In the recent regulatory round up from the FCA stress was placed on the actions they are and will be taking on suitability issues.
The FCA view is that customers should be at the centre of a firm’s model. A successful wealth management service is entirely dependent on providing clients with suitable investment portfolios.
Accordingly, helping firms to improve their standards on suitability is now one of the FCA’s priorities in supervising the sector.
Over the past six years, three separate phases of work have been undertaken, culminating in the Thematic Report published in December 2015. The FCA state they have now clearly explained their expectations and highlighted both good and poor practice.
This is a clear warning shot. Advisers should now be under no doubt as to what is expected. Firms will need to consider whether and how they can consistently demonstrate suitability across their client files and take the necessary steps to address any shortcomings they identify.
The FCA is preparing to visit a number of firms at the end of the year to see what action they have taken. They state they know from experience that firms can and do get it right, so it is expected all firms will have taken steps to improve where they need to.
Put simply, they are saying it is not complex rules that are the problem but poor practices.
This will remain a focus of FCA work until firms across the sector can demonstrate that they are delivering suitable investment portfolios.
Already some firms have been asked for data. It is likely that these firms will be in the sights of the FCA. At Complyport we have acted as expert witnesses commenting on the quality of suitability standards. We have also worked as Skilled Persons and helped firms with due diligence when seeking to purchase advisory firms. “Suitability” covers a number of steps in the advice process.
It is never too late to demonstrate your firm puts the client at the centre of the process and takes suitability seriously. We offer an independent review of your standards and, if necessary, can advise on improvements.
[Contact-Team]
