Wealth managers in the firing line over advice failings

9th December 2015


The financial watchdog is considering taking action against a number of wealth managers after uncovering failings in the way they assessed the suitability of different investments for their clients.

In a thematic review of the sector, the Financial Conduct Authority (FCA) found that wealth managers and private banks have made progress in demonstrating the suitability of their clients’ portfolios.

However, the regulator says some firms need to make substantial improvements in client information practices as well as ensuring the portfolios they manage truly reflect the needs and risk appetite of their customers.

It is considering enforcement action against five of the 15 firms it reviewed.

It found that some clients investment portfolios did not tally with the attitude to risk or objectives that had been recorded.

The regulator reviewed 150 client files and discovered that  23% had a high risk of unsuitability, 37% were unclear and 41% showed a low risk of unsuitability.

Megan Butler, FCA director of supervision, investment, wholesale and specialists, says:“The UK wealth management industry plays a vital role in delivering financial services.  It is positive that a number of firms have taken steps to improve and demonstrate the suitability of their clients’ investment portfolios.

“We are concerned, however, that some do not appear to have heeded the messages we have put out in recent years, and taken steps to identify and correct problems we’ve previously identified. Getting suitability right is fundamental to providing a portfolio management service that meets customers’ needs.”

Leave a Reply

Your email address will not be published. Required fields are marked *