Percival said he had assessed six major risk tools used in the UK and identified situations in which tools had questioned the same client but had proposed weightings for ‘equity/property’ ranging from 30-65%.
It comes as a forthcoming requirement in Mifid II, likely to come into force in January 2018, will put wealth managers on the hook for taking steps to ensure any tools they use provide accurate risk profiles for their clients.
Speaking at the Morningstar Investment Conference 2017, Percival also defended the FSA’s decision not to name individual risk tools when in 2011 it published the results of a study into the sector, which found nine out of 11 tools were flawed.
He said the regulator was likely to be currently considering a number of ways the tools may still be flawed as part of its monitoring of the issue, but based on his investigation the sector appeared to have improved overall since 2011.
He said that the language used to explain particular questions in risk tools had improved, as had descriptions of the riskiness of funds.
However, Pecival warned the regulator was likely to remain deeply concerned with wealth manager and advisers’ assessment of clients’ ‘capacity for loss’.
