2017年-FCA英国金融行为监管局_assessing_suitability_research_and_due_diligence_of_products_and_services_thematic_review_tr16_1_3页_134kb

Regulator Assessment Summary: Qualifying Regulatory Provisions

Core Content

The Thematic Review (TR16/1) titled Assessing Suitability: Research and Due Diligence of Products and Services was conducted by the Financial Conduct Authority (FCA) in February 2016. The review aimed to evaluate the research and due diligence practices of regulated advisory firms in the UK, with the objective of ensuring that these practices are sufficient to protect customers from poor advice and potential harm.

The review identified three main drivers of poor customer outcomes:

• Due diligence practices
• Incorrect risk profiling
• Costs related to replacement business when an adviser's recommendation is unsuitable

The FCA emphasized that while the objective of research and due diligence is consistent across different investments, services, and providers, the time and effort required may vary depending on the firm's familiarity with the provider and the assets involved.

Scope and Methodology

The review involved:

• Assessment of 13 advisory firms to understand their research and due diligence processes
• On-site visits and staff interviews where appropriate
• No individual file reviews were conducted
• Seven external consultancy firms and three product/service providers were also visited to gain insight into the wider market

However, compliance with FCA rules was not assessed for the external firms.

Findings

The thematic review found varying degrees of good practice in research and due diligence across advisory firms. Key factors contributing to better practices included:

• An effective corporate culture of challenge
• In-built challenge mechanisms in the research and due diligence process
• Individuals with appropriate knowledge, skills, and expertise to challenge the firm's approach

Firms with poor corporate governance culture were found to have weaker research and due diligence processes.

Actions and Mitigating Measures

• Three firms were required to attest the effectiveness of their research and due diligence processes
• One firm was instructed to complete a past business review

Affected Businesses and Estimated Impact

• Type of business affected: Regulated advisory firms
• Estimated number of affected firms: 6000
• Estimated cost of familiarization with the report: £288,000
  • Based on an estimated £48/hour rate for compliance staff
  • Assumption: Each firm spends 1 hour to read, digest, and disseminate the report

Cost and Benefit Breakdown

Conclusion

The Thematic Review TR16/1 did not identify any systematic risks or rule breaches that require further investigation at an industry level or for individual firms. The FCA expects that all regulated advisory firms will find the report helpful for improving their research and due diligence practices, without imposing significant additional work or costs.

The BIT score for the report is 0, and the EANDCB (Estimated Net Cost to Business) is also 0, as the total cost is below £50,000. The cost estimate assumes that experienced compliance staff will be involved in the familiarization process.

Additional Information

• The BIT score is calculated based on the nearest £100,000 increment
• For reporting purposes, costs below £50,000 are scored as zero
• Robert Half salary guide (2016) was used to estimate the compliance staff rate, with an average of £100,000 per annum for a compliance manager in London

[1] Thematic Report: Assessing Suitability: Research and Due Diligence of Products and Services
[2] Reference to RPPD 1.24
[3] Reference to RPPD 1.24
[4] Reference to the time and cost estimate for report familiarization