Clifford Chance

SFC seeks to abolish non-reliance clauses with new suitability requirement

11 December 2015

Following an extensive consultation, the SFC has published a new clause which must be included in all client agreements. The new clause, published as part of a change to the Professional Investor Regime (PIR), requires financial intermediaries to ensure that any financial product solicited for sale or recommended to a client is reasonably suitable for the client, regardless what is stated in the client agreement. The clause will enable investors to claim for damages under the client agreement where an intermediary sells or recommends products that are not reasonably suitable. The SFC has said that institutions should review their client agreements immediately to ensure that they include the new clause and that no terms of their existing client agreements are inconsistent with it.

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