On 7 January 2011, the Financial Services Authority published a consultation on guidance on assessing suitability (GC11/1), which relates to chapter 9.2 of the Conduct of Business sourcebook (“COBS”) and focuses on how to establish the risk a customer is willing and able to take and making a suitable investment selection. It is aimed at firms who provide investment advice or discretionary management services to retail customers, but is also relevant to providers of risk-profiling and asset-allocation tools (including those provided as part of a platform).
The FSA’s proposed guidance considers:
- how firms establish and check the level of investment risk that retail customers are willing and able to take (in the wider context of the overall suitability assessment);
- the potential causes of failures to provide investment selections that meet the risk a customer is willing and able to take; and
- the role played by risk-profiling and asset-allocation tools.