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Financial organizations must assess, depending on the services they offer, whether the financial service or product is appropriate or suitable for the customer. For this purpose, they must obtain information from the customer.
If you are a financial institution offering a service other than investment advice or individual wealth management, you must obtain information about the client’s knowledge and experience. This is also known as the appropriateness assessment. If you conclude that the service or product is not appropriate for the client, you must warn the client about this. Ultimately, the customer decides for himself whether or not he wants to purchase the service or product.
If your financial organization gives investment advice or manages individual assets, you do not have to make a separate appropriateness assessment. You are, however, required to make a suitability assessment. In addition to the knowledge and experience of the client, you must also obtain information about his financial position, objective and risk appetite, and then adjust your advice or management to the information obtained.
Do you need help designing these tests? We can assist you in developing a new suitability or appropriateness assessment. We can also assess whether your test meets the legal requirements and adjust it if necessary.