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Background to fca suitability requirements

This Practice Note looks at the suitability rules of the Financial Conduct Authority (FCA). For specific guidance on establishing the risk a customer is willing and able to take and making a suitable investment selection, see Practice Note: Establishing risk and suitable investment selections.

The conduct of business rules in relation to investment business can be found in the FCA Handbook in the Conduct of Business sourcebook (COBS). In 2006, the FCA's predecessor, the Financial Services Authority (FSA) reformed COBS to implement the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID). MiFID has been replaced by the recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II Directive) and the Markets in Financial Instruments Regulation (Regulation (EU) 600/2014) (MiFIR) (together with the MiFID II framework). Both the MiFID II Directive and MiFIR entered into force on 2 July 2014. As amended, the majority of the MiFID II framework has applied since 3 January 2018, and EU Member States had until 3 July 2017 to transpose the provisions of MiFID II into national law. The MiFID