Financial Advisory Agreement Template for England and Wales

A financial advisory agreement is a written contract between an FCA-authorised financial adviser and a client, setting out the scope of advisory services, the adviser's regulatory permissions, fee structure, suitability assessment process, and the client's instructions. Under FSMA 2000, advice on investments must be given by an authorised firm.

Under FCA COBS rules, independent advisers consider the whole market and all retail investment products when making recommendations. Restricted advisers can only consider certain products or providers. The agreement must clearly disclose which type of advice is being offered before any recommendation is made, and this classification cannot be changed mid-engagement without fresh disclosure.

Since July 2023, the FCA Consumer Duty (PS22/9) requires advisers to act to deliver good outcomes across four key areas: products and services, price and value, consumer understanding, and consumer support. The financial advisory agreement must reflect these obligations, including how the adviser monitors ongoing suitability and communicates with the client.

Under COBS 6.1A, advisers must provide clients with a clear statement of the fees or charges for their service, expressed as a cash amount or, if that is not possible, as a percentage. Ongoing adviser charges must be reviewed regularly. Clients have the right to stop ongoing fees; the agreement should set out how to do this.

Under COBS 9A, a financial adviser must assess the client's knowledge, experience, financial situation, investment objectives, and risk tolerance before making any recommendation. A suitability report must be provided in writing. Advice that does not meet the suitability standard entitles the client to redress through the FCA, Financial Ombudsman Service, or the courts.

No, for most retail investment products. Since the Retail Distribution Review came into effect in 2013, FCA-regulated advisers cannot accept commission on retail investment products. Fees must be charged directly to the client. The agreement must state the exact fee basis. Inducement rules under retained MiFID II also restrict payments from third parties to advisers.

The agreement must contain a GDPR-compliant description of how the adviser collects, processes, stores, and shares the client's personal and financial data under the Data Protection Act 2018 and UK GDPR. Clients have the right to access, correct, and request deletion of their data. Advisers must have a lawful basis for each processing activity.

The FCA requires all regulated advisers to have a written complaints procedure and to handle complaints within eight weeks. If the client is not satisfied with the firm's response, they can refer the complaint to the Financial Ombudsman Service (FOS) free of charge. The FOS can award compensation up to 430,000 pounds for eligible complaints.