Law firm CMS Cameron McKenna has warned advisers that their suitability reports are failing to meet FSA standards, which could open firms up to the risk of regulatory action.
Speaking at the Personal Finance Society annual conference in Coventry today, CMS Cameron McKenna partner Simon Morris said he has seen many instances where suitability reports have not been up to scratch while representing advisers who have been visited by the FSA.
He said: “Advisers need to ask themselves whether they have the systems and controls in place to ensure suitability in every incident.”
Morris told delegates that he had come across countless cases where the FSA has challenged a firm following an Arrow visit or as part of a thematic review and found that suitability documents across the sample of client files were not adequate.
He said: “I have looked at suitability report after suitability report and it does not properly describe why that sale was appropriate for each customer’s requirements and why other products were discounted.
“I look at a file and I do not see evidence of suitability and that is what the FSA challenges. And if and when the FSA requires you to do a retrospective review of 2,000 cases that is when the FSA starts taking disciplinary action because it also shows you do not have the right systems and controls in place.”