Periodic Assessment of Suitability

Hi all,

I am looking for some guidance surrounding the recent introduction of periodic assessment of suitability post MiFID II.

As we understand this as a firm, any client who is paying for ongoing advice should now receive an annual report outlining why investments, platform, provider etc remain suitable. We already give clients investment reviews throughout the year, however we do not go into much detail surrounding objectives & aims.

For clients we have taken on in the past 0 - 6 months, will we be required to issue an assessment of suitability report for them?

Thank you in advance.



  • I don't think so. We have interpreted the rules to mean - at annual review - you specifically have to say everything is hunky-dory with the recommendations we made last year.

    I don't think you have to say 'why' they remain suitable again, just that they are.

  • Short current situation and objectives section focussing on anything that's changed. ATR - your rp remains '.....'. Then before specific recommendations 'Ongoing Suitability' heading like this:

    Having considered your current situation, objectives and attitude to risk, I am satisfied that the_ Provider platform product and product remain suitable. Comment, for example: Slightly lower cost platforms are available but the small annual cost saving would not justify switching at this time. _Platform continues to offer a good service at a competitive cost.
    I am also continuing to recommend that you use your ISA and CGT allowances each tax year.
    With regard to your investment strategy, I am continuing to recommend a diversified portfolio, mainly comprised of actively managed funds.

  • Hi Luis,

    I'm not sure I understand your final question: you will have to issue a periodic suitability assessment in line with COBS 9A.2.2 and COBS 9A.3.5. This could be more than annually.

    You must 'review,...the suitability of the recommendations given at least annually' (COBS 9A.3.9).

    In my opinion, and with clients I work with on these assessments, this means updating information on, and getting confirmation of, the client's:

    • financial objectives;
    • risk profile, including capacity for loss;
    • investment knowledge and experience;
    • investment timeframe.

    (COBS 9A.2.1, COBS 9A.2.4 - 8)

    It means that the assessment should include several specific statements, including those from COBS 9A.2.9(a) and COBS 9A.3.1 as two such examples.

    Note the third paragraph of COBS 9A.3.3:

    Where an investment firm provides a service that involves periodic suitability assessments and reports, the subsequent reports after the initial service is established may only cover changes in the services or instruments involved and/or the circumstances of the client and may not need to repeat all the details of the first report.

    I take this to mean , as you do, that it doesn't need a lot of detail, just a reference back to what was known and to what has changed.. It would need to include an ex-ante charges disclosure for the coming 12 months (COBS 6.1ZA.11 onward) for anything that had changed and you could incorporate the annual ex-post disclosure if it fell due at the same time (although these dates are on a different basis).

    Hope that helps.

    Benjamin Fabi FPFS
    Chartered Financial Planner 
  • Hi all,

    Thank you for you responses, they have been most helpful.

    I feel that a brief letter covering all necessary parts along with a cost and charges disclosure will suffice.

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