FSA gets tough on investment tools

In a guidance paper out today, the FSA said the level of failure in firms' investment selections is "unacceptable" and identified use of model portfolios and over reliance on risk profiling and asset allocation tools as particular areas of concern. Of the 11 risk-profiling tools reviewed, the FSA said nine had "weaknesses which could, in certain circumstances, lead to flawed outputs". The paper says: "We expect all types of firms to consider whether they need to improve the way they assess and check the risk a customer is willing and able to take and so ensure they make suitable inves...