Coutts has written to its customers to inform them that it is conducting a review of historic suitability of advice given, following an agreement with the FCA.

The Financial Conduct Authority has come under fire from a wealth manager for failing to expose “wrong-doing” and enforce Retail Distribution Review “best practice" following news last week that Coutts has written to thousands of its UK clients to inform them that it is conducting a review of historic suitability of advice given.

Neil Shillito, director of SG Wealth Management, believes that the FCA is not taking the principles of the RDR seriously enough if larger firms such as Coutts are effectively only receiving a “wrap on the knuckles” for what he feels is a very large breach of mistrust for Coutts clients.

Shillito questioned why the trust of the clients was apparently not at the forefront of the advice process prior to the implementation of the RDR.

“As yet, there has been no statement from the FCA on the matter; the nature of its agreement reached with Coutts or whether there would be any public criticism of the bank which would enhance the credibility of the regulator in the public's eye as an organisation dedicated to exposing wrong-doing and enforcing ‘best practice',” said Shillito.

The private bank will review the suitability of advice for all clients as at 26 November 2012, the date Coutts implemented the RDR. A spokesperson for Coutts said that one of the files goes back to 1957 and that the review of clients' was not expected to be completed until 2015.

Coutts said a large part of its previous weakness lay in record-keeping, much of which was paper-based. To remove that weakness, all client records are now captured and held, both electronically and in writing. It said that the final cost of compensation and individual compensation amounts are unknown at this time.

The move is in response to a “Dear CEO” letter sent out by the FCA's predecessor, the Financial Services Authority, to UK wealth management firms warning them that in several cases clients had been sold financial products that the FSA considered excessively risky, given a client’s stated risk profile.

“Looking back, there have been some instances where the advice given during our previous advice process could have been better, and we are working hard to address that,” said chief executive Michael Morley.

“We want our clients to be absolutely certain that every investment made by them is indeed suitable, and continues to be suitable. If not, we will ensure that portfolios are appropriately adjusted, and if clients have suffered any financial detriment, they will be compensated in full,” he added.

When contacted by this publication, the FCA said it could not comment for legal reasons.

Coutts was fined £6.3 million ($10.59 million) by the FSA in 2011 for suitability issues around its sale of an AIG bond. In the same year, HSBC was fined £10.5 million, while Barclays was fined £7.7 million for broader suitability failings.