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Wealth management: meeting suitability requirements?

The Financial Conduct Authority (FCA) has published its findings of a review of suitability of retail investment portfolios provided by wealth management and private banking firms. Whilst some progress has been made in demonstrating the suitability of clients’ portfolios, significant concerns remain around the management and use of client information. The regulator has referred a number of firms to Enforcement or issued S166 Skilled Person requirements.

The FCA's findings

The thematic review found that:

  • firms need to ensure the composition of portfolios managed accurately reflect the investment needs and risk appetite of clients;
  • improvements are still required in collecting, recording and regularly updating client records;and
  • firms' governance, monitoring and assessment arrangements are often inadequate for meeting their regulatory responsibilities in relation to suitability.

What firms need to do now

Firms providing discretionary and advisory portfolio management services to retail clients must review the FCA's report

Firms should ensure they are able to demonstrate how the portfolios they manage are suitable and consider whether any of the issues identified apply to them. Firms will be required to take any necessary action promptly. 

To discuss the implications of the report for your firm, whether you need to consider a review of your systems and controls or would like support in responding to a S166 please contact Noline Matemera on +44 (0)333 006 0734 or Emily Benson on +44 (0)333 006 1471.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com


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