Overview

The £7.7 million fine on Barclays Bank plc, the highest so far imposed by the FSA for retail failings, sends a clear warning to firms that shortcomings in the process of selling funds to retail investors will not be tolerated and will be subject to severe punishment. The case comes hot on the heels of two FSA guidance consultations that are relevant to the retail sector: one on assessing suitability and the other on financial promotions. Travers Smiths discusses the guidance consultations and their implications.

The FSA's guidance consultation "Assessing suitability: Establishing the risk a customer is willing and able to take and making a suitable investment selection" was issued earlier this month. The guidance consultation is aimed at investment advisers and private client discretionary wealth managers – and also at the providers of risk-profiling and asset-allocation tools, including those provided as part of platform.

The second guidance consultation, “financial promotions” is aimed at fund managers and other persons approving financial promotions (particularly "image" advertisements, or advertisements which deal with past performance).

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