CIPR 5.2.3 Discretionary investment management services for retail customers and certain opted-up customers

(1) This rule applies if an authorised firm enters into, or proposes to enter into, a discretionary investment management agreement with:
(a) a retail customer; or
(b) an individual who has been classified as a business customer in reliance on a statement under rule 3.3.3 (2), or who was classified as a business customer under COND in reliance on a statement under rule 2.3.2A (2) of those rules.
(2) Before the firm enters into the agreement:
(a) it must take reasonable steps to ensure that it has sufficient personal and financial information about the customer;
(b) it must take reasonable steps to ensure that the service set out in the agreement is suitable for the customer, taking into account what the customer has told the firm and anything else that the firm knows or reasonably ought to know about the customer;
(c) it must be satisfied that:
(i) the service is appropriate for the customer;
(ii) the customer is likely to continue to be able to meet the financial commitment associated with the service; and
(iii) the customer is financially able to bear any risks associated with the service; and
(d) it must give the customer a statement, in a durable medium, of why the firm considers that the service is suitable for the customer.
(3) If an authorised firm makes an investment decision that applies to the portfolios (or parts of the portfolios) of a number of customers referred to in subrule (1), the firm must take reasonable steps to ensure that the decision is suitable for all of those customers, taking into account each customer's stated investment objectives.
(4) An authorised firm must periodically assess the portfolio or account of each of its customers referred to in subrule (1) to ensure that the portfolio or account remains suitable, taking into account what the customer has told the firm and anything else that the firm knows or reasonably ought to know about the customer. The minimum frequency of such assessments must be stipulated in the firm's agreement with such a customer.
Derived from QFCRA RM/2019-2 (as from 1st January 2020).