Suitability, advice, non-advised transactions and discretionary management standards – for advisers, discretionary fund managers and compliance staff – two half-days
INTRODUCTION
Course objectives
The role of compliance in the advice process
Benefits of good fact-finding and suitability letters
Risks of non-compliance
MiFID and non-MiFID business – finding the rules
THE SCOPE OF THE SERVICE
Choosing clients
Agreeing the scope of advice – full or focused advice
No personal recommendation relied upon – generic, execution-only and insistent customers
KNOW YOUR CUSTOMER
Understanding existing investments and arrangements
Risk-profiling – and the various types of customer and product risks
Partially completed forms
SUITABILITY
COBS 9 and 9A and how they work
Understanding the scope of the mandate
Know your product – researching and selecting what to recommend
Balancing elements with different risk profiles
Use of non-correlated asset types and compliance risks
General suitability issues
Mixing investments and protection
Uses of platforms
Duty to review existing investments
Leverage
Non-standard assets
Particular Product Problems
Analysing funds
Identifying assets and compliance risks within
Tax and other wrappers
Uses of derivatives
Absolute return offerings
Pensions issues
Unsuitable Customers for Pensions
Transfers – Occupational Schemes, GPPs, Existing Personal Pensions
Drawdown
Annuities
SIPPs
CONSTRUCTING A COMPLIANT SUITABILITY REPORT & OTHER DISCLOSURE REQUIREMENTS
Regulatory requirements – disclosure of mandates and risks and suitability reports
Form – concise, readable, clear
Substance – explanation for why product recommended and disclosure
Live demonstration of such a letter
MONITORING ADVICE AND DISCRETIONARY FUND MANAGEMENT STANDARDS
Compliance obligations under SYSC
Core risk management
Competent employee rule
KPIs and management information that is useful
Spotting future problems – indications
Taking action when things go wrong