17th January 2019

Defaqto: Key ingredients of suitable advice

Delivering suitable advice doesn’t stop with risk profiling your client. Interestingly, the Financial Conduct Authority (FCA) doesn’t recommend a specific process or tools that firms should use, but firms must take reasonable steps to ensure a recommendation is suitable for their client¹. What’s more, in the very same document, the FCA states that “all firms, regardless of size or type, can carry out good research and due diligence”.

So, what’s actually the FCA’s advice on the subject? In FG11/5 the FCA states that a firm needs to be able to demonstrate how any recommendation of or transaction is suitable for a particular customer given each of the constituent parts of the suitability assessment.

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