FCA says wealth managers still failing clients

The Financial Conduct Authority said some wealth managers and private banks need to make substantial improvements in client information practices as well as ensuring the portfolios they manage truly reflect the needs and risk appetite of their customers.

Megan Butler, FCA director of supervision for investment, wholesale and specialists, said although wealth managers and banks have made progress in demonstrating the suitability of their clients’ portfolios, “some do not appear to have heeded the messages we have put out in recent years, and taken steps to identify and correct problems we’ve previously identified”.

“Getting suitability right is fundamental to providing a portfolio management service that meets customers’ needs,” she added.

The watchdog's thematic review revealed that many firms still have to make substantial improvements in gathering, recording and regularly updating customer information to support the investment portfolios they manage for customers.

In addition, it showed that firms need to ensure that their governance, monitoring and assessment arrangements are sufficient to meet their regulatory responsibilities in relation to suitability.

The UK wealth management industry manages over 1.8 million portfolios for customers in the UK and has over £600bn of their assets under management.