicable AIFC Rules or Regulations.
Note: the term communication" includes, but is not limited to, a Financial Promotion, a client agreement, terms of business, Financial Product terms and conditions, a mandate, power of attorney entered into for the purposes of a Financial Product or Financial Service and any other communication which relates in whole or in part to the provision of a Financial Product or Financial Service.
Suitability and Appropriateness Assessment
The obligation of firms to conduct suitability assessment
When Advising on Investments or Managing Investments for a Client or Providing Trust Services, an Authorised Firm must take reasonable steps to ensure that any recommendation of a service or recommendation or decision to trade on behalf of a Client is suitable for the Client.
When making its recommendation of a service or recommendation or decision to trade on behalf of a Client, the Authorised Firm must assess the Client's investment or other objectives, financial situation and knowledge and experience in relation to the type of Investment or Investment Service concerned, so as to ensure that the recommendation or decision to trade is suitable for that particular Client.
If an Authorised Firm does not obtain sufficient information to assess suitability for the purposes stated above, the Authorised Firm must not recommend an Investment or Investment Service, or make a decision to trade. However, an Authorised Firm may assume, when making a recommendation, or decision to trade, for or on behalf of a Professional Client, that the Client has the necessary knowledge and experience for the purposes stated above, and, if the Client is a Deemed Professional Client, the Client has an adequate financial situation and the necessary knowledge and experience for the purposes assessing the Client's financial situation and knowledge and experience in relation to the type of Investment or Investment Service concerned.
When Advising on Investments for a Retail Client, an Authorised Firm must provide the Client with a suitability report that must include an outline of the advice given, an explanation of why the recommendation is suitable, including how it meets the client's objectives and personal circumstances, and a statement bringing to the client's attention the need for periodic review of suitability (where relevant).
Appropriateness assessment
When Dealing in Investments as Principal, Dealing in Investments as Agent, or receiving and transmitting orders for a Client, an Authorised Firm must ask for information about the Client's knowledge and experience in relation to the type of Investment or Investment Service concerned to assess whether the Investment or Investment Service are appropriate for that Client.Certain exemptions stipulated in the AIFC Conduct of Business Rules apply.
When assessing appropriateness, the Authorised Firm must assess whether the Client has the necessary knowledge and experience in order to understand the risks involved in relation to the relevant Investment or Investment Service. An Authorised Firm may, however, assume that a Professional Client has the ecessary knowledge and experience for the purposes stated above.
If an Authorised Firm considers that the Investment Service, Investment or Transaction is not appropriate for the Client, it must issue a warning to the Client that it is not considered to be appropriate.
Client Agreements
An Authorised Firm must not carry on a Regulated Activity with or for a Person unless the Authorised Firm has provided to that Person the key information as per the AIFC Conduct of Business Rules in good time before the service is provided to enable the Person to make an informed decision relating to the relevant Regulated Activity (certain exceptions apply).
If you are a Retail Client, an Authorised Firm must enter into a written agreement with you. The agreement must set out the essential rights and obligations of both parties.
An Authorised Firm may either provide a person with a copy of the proposed client agreement containing the key information, or provide the key information separately from the client agreement (certain exceptions apply).
Reporting to Clients
Trade confirmations
When an Authorised Firm executes a transaction in the course of Managing Investments for a Client, it must provide a confirmation note to the Client as soon as possible and in any case no later than two business days following the date of execution of the transaction. The confirmation note must include the details of the transaction stipulated in the AIFC Conduct of Business Rules. However, an Authorised Firm may agree with a Professional Client or Market Counterparty to provide reporting on transactions differently from the above stated requirements in relation to content and timing.
Periodic statements
When an Authorised Firm manages Investments for a Client or operates an account containing uncovered open positions in a Contingent Liability Investment, it must promptly and at suitable intervals provide the Client with a written statement (“a periodic statement”) containing the matters stipulated in the AIFC Conduct of Business Rules. For these purposes, a “suitable interval” is every three months; monthly, if the Client’s portfolio includes an uncovered open position in Contingent Liability Investments; or at any alternative interval that a Client has on his own initiative agreed with the Authorised Firm but in any case at least annually.
