Coutts, the wealth management unit of RBS, is planning to include financial planning products, such as offshore insurance bonds in its suitability review, according to Wealth Manager.
The suitability review already includes Coutts’ own internal funds such as Orbita and Novus.
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The wealth manager commenced suitability review of all investment portfolios advised by its staff in the UK, including its own investments and those managed by third parties.
The review relates to investments held by clients on 26 November 2012, when the company implemented the retail distribution review (RDR), and is expected to be concluded by 2015, reported Wealth Manager.
Coutts told clients that if investments are found to be unsuitable it would offer a compensation scheme along with an opportunity to exit the investment.
The addition of financial planning products, such as insurance bonds, corporate property bonds and maximum investment plans (MIPs), is likely to raise scope for compensation payouts.
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By GlobalData"The emphasis for potential mis-selling is not on the investment management side, it could be on the financial planning side where they have been recommending offshore bonds and MIPs," an unidentified source told Wealth Manager.
Fowler Drew that has added a number of ex-Coutts clients stated that Coutts had been partial towards investment bonds.
Fowler Drew founder and director Stuart Fowler said: "If the clients we have analysed are in fact representative, there appears to have been a systemic strategy of recommending investment bonds. The peg to hang that strategy on was the various forms of restrictions on pension contributions, either the lifetime or annual allowance."
"However, offshore bonds were likely to leave the clients in a worse tax position."
