The purpose of this letter is to advise you that under the rules of the Financial Conduct Authority (“FCA”) we are proposing to categorise you as an Elective Professional Client in respect of the investment services to be provided by LGB Investments, on the basis of your experience and understanding of the services to be provided and transaction(s) contemplated and of the risks involved.
We are proposing to categorise you as an Elective Professional Client on the basis that:
- We have undertaken an assessment of your expertise, experience and knowledge and it gives reasonable assurance, in light of the nature of the transactions or services envisaged, that you are capable of making your own investment decisions and understanding the risks involved (the “qualitative test”);
- In relation to MiFID business in the course of that assessment, at least two of the following criteria are satisfied:
- You have carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;
- The size of your financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds €500,000;
- You work or have worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged, (the “quantitative test”).
We have, on the basis of the information provided, concluded that you meet the qualitative test and that you meet at least two criteria of the quantitative test.
Under the rules of FCA, we are required to set out details of the protections that you will lose by virtue of this categorisation and to seek your written consent to be categorised as an Elective Professional Client. By being categorised as an Elective Professional Client you will lose the protections of the rules which only apply to Retail Clients.
In particular, you should note that rules relating to the following areas do not apply, or only partially apply to Elective Professional Clients:
- Communicating with clients, including financial promotions:
As an Elective Professional Client, the way in which we communicate with you may be different to the way in which we would communicate with a Retail Client. However, we must still ensure that our communications with you are fair, clear and not misleading.
- Distance Communications
As an Elective Professional Client, it is possible that you may not meet the definition of a “consumer”. If this is the case then the requirements relating to distance communications will not apply.
- Information about the firm, its services and remuneration
There are specific pieces of information about the firm, our services and remuneration that we must provide to Retail Clients. We are obliged to provide information on these areas to all clients but the level of detail, medium and timing of the provision is less specific for those clients that are not Retail Clients.
- Client Agreements
As an Elective Professional Client, we are required to have a client agreement with you. However, the medium or this agreement and the timeframe within which it must be agreed are more flexible than they would have been if you were a Retail Client.
When making personal recommendations to you we are entitled to assume that, in relation to the products, transactions and services for which you are classified as an Elective Professional client, that you have the necessary level or experience and knowledge to understand the risk involved in the transaction.
We are not required to provide you with a suitability report for any personal recommendations made.
Finally, you should note that the services of the Financial Ombudsman Service may not be available to you as an Elective Professional Client. Professional clients cannot refer complaints to the Financial Ombudsman Services unless they meet the definition of a consumer, and, generally, only retail clients are entitled to claim compensation under the Financial Services Compensation Scheme. If you agree to be categorised as an Elective Professional Client, please sign and return a copy of this letter. Please note that we will continue to categorise you as a Retail Client for any other services not listed above and you will continue to receive the protections offered by virtue of this categorisation.