MiFID II News

Suitability Reports

Pre-Sale

Although we cannot be 100% clear on what is expected and we would advise confirmation from your respective compliance support, it would appear most suitability reports require to be written Pre-Sale.

Paraplanning Online introduced Pre & Post report options a few years ago.

The Pre-Sale option offers a sign off page for the adviser and client to agree how they wish to proceed; this should negate any requirement for a follow up letter.

Periodic Review Report

This is a new requirement and refers to how your ongoing service proposition operates. Periodic assessment of suitability is detailed in COBS 9A.

“Firms providing investment advice must agree with a client whether a periodic assessment of suitability will be performed. If periodic assessment is to be performed it must be at least annually and the continued suitability confirmed in writing.”

The periodic report must contain an updated statement of how the existing investments meet the preferences, objectives and other characteristics of the client.

The confirmation of continued suitability does not need to be War and Peace – a reference back to original report and brief confirmation is all that is required. The rules state: “Where an investment firm provides a service that involves periodic suitability assessments and reports, the subsequent reports after the initial service is established may only cover changes in the services or instruments involved and/or the circumstances of the client and may not need to repeat all the details of the first report.”

Paraplanning Online understood this would be required years ago from the FSA’s (as it was known then) thematic reviews and we created an Investment Proposition Review report which has been updated to include features required and renamed Periodic Review (MiFID II).

Costs Aggregation

It would appear there is a requirement to confirm the aggregation of costs, PPOL have already updated the suitability report to accommodate this requirement.

Similarly there is a requirement to report actual costs incurred during any review period and this is now included in the new Periodic Review.

Further updates

Further updates will follow as and when required.