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Coutts issues suitability warning to all UK clients

by Danielle Levy, Elsa Buchanan on Jun 05, 2014 at 11:22

Coutts issues suitability warning to all UK clients

Coutts’ chief executive Michael Morley has written to all UK clients to warn of potential suitability issues with their portfolios, Wealth Manager can reveal.

In the letter, which has been sent out to clients over the past few weeks, the chief executive said the private bank had agreed with the FCA that it will review the suitability of all investment portfolios. Non-investment products and services will not be included in the review.  

It is understood the review of the suitability of investment advice given in the UK relates to investments held by clients on 26 November 2012, the date Coutts implemented the retail distribution review (RDR).

It is expected the review will not be concluded until early 2015. However, clients will be notified as soon as their investments are reviewed. If investments are found to have been unsuitable, Coutts will then send clients a compensation offer and the opportunity to exit the investment.

Morley (pictured) said the trust of Coutts’ clients was its number one priority and explained the ‘review is designed to make sure that suitable advice was given and we put things right when it was not.’

‘We are proud of our new wealth management advice service and we believe it sets a standard for giving objective advice to clients, based on a comprehensive understanding of their personal assets and liabilities,’ he said.

‘There have been some instances where the advice given during our previous advice process could have been better, and we are working hard
to address that.

‘We want our clients to be absolutely certain that every investment made by them is indeed suitable, and continues to be suitable. If not, we will ensure that portfolios are appropriately adjusted, and if clients have suffered any financial detriment, they will be compensated in full.’

As the scale of compensation payments cannot yet be determined, Coutts declined to disclose how much the bank is setting aside to cover this.

In November 2011, Coutts was fined £6.3 million by the regulator for suitability issues around its sale of an AIG bond. The private bank is not alone. In the same year HSBC was fined £10.5 million, while Barclays was fined £7.7 million over broader suitability failings.

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2 comments so far. Why not have your say?

Neil Shillito

Jun 05, 2014 at 13:56

So, no commission bias there then?

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Anonymous 1 needed this 'off the record'

Jun 06, 2014 at 08:33

Or for instance recommending to all its wealthy clients with large bank balances to invest in one duff, share called RBS 2008 Rights issue that Coutts just happened to be owned by!

What about Adam & Co I am near certain they called on their rich Scottish clients in order to support the lifestyle of 1,000 bankers who had momumentally failed.

The FSA should also announce that Adam&Co have to do the same thing. Expect a manipulated survey like Linklaters attempt of the GRG unit however recommending a massive lump of cash into one share that then lost 70% in 6 months and 85% before the effects of inflation for 6 years would seem ripe for compensation. I hear Miller McLean is the installed Chairman of Adam & Co and as he masterminded the enormous legal team at RBS I expect the FSA etc may well be duped yet again!

The would welcome those sold a pup/told to invest in such a "safe" investment. It will be interesting if they used the rigged survey questions and lawyers again - I think I will ask if a bookmaker would take that bet.

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