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Suitability letter guidance confirmed

The FSA has published its guidelines for a simplified, less prescriptive version of the suitability letter as part of its final disclosure measures for the new conduct of business sourcebook.

The FSA says the document, branded the suitability report, must set out the client’s demands and needs, explain why the firm has concluded the recommended transaction is suitable for the client and include an explanation of any possible disadvantages of the transaction for the client.

The regulator also clarified other requirements that have been retained as consistent with the objectives of Mifid- in the aftermath of the FSA’s recent decision to move menu and IDD from rules to guidance.

These include the requirements for an adviser to be called independent, the simplified prospectus or key facts document and disclosure of how much commission or commission equivalent they are paying.

FSA head of retail investment policy Andrew Sykes says: “These measures allow us to retain a number of important safeguards for consumers. We are only retaining measures where we have been able to show that the benefits of doing so will outweigh the costs.”

Distribution Technology head of financial planning Simon Farrant says: “The cost to change menu and IDD documentation and the fact they remain as guidance may be sufficient to keep firms using the existing documents for now.”


Skandia challenges firms on net figures

Skandia is calling on other life companies to publish their net sales figures, saying they are the key measure of the success of a product provider.The firm’s interim results show a small rise in net cash inflows to £2.4bn for the first half compared with £2.3bn in the first half of 2006.Skandia believes too many […]

Bacon or cheap insurance?

Vegetarian life insurance has been a hot topic since Animal Friends Insurance, the pet insurance specialists, said they would give vegetarians and fish-eaters an average 6 per cent discount on their life premiums.

Time is needed to make fee move

JP Morgan Asset Management has raised concerns that IFAs may not be given the time and regulatory support to move to the fee-based model favoured by the retail distribution review.In its IFA survey, Surviving the storm, JPMAM says advisers need to be give sufficient time to make the transition and help should be made available […]

2016 Global Survey of Individual Investors: How is investor behaviour rewriting the job description for financial professionals?

Trapped between expectations for near double-digit returns and strong apprehensions about investing in persistently volatile markets, investors worldwide are of the opinion that professional financial advice is worth the fee. But even though they believe individuals who work with a financial professional are more likely to achieve their goals, investors have a clear vision of […]


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