What's on my mind

Contracts matter: don’t take chances

12th October 2016

Contracts are a part of commercial life. The main ones affecting intermediary firms are those with clients, employees – and in particular advisers, and also those made with third party suppliers, most commonly life companies, platforms and IT software companies.

It’s a sad fact that some financial intermediaries spend minimal amounts of time reviewing contracts and are reluctant to incur legal fees and so choose in many instances not to seek input from lawyers. This in my experience stems from a perception that either they are “OK”, “cannot be changed”, are “all the same”, or simply a belief that things won’t go wrong.

My experience is that it pays dividends in the longer term to get contracts checked by a lawyer – though not a “generalist” but rather individuals and firms that understand and regularly deal with financial services matters.

Here are some examples of contract “pitfalls” to avoid:

On some occasions, the issues that arise are irritating and cause annoyance and minor financial loss but sometimes the failure to understand the terms of a contract can cause more severe and longer lasting financial damage. Examples include:

Time spent sourcing competent and suitably experienced lawyers and making the time to properly scrutinise and understand the content and consequences of contracts being entered into will result in a better protected business – and a more valuable one.

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