The FCA have published extensive guidance regarding suitable investment advice.

FG11-05 : Establishing the risk a customer is willing and able to take and making a suitable investment selection

  • “We have noticed an increased reliance on asset-allocation tools and model portfolios. It is our view that tools, and other structured approaches to selecting products and funds can be a useful starting point for an investment selection, when used as part of a robust suitability process.”
  • “We are concerned that, where firms solely use volatility as a proxy for risk and ignore other risks, this can result in investment selections that, for example, include complex assets that may not be suitable given the risk the customer is willing and able to take”

CP12-09 : Consumer redress scheme in respect of unsuitable advice to invest in Arch cru funds

  • “it is no defence for an IFA to say that they relied, or were justified in relying, on statements made by a product provider or a third party’s opinions about the suitability of an investment”
  • “the duty to determine suitability cannot be delegated”
  • “it is up to the IFA to determine the risks in the product

30 May 2013 : FCA’s One Minute Guide to Due Diligence

TR15-12 : Wealth management firms and private banks: suitability of investment portfolios

  • “firms should ensure that they understand the nature and risks of products or assets selected for customers”

TR16/1 : Assessing Suitability: Research and Due Diligence

  • “When firms have CIP’s, they must ensure the advice is suitable for the individual client”
  • “Research and due diligence needs robust systems and controls in order to be effective. To be effective, file reviews should involve a genuine assessment of the recommendation rather than simply checking the presence of research and due diligence”
  • The FCA will publish second consultation paper on the implementation of the Markets in Financial Instruments Directive (MiFID II) later this year, which will include requirements in relation to research on products.

Regulation is in place to protect investors against taking unknown risks. Find out more about this risk and the funds that have failed here.


The information contained in this website is for general information purposes only. The information is provided by sigMacity Limited and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk. The Trademarks on the website are the property of the respective organisations and are used under licence.

In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

Through this website you are able to link to other websites which are not under the control of sigMacity Limited. We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.

Every effort is made to keep the website up and running smoothly. However, sigMacity Limited takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.