• Investment Bonds
• Offshore Bonds
• Investment Individual Savings Accounts
• Unit Trust/OEICs
• Investment Trusts
• Personal Pensions
• Stakeholder Pensions
• Self Investment Personal Pensions
• Income Protection (PHI)
• Term Assurance*
• Whole of Life
• Standalone Critical Illness (Term)*
• Standalone Critical Illness (WOL)
• Retirement Annuities
• Income Drawdown
• Mortgages**

* Includes: Level Term Assurance; Decreasing Term Assurance; Reviewable Term Assurance; Renewable Term Assurance; Family Income Benefit.

**Currently not available through Defaqto

ATEB suitability templates have undergone the scrutiny of numerous FSA inspection visits. Whilst ultimate responsibility for compliance rests with the advisory firm, we know that these templates meet the core suitability requirements. They have been designed by compliance specialists and are based on years of regulator feedback.

The FSA would NEVER endorse or approve any specific software.

They make the following statement on their website:

“A good suitability letter is concise and easy to understand. It gives a reasoned explanation of the risks and a reasoned selection of product and product provider information. It explains the risks that are specific to the client's circumstances and the product. The letter repeats the main elements of the discussions that have taken place between the adviser and client. A software package can do some - but not necessarily all - of these things”

We disagree. Our software will do ALL of these things with a little help from the firm!

The FSA have stated that you could include details of alternative products if they help to demonstrate why the product recommended was suitable, otherwise you do not need to mention them.

We agree, we do not believe that 'reasons why not' are necessary, providing that strong personalised reasons for suitability are emphasised; this is our approach.

By way of example

A client's circumstances and preferences lead an adviser to recommend an investment bond in order to make use of the 5% bond allowance and access to a particular with-profits fund. Providing this is linked within the letter to the client's circumstances ...... why would you wish to include reasons why you didn't recommend an OEIC? It would appear to be a pointless exercise because 5% allowance and WP funds are not available within an OEIC.

We understand why advisers may wish to do this, but we feel the only purpose it serves is to bulk up the report.

Put yourself in the shoes of your client; is it really fair to overload the client with too much information?

If you insert a generic paragraph into a suitability report there is no guarantee that it will protect you. FOS has rejected cases where clients have even signed reports. What's important is, to identify the correct content that should go into a report rather than throwing 'Everything and the Kitchen Sink' at the client.

An 'Option' is not a 'Recommendation'; we suggest that if you want to give the clients options then you should do this prior to completing your suitability report. Options are generic; your recommendation will evolve following your consideration of the client's options. This links well with communication guidelines of something 'Generic' first and then 'Specific' later. Discussing options before making a final recommendation has many advantages; in particular, it allows information to be digested by the client in more manageable chunks

• Quality reports are not about lots of technical data, the product providers do this – why repeat it!
• A good suitability report is concise and easy to understand.
• It gives a reasoned explanation of the risks and a reasoned selection of product and product provider.
• It explains the risks that are specific to the client's circumstances and the product.
• The report repeats the main elements of the discussions that have taken place between the adviser and client.

Yes, the style has been viewed by the FSA on numerous occasions and they have never been critical of any aspects. They state quite clearly on their website that better suitability reports should explain “simply and clearly why the recommended transaction or product is suitable for the client”. We are confident that our output clearly ticks the regulatory boxes.

In the market place there are other systems which either produce very technical generic reports or short weak reports which really confirm the 'what'. Our system, using the wizard guides the user to answer the 'why'.

This is best explained by using an example:

Fact
With this investment, switches between funds do not incur a personal liability for capital gains tax.

Advantage
With this investment, switches between funds do not incur a personal liability for capital gains tax. This could be useful if you are already making use of your annual capital gains tax allowance elsewhere.

Benefit
When you make switches between funds within this investment, you will not be personally liable for capital gains tax. This is a useful benefit as you are already making use of your annual capital gains tax allowance elsewhere.

Both Facts and Advantages can be answered “so what” and are something you would probably find in a product provider brochure, so not really very good for a suitability report! ATEB suitability encourages and prompts the “Benefit” statement and dare I say personalisation. Understand the difference and you have cracked it!

You should consider developing your information gathering process (fact find) to identify key questions within the software. You may need to ask more questions at your fact find stage.

With the exception of some prescribed risk warnings for Income Withdrawal (Unsecured Income) or short term annuities you may be surprised to know the answer is “No”. Over the years, the FSA have removed much of the prescription in this area.

The main problems that exist with DOCUMENTED advice is the inability of the user to personalise the report, there is no such thing as inserting “paragraphs for compliance” it's a myth, you identify the correct needs of the client relative to their circumstance and recommend and link the product to their needs – this is compliance!

“Compliance means personalisation” - The ATEB system tackles the 'cause' rather than the 'symptom' of a poor suitability report.

The FSA state that a suitability report must as a minimum

• State the client's objectives
• Explain why the recommendation is suitable relative to the information provided by the client
• Explain any possible disadvantages of the advice

ATEB suitability covers all of these areas.

The rules and guidance can be found at: http://fsahandbook.info/FSA/html/handbook/COBS/9/4