August 22, 2014

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August 20, 2014

August 19, 2014

FSA Fines Manager for Systemic Suitability Failings

On November 14, the UK Financial Services Authority (FSA) announced that it had fined Savoy Investment Management Limited (Savoy) £412,000 (approximately $653,000) for failing to take reasonable care to ensure the suitability of the investment portfolios of its wealth management clients. Savoy was found to be in breach of Principle 3 (management and control), Principle 9 (customers: relationships of trust) and rules COBS 9.2.1 to 9.2.3 on suitability requirements.

The FSA stated that Savoy had limited front office controls over the provision of investment advice and portfolio management services and it failed to take reasonable care to ensure the suitability of its advice and portfolio management services. This included failures to collect and record “know your client” information and compliance monitoring failures. The FSA had reviewed Savoy as part of its thematic review of the wealth management sector, which found there was an unacceptable risk of clients of wealth management firms experiencing unfavorable outcomes. Twenty-three of the sample of 52 Savoy files reviewed by the FSA were found not to contain sufficient information to determine suitability.

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©2014 Katten Muchin Rosenman LLP

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About this Author

Partner

Edward Black, a partner in Katten Muchin Rosenman UK LLP, has a wide range of funds and financial services experience. He has acted for securities, commodities and derivatives brokers and dealers, banks, investment banks and investment managers for over 20 years. This has led to substantial involvement in commercial and transactional work in the financial services field as well as extensive regulatory expertise, and to significant experience with employment law matters.

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