Wealth managers and private banks have made progress in demonstrating the suitability of their clients’ portfolios, a thematic review by the Financial Conduct Authority (FCA) has found. However, 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. The FCA will be following up on these issues with these firms.
Megan Butler, FCA director of supervision, investment, wholesale and specialists, said: “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.”
The FCA encourages all firms providing discretionary and advisory portfolio management services to retail customers to review its findings, consider whether any of the issues identified apply to their own businesses, and take action where necessary. To further help firms, the FCA has provided some examples of good and poor practices observed in its review.
