Open a group's website and download the client agreement. If the first page names one company and the payment page charges another, the document is already wrong, and it will be wrong in the way that matters: at the moment a client disputes something and asks who they contracted with.
Terms of business are entity level documents. In a group with a licensed company and a second one, there are two sets, and they differ in more places than the header. Getting this right is dull work, and it is the cheapest protection a firm can buy.
What actually changes between the two
The commercial mechanics can be identical. The regulatory content cannot. A licensed entity's terms carry the regulator's name and registration number, the client categorisation applied and the consequences of it, the order execution policy summary, the conflicts policy, the client money arrangements, the complaints route including any external scheme, and the compensation scheme position. An entity in a light touch territory has none of those to declare, and saying nothing is correct there. Copying the licensed entity's disclosures into the offshore document is worse than leaving them out, because it states protections the client does not have.
Product terms diverge too. Retail leverage caps, marketing restrictions, bonus rules and negative balance treatment are set by regime. If your EU terms promise negative balance protection because the rules require it, that promise should not silently appear in a document for an entity that does not operate it, and it should not silently disappear from a document for one that must.
The clauses that carry the most weight
A few sections do most of the work when something goes wrong, and they deserve real drafting attention rather than a template paste.
- Counterparty identity: the full legal name, company number, registered address and, where applicable, licence number of the entity the client is contracting with.
- Client categorisation: which category applies, what protections attach to it, and how a client may request a different one. The mechanics are set out in client categorisation rules.
- Client money: whether funds are held in segregated accounts, with whom, and what happens on insolvency. See client fund segregation.
- Execution: whether the firm deals on own account or transmits orders, and how price is formed.
- Amendment: the notice period for changes, the method of notice, and what happens if the client does not accept.
- Complaints and dispute resolution: the internal route, the timescale, and the external scheme if one covers the entity.
The amendment clause is the one firms regret. Terms change when rules change, and if the clause requires individual signed consent for every edit you will be unable to comply with a rule change on the regulator's timetable.
These are the areas to discuss with counsel, not a drafting template. Client agreements are governed by local contract law as well as financial regulation, and a clause that is standard in one jurisdiction is unenforceable in another. Have each entity's terms drafted or reviewed locally.
Versioning is the part nobody builds
Terms get updated. Fees change, a rule changes, a product is added. Two years later a client disputes a charge and the question is not what your current terms say, it is what the terms said on the day they accepted, and whether they accepted at all.
That means every version needs a version number and an effective date, the full text of every past version needs to be retrievable, and each client record needs to store which version was accepted, when, and by what action. A checkbox that writes a timestamp and a version identifier is enough. A checkbox that writes nothing is a gap you cannot close later. The related obligations are set out in record keeping and retention periods.
Notice of change follows the same discipline. Send it, record that it was sent, record delivery where you can, and record the response. In practice this is a portal feature more than a legal one: the client signs in, sees the new version, accepts, and the acceptance is stamped.
Where the terms and the licence contradict each other
The failure mode worth naming: terms drafted for the group rather than the entity, then applied to whichever company took the client. It produces contradictions that are obvious in hindsight. A complaints clause pointing at an ombudsman scheme that does not cover the offshore entity, discussed in financial ombudsman schemes. A compensation scheme reference in a document for a company that participates in none. A governing law clause naming a court in a country where neither party is established.
Each of those is a promise the firm cannot honour, and a regulator reading it will treat it as a misleading statement to clients rather than a typo. The fix is procedural: the terms for each entity are owned by one named person, reviewed against that entity's permissions at every change, and published from a source where the entity is a field rather than a copy paste. Firms running the two document sets out of one system, with the entity attached to the client record, stop making this mistake. Firms maintaining two PDFs by hand keep making it.
None of this wins clients. It decides how a dispute ends, which over a few thousand accounts is the same thing.
"If your terms say the client may complain to an ombudsman that does not cover the entity they signed with, you have written a promise you cannot keep."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- Terms of business belong to an entity, so a group with two companies maintains two sets that differ in the regulatory sections, not just the header.
- Never copy a licensed entity's disclosures into an offshore document: stating protections the client does not have is worse than stating nothing.
- Version every set, keep past versions retrievable, and record which version each client accepted and when.
- Complaints, compensation and governing law clauses are where group level drafting produces promises the entity cannot keep.
Frequently Asked Questions
Can one client agreement cover two entities in the same group?
In practice no. The agreement identifies the counterparty and sets out that counterparty's regulatory status, client money arrangements and complaints route, and those differ between a licensed company and an unlicensed one. A single document covering both will either overstate protections for one or understate them for the other.
How should changes to terms be communicated?
Through the notice mechanism set out in the amendment clause, with the notice period it specifies, and with a record that the notice was sent and what the client did next. Most firms handle this in the client portal so the new version, the acceptance and the timestamp all sit on the client record.
How long do old versions of the terms need to be kept?
For as long as the applicable record keeping rules require for client agreements in that jurisdiction, which typically runs for years after the relationship ends. Keep the full text of every version rather than a change log, because the question later is what the client agreed to, word for word.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.