Demonstrating Compliance with the Suitability and Appropriateness of Advice
Suitability and Appropriateness is a priority for wealth management and private banking firms, but it has historically been a difficult process for firms to standardize and demonstrate. In the U.K., compliance requirements for the Suitability and Appropriateness of advice are defined in:
- The regulations of MiFID and MiFID II
- The Conduct Of Business sourcebook (COBS) 9 and 10, from the FCA handbook
- Thematic Reviews by the FCA
Regulators are primarily concerned with the protection of retail clients and many firms have been fined following reviews, usually due to weaknesses in systems and controls.
NexJ provides intelligent customer management with business process management capabilities to help firms comply with suitability and appropriateness of advice obligations. NexJ enables firms to seamlessly embed suitability and appropriateness requirements into daily business.
With NexJ, firms can:
- Create a comprehensive, client-centric view of all enterprise data
- Collect all necessary data during client onboarding to classify clients and understand the client’s knowledge and experience, financial position, risk tolerance, and ability to bear loss
- Review client classification and client circumstances in periodic reviews
- Record and document all client interactions in the contact record
- Notify advisers and management when exceptions occur or portfolios are out-of-balance and launch investigative workflows
NexJ’s intelligent customer management products enable firms to demonstrate compliance with regulatory standards for the suitability and appropriateness of advice, including requirements for:
- Initial Assessment
- Trade Idea Generation, Recommendations, and Advice
- Information and Portfolio Turnover Reviews
- Governance and Monitoring
- Investigating Red Flags
- Meeting Organisation Requirements
