FCA bans clauses restricting clients’ choice of future supplier in relation to primary market services.

On 27 June the FCA published its Policy Statement PS17/13 ‘Investment and corporate banking: prohibition of restrictive contractual clauses’. This details the FCA’s decision to ban firms from entering into agreements which contain restrictive clauses, which will take effect from 3 January 2018. The prohibition applies to two types of restrictive clause:

1. Right to act clauses, which give the firm the right to provide future primary market service to the client; and
2. Right of first refusal clauses, which give the firm the right to be offered future primary market service work before the client has the opportunity to offer it to any other provider.