What To Do When Your Client Reneges On Their High-net-worth Certification

At a glance

The following scenario should sound familiar. You are an Independent Financial Adviser ("IFA") and have taken on clients referred by outside sources. You have been assured by those third-party sources that every client referred, though classified by you as retail, has self-certified as a high net worth individual. You've seen the certificate and written statement in each case and your compliance department has diligently filed them with the clients' records. You have arranged for some of these investors, at their instigation to invest in some product or another on an execution-only basis. Your terms of business (which they have read and signed) confirm you'll facilitate this, but with no duty to advise. And just to be on the safe side, your compliance department asks them to re-certify high net worth, year on year, which they willingly all do.