The FCA published a thematic review report (TR15/12) on the suitability of discretionary and advisory investment portfolios managed for retail customers by a sample of wealth management and private banking firms on 9 December 2015. The review also considered the firms' governance and control environment.
The FCA assessed 150 randomly selected client files from 15 firms and found that:
- 23% indicated a high risk of unsuitability;
- 37% were unclear, in that there was insufficient information for the FCA to make an assessment or the information presented was inconsistent or confusing; and
- 41% showed a low risk of unsuitability.
These results were an improvement from the position found in the FSA’s previous work on suitability in 2011, where the proportion of high risk or unclear files was 79%.
The report included a specific list of good and poor practice observations.
The FCA said that all firms providing discretionary and advisory portfolio management services to retail customers should review the report’s findings, consider whether any of the issues the FCA identified apply to their own businesses, and take action where necessary.