Product Suitability

Advisers and the firms they work for have certain obligations when recommending investment products to their clients. We are seeking feedback from investors on issues relating to the suitability of investment products available to, and recommended to, retail investors. Suitability means that the characteristics of the product match the investment objectives and risk tolerance of the investor. Your feedback will help us as we consider these issues.

Please read the following overview and send us your responses to any or all of the questions by October 9, 2008.

Overview
Firms should consider a number of factors before they approve which investments their advisers are allowed to sell. However, the fact that a firm has reviewed and approved a product does not mean it is suitable for all investors.

Firms and their representatives (like your adviser) are still required by law to ensure that each recommendation made to a client is suitable. In order to do this, your adviser should understand the features of the investment product they are recommending to ensure it matches your goals, financial situation and tolerance for risk. Your adviser should explain the reasons for recommending an investment product, and both the risks and benefits of the product.

We are interested in hearing about what information you need when making a decision to invest and how you think investment products should be regulated.

Questions for investors

1) What information about an investment does your adviser give you before and after you buy it? Is there any other information you would like?

2) Should specific investment products be prohibited from sale to the public, or should all products be available to investors and investors be allowed to make their own choice?

3) Should regulators focus on regulating specific products or on regulating how products are sold and distributed?

Product Suitability Consultation
Report on the public consultation on product suitability (PDF)