FSA: Guidance Consultation: Proposed guidance on Assessing Suitability: Establishing the risk a customer is willing and able to take and making a suitable investment selection

Financial Services Authority

On January 6 2011, the Financial Services Authority ("FSA") published a consultation paper on the suitability of investment advice. The consultation paper recommends that financial advisers should assess the suitability of investments, adopt risk-profiling tools and develop processes to identify clients who are risk averse. The FSA was concerned that financial advisers had used insufficient risk profiling analyses and in doing so, had failed to take appropriate account of clients' capacity for loss. The FSA warned that financial advisers' explanations of risks posed by investments were unacceptable, and that the use of risk profiling tools could lead to flawed outputs. The FSA has requested feedback and comments on the guidance paper by 28 January 2011.

Date

January 7, 2011