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FCA: concerns remain over risk profiling 

May 16, 2014
Max Skjönsberg, Citywire

The Financial Conduct Authority (FCA) remains concerned about advisers’ risk profiling of clients, particularly regarding risk description of clients’ risk category.

Roy Percival, technical specialist at the FCA, said the regulator continued to see problematic areas in its day-to-day supervision of firms.

He said: ‘Are they [firms] giving a sufficiently clear understanding to the client about what is the level of risk the client is signed up to? When we have previously published on this topic we did indicate that descriptions did not adequately quantify potential losses, and what the volatility might look like, and from the work we are doing at the moment we see that continues to be the case.

‘Very few firms are looking at capacity for loss; they are at least not looking at it in an explicit manner.’

Percival said that nine out of 11 risk-profiling and asset allocation tools the FCA had looked at had been flawed.

Read more: Citywire

 
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