FCA appropriateness rules

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • FCA appropriateness rules
  • Background to appropriateness requirements
  • When does the appropriateness test apply?
  • Application of appropriateness requirements for non-MiFID, non-IBIP and loan-based P2P activities
  • Loan-based P2P platforms
  • Application of appropriateness requirements for MiFID, and IBIP activities
  • Insurance-based investment products
  • Assessing appropriateness
  • Knowledge and experience
  • Do experience AND knowledge need to be assessed?
  • More...

FCA appropriateness rules

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

Background to appropriateness requirements

The Financial Conduct Authority’s (FCA) rules on ‘appropriateness’ and the appropriateness test (which are contained in chapters 10 and 10A of the FCA's Conduct of Business sourcebook (COBS) were originally introduced under the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID) with the aim of increasing investor protection in the non-advised market. The objective of the test is to help firms determine whether their clients have enough knowledge and experience to understand the risks involved in a product offered or service demanded. Knowledge and experience have to be assessed in a way that is appropriate to:

  1. the client in question

  2. the service, and

  3. the product

MiFID (Directive 2004/39/EC) has been replaced by the recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II Directive) and the Markets in Financial Instruments Regulation (Regulation (EU) 600/2014) (MiFIR) (together the MiFID II framework). Both the MiFID II Directive and

Related documents:

Popular documents