1. Assessing suitability: Research & Due Diligence
(R&DD)

2. Agenda Why look at R&DD? Thematic Review Key takeaways and next steps
What we did
Key findings
Areas for consideration (including good/poor practice)
Key takeaways and next steps

3. Why look at R&DD? What is the purpose of R&DD?
Understanding recommended solutions
Funds/products/services
Two fundamental questions
Why are we interested R&DD?
- A root cause of unsuitable advice
- To understand firms’ approaches

4. What we did Pre-consultation 13 Advisory firms 3 Provider firms
7 Third party consultancies

5. Key findings Majority of firms demonstrated elements of good practice
Often not replicated across the entire approach
Importance of culture of challenge

6. Criteria for selecting an investment solution
Prescription
Various criteria used for selecting investment solutions
Link to customer needs and objectives
Review of criteria

7. Assessing risks Volatility Various factors to consider including:
Risks of underlying investment
Product structure & complexity
Presence/Absence of protections
Fact vs opinion
Familiarity with product/provider/assets

8. Provider due diligence
Provider’s ability to continue providing the service:
Financial strength
Commitment to the market
Broad understanding of firm’s position
Entrusting the firm with client money

9. Platform due diligence
Is it appropriate to recommend a platform?
Criteria for the platform
Objective approach rather than ‘retro-fitting’
Does the platform:
Only receive remuneration permitted by the rules?
Present retail investment products without bias?

10. Expertise Skills, knowledge & expertise Outsourcing to a third party
Competence of the third party
Cannot delegate responsibility for suitability

11. Implementation
Effective communication of R&DD results throughout the firm
Alerts
Training/guidance

12. Ongoing reviews Constant change Revisit and refresh
Structure of markets
Proposition offerings
Your client banks
Revisit and refresh
Periodic reviews vs ad hoc reviews

13. Assessing suitability web-page
Key takeaways
Culture of challenge
Revisit & refresh
Size doesn’t matter
TR16/1
Assessing suitability web-page
Watch this space

14. South West – March 2016 
Northern Ireland – April 2016
North East – May 2016 
East Midlands – June 2016 
Wales – July 2016 
Scotland – September 2016 
East Anglia – October 2016 
West Midlands – November 2016
London – December 2016 
Yorkshire and the Humber – January 2017 
South East – February 2017 
North West – March 2017 

15. QUESTIONS?