Investment manager fined — lessons from the Savoy case –
14 Nov 2012
The Financial Services Authority (FSA) has fined Savoy Investment Management Limited £412,000 for failures relating to suitability of advice given to clients and of portfolio decisions made on their behalf. “Know your customer” material was
• inadequate and/or out of date, and
• there was a high risk that investment managers were making decisions that did not match clients’ expectations or attitude to risk.
In the final notice the FSA said that private client wealth management firms such as Savoy should have controls in place to monitor their investment managers’ portfolio management activities, including:
• investment committees;
• house models for asset allocation and/or stock selection; an approved security list;
• guidelines on what are suitable investments within the risk appetites chosen by the client;
• computer systems which monitor adherence to clients’ investment restrictions, and, where applicable,
o investment objectives and
o risk appetites;
o periodic sample peer reviews
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