The following Financial Services guidance note provides comprehensive and up to date legal information covering:
This Practice Note highlights key aspects of key materials produced by the Financial Conduct Authority (FCA) and its predecessor, the Financial Services Authority (FSA) since March 2011 about the advice process. In particular, the note considers:Finalised guidance: assessing suitability—Establishing the risk a customer is willing and able to take and making a suitable investment selectionFinalised guidance: assessing suitability—Replacement business and centralised investment propositionsFG15/1—Retail investment adviceTR16/1: Assessing suitability: Research and due diligence of products and services
FSA-finalised guidance on assessing suitability—establishing the risk that a customer is willing to take and making suitable investment decisions (the March 2011 Guidance)
FSA-finalised guidance on assessing suitability—replacement business and centralised investment decisions (the July 2012 Guidance)
FCA-finalised guidance on retail investment advice (the January 2015 Guidance), and
FCA thematic review report on assessing suitability—research and due diligence of products and services (the February 2016 Report)
This Practice Note will be useful for firms who wish to ensure that they are complying with their suitability obligations. For more information about the FCA's suitability requirements, see Practice Note: FCA Suitability rules.
During a number of surveys that preceded the March 2011 Guidance, the FSA found a significant number of investment files at investment firms unsuitable due to the fact that investment selections failed to meet the risks customers were willing and able to take. As a result the FSA took (and the FCA will continue to take) tough action to deal with failings by authorised firms.
The FSA issued its March 2011 Guidance in order to:
combat the high number of unsuitable investment selections it sees in the pensions and
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