Finalised guidance Assessing suitability

Financial Services AuthorityFinalised guidanceFinancial Services AuthorityPage 1of 31 March 2011 Assessing suitability :Establishing the risk a customer is willing and able to take and making a suitable investment selectionContents1 Our Establishing the risk a customer iswilling and able to investment Adopting third-party Summary of changes to final guidance as a result of guidanceAssessing suitability : Establishing the risk a customer is willing and able to take and making a suitable investment selectionFinancial Services AuthorityPage 2of 311 Overview high number of unsuitable investment selections1we see in the pensions and investment markets is still a significant concern, as highlighted in the Financial Risk Outlook Retail Intermediaries Sector Digest is a specific risk to our consumer protection Conduct of Business sourcebook (COBS) requires a firm to take reasonable steps to ensure that a personal recommendation, or decision to trade, is suitable for its customer.

1.3 Of the investment files assessed as unsuitable between March 2008 and September 2010, we rated half of these as unsuitable on the grounds that the investment selection failed to meet the risk a customer is willing and able to take. 1.4 The level of failure in this area is unacceptable. We have taken, and continue to take, tough action to

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