On November 19, the Financial Services Authority published the first issue of its Capital Markets Bulletin in which it focuses on the provision of valuation services by UK banks. The FSA observed that banks providing their clients with formal valuation statements is a key part of an independent determination of the market value of clients’ investment portfolios. Where banks provide this service, they must ensure compliance with:
- FSA Principle 2 (to conduct business with due skill, care and diligence), Principle 6 (to treat customers fairly) and Principle 7 (requiring clear, fair and not misleading communications) across all aspects of their valuation services, and
- Rule 4.2.1(1) of the FSA’s Conduct of Business Sourcebook (COBS) for communications to be clear, fair and not misleading.
The bulletin sets out numerous examples of industry best and better practices and contrasts weaker practices in valuation services identified during the FSA’s review.