The FCA turns the spotlight on fund ratings Posted 04-08-2017



FT Adviser reports that the FCA has highlighted fund ratings and model portfolios a particular area of concern in its newly launched study of the platform market : https://www.ftadviser.com/regulation/2017/07/17/mps-and-fund-ratings-brought-into-fca-platform-study/

The key points are:

  • “the FCA said it would conduct further analysis on fund ratings”
  • “as well as covering the £600bn platform industry, the FCA said advisers, wealth managers and other distributors would also be studied”
  • “We will assess whether platforms’ risk profiling tools match investors to a portfolio suited to their risk level”
  • “The FCA also said it wanted to understand the impact fund ratings had on a platform’s ability to construct tools for advisers”
  • “The study will also include elements of discretionary wealth manager offerings – which the regulator said could be considered an equivalent to platforms in some cases”

This echoes

  • CP12/09:
    • “the duty to determine suitability cannot be delegated”
    • “it is up to the IFA to determine the risks in the product
  • TR15/12:
    • “firms should ensure that they understand the nature and risks of products or assets selected for customers”
  • TR16/01:
    • “When firms have CIPs, they must ensure the advice is suitable for the individual client”

The case for firms to use AssetQ (to evidence they understand the risks in the products they recommend) continues to gain strength.


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