This website will offer limited functionality in this browser. We only support the recent versions of major browsers like Chrome, Firefox, Safari, and Edge.
Debbie Gupta's comments on suitability and 'soft facts' present an interesting dilemma for firms. Suitability requirements have always been vague (possibly deliberately so) about what information a firm is required to collect in order to justify suitability. The rules use wording such as "Investment firms shall determine the extent of the information to be collected from clients [and] such information as is necessary for the firm to understand the essential facts about the client" (MiFID business) and "A firm must obtain from the client such information as is necessary for the firm to understand the essential facts about him" (Non-MiFID business). So there is the potential for moving goalposts here in terms of the regulator's expectations, which is particularly pertinent given the FCA''s latest suitability review.
What all firms should do is review their internal policy on know-your-client and consider the type of information that they expect to be collected for different types of client and advice, and then ensure that a system is in place to monitor compliance with that policy. That way a firm can show that they have considered this issue carefully and have taken steps to address it. It may look particularly poor for firms if they (i) cannot show that they have considered this issue at all, and/or (ii) have a significant level of variation in the information collected across the business by different advisers etc. As always with the regulator you should have a reasonably consistent approach and be able to justify that approach.
If a firm is collecting these types of 'soft facts', then it should also consider its Privacy Policy, the lawful basis on which it is processing this type of data and its information security, to ensure that the firm is adequately dealing with any increased risk in those areas from collecting this type of personal data (which could stray into 'special category data'). Firms may have to move to a consent-based model for processing this wider range of personal data if they are currently relying on 'legitimate interests', or should at least give some thought to whether 'legitimate interests' can still apply, and document the process and the decision arrived at, in case of later challenge.
Advisers should capture a client’s soft facts as well as their financial position in their suitability report, the FCA has said. The regulator’s head of life insurance and advice supervision Debbie Gupta told the Dynamic Planner conference that looking at the emotions and reasoning behind goals could help create more robust recommendations.
https://www.moneymarketing.co.uk/news/fca-advisers-should-capture-soft-facts/
