Investigation prompts City regulator to order 260 firms to review advice given to clients or face disciplinary procedures
Wealth managers have been accused by the Financial Services Authority (FSA) of putting their clients into inappropriate or high-risk investments. The City watchdog said firms have “significant widespread failings” after its investigations revealed that four out of five client portfolios had a “high risk of unsuitability”.
The FSA reviewed the suitability of client portfolios in a sample of firms across the wealth-management industry. But the damning results revealed that 14 out of 16 firms – which the FSA refused to identify – posed a “high or medium-high risk of detriment to their customers”, with 79 per cent of files having a high risk of unsuitability. The firms reviewed ranged from small independent wealth advisers to the UK arms of global banks, suggesting that problems are endemic in the industry.