The FSA has finalised guidance on how firms should establish the risk a customer is willing to take and put in place a suitable investment selection.
The report, published today, includes examples of good and bad practice which the regulator says firms can judge themselves against.
It follows draft guidance issued in January. The FSA has made only minor changes to its wording from that paper.
The regulator says it will take tough action against firms that do not adequately assess clients' attitude to risk when arranging investments.
In January's paper, the FSA outlined the "high" number of unsuitable investment selections it saw in the pensions and investment markets.
Of the investment files assessed as unsuitable between March 2008 and September 2010, it rated half as unsuitable because the investment selection "failed to meet the risk a customer is willing and able to take".
Today's guidance also outlines the responsibilities of third-party tool providers in helping advisers arrange the appropriate investments for their clients.
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