<img src="https://certify.alexametrics.com/atrk.gif?account=b2hlr1ah9W20em" style="display:none" height="1" width="1" alt="">
    Login
    Get started

    Suitability tests and MiFID II

    Published on 10 Nov 2017 by Lynne Callister

    mifid ii suitability tests

    According to figures released by the Financial Conduct Authority (FCA), over £27bn has been paid out already to those who were missold PPI, with an estimated 64 million PPI policies missold in the UK from 1990 to 2010.

    With MiFID II set to be implemented in January 2018, will clients fair any better when the new regulations take effect?

    Under the new rules, firms are obliged to ensure that when providing investment advice and/or portfolio management, anything that is recommended to their clients must be suitable and appropriate for their needs. To do this, firms must carry out suitability assessments for all recommendations (including buy, as well as sell or hold investments).

    Assess these 3 steps to ensure suitability tests are carried out appropriately under MiFID II:

    1. The client's knowledge and experience - ie the sorts of service, transactions and regulated mifid ii suitability tests investments they are familiar with; the type, volume and frequency of transactions; and their level of education or profession.
    2. Their investment objectives - ie risk preferences, risk profile and tolerance, and the purpose of the investment.
    3. Their financial situation - ie the source and extent of their income, assets (including liquid assets, investments and property), ongoing financial commitments and their ability to bear losses.

    All of this information must be reviewed and updated at least annually for firms providing ongoing advice.

    Want to know more about FCA Compliance?

    As well as 30+ free compliance training aids, we regularly publish informative FCA compliance blogs. And, if you're looking for a training solution, why not visit our FCA compliance course library.

    If you've any further questions or concerns about FCA compliance, just leave us a comment below this blog. We are happy to help!

    Leave a comment

    Tick

    Free Trial: Compliance Essentials

    Skillcast Essentials is our best-selling library and there's a reason for that. Essentials library provides comprehensive coverage of the key compliance / conduct issues that companies in the UK face today.

    Request now

    10 Worst Cyber Crimes Analysed

    Cyber crime creates a huge financial drain on the UK economy every single year. Nearly half of UK businesses reported a cyber attack, according to specialist insurer Hiscox. According to recent ...

    Read More
    Six of the Best Books on Governance, Risk Management & Compliance

    We didn't become compliance learning experts overnight. We stand on the shoulders of some great minds in the Governance, Risk Management and Compliance (GRC) community. Our Pick of the Best Books on ...

    Read More
    5MLD is Coming: Threat or Opportunity?

    Many cryptocurrency firms will feel that more money-laundering regulations are a hindrance to their agile business models, but perhaps they should try and see the opportunities too? The appeal of ...

    Read More
    Skillcast Giving Back

    Skillcast promotes ethical behaviour not only to our customers but to society in general. We do this through education, charitable donations and managing our impact on the environment. We help ...

    Read More