FCA verdict on Credit Suisse cliquet revives backtesting debate

The UK regulator has fined Credit Suisse and Yorkshire Building Society for a serious breach of the requirement to be clear, fair and not misleading in their financial promotions. But where does the judgement leave the use of backtesting?

Financial Conduct Authority headquarters

The UK Financial Conduct Authority (FCA) fined Credit Suisse International (CSI) £2.4 million and Yorkshire Building Society (YBS) £1.4 million on June 16 for selling structured deposits accompanied by inadequate marketing material, in a verdict that raises questions about the use of backtesting and appropriate probability analysis, say bankers.

The fines were in regard to sales of a cliquet product created by Credit Suisse, of which 75% - a total of £797 million - was distributed to more than

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