# Suitability Report: [Client name], [Report reference]

> Written statement on suitability that an investment firm gives a
> retail client when it provides investment advice, and the updated
> statement it includes when it manages a portfolio. It records the
> client profile used, the recommendation, why it is suitable
> (objectives, time horizon, knowledge and experience, attitude to risk,
> capacity for loss and sustainability preferences), its disadvantages,
> the costs and their cumulative effect, any switching analysis, the
> need for periodic review, inducements and conflicts, and the delivery
> record. Based on MiFID II (Directive 2014/65/EU) Article 25(2) and
> 25(6), as amended by Directive (EU) 2021/338, Commission Delegated
> Regulation (EU) 2017/565 Articles 50, 52, 54 and 55, as amended by
> Delegated Regulation (EU) 2021/1253 (sustainability preferences,
> applying from 2022-08-02), and the ESMA Guidelines on certain aspects
> of the MiFID II suitability requirements (ESMA35-43-3172). EU Retail
> Investment Strategy amendments are pending and not yet in force as of
> 2026-10. Replace every `[bracketed]` value and every row marked
> *Example*. This is a document format, not financial, investment, tax
> or legal advice. Obtain the directive, regulation and guidelines for
> the normative text.

<!--
Guidance: How to use this template
- Complete the Client Risk Profile (`finance/client-risk-profile`)
  first. A suitability report that is written before the profile is
  signed off has no basis: Delegated Regulation (EU) 2017/565 Article
  54(8) prohibits a recommendation when the firm lacks the information.
- Sections 1 to 13 are the client-facing report. Write them to the
  client in plain language ("you", "we"), avoid jargon or explain it
  once, and keep each reason specific to this client. Section 14 is the
  internal file note and is not sent to the client.
- Retail clients must receive the statement in a durable medium before
  the transaction (MiFID II Article 25(6)). For portfolio management,
  the initial statement is given with the advice to enter the mandate;
  later statements form part of the periodic report. The distance-communication
  exception needs both the client's consent and the offer to delay the
  transaction; record both in section 13.
- For professional clients, Article 29a(2) (inserted by Directive (EU)
  2021/338) switches off the switching analysis and the suitability
  statement unless the client opts in. Record the opt-in or its absence.
- For a portfolio management mandate, this template serves as the
  initial suitability statement; later periodic reports may cover only
  what changed (Article 54(12), third subparagraph).
- Related documents: Investment Policy Statement for an individual
  (`finance/investment-policy-statement-individual`), Client Portfolio
  Review (`finance/client-portfolio-review`), MiFID Target Market
  Assessment (`compliance/mifid-target-market-assessment`), Conflicts of
  Interest Register (`compliance/conflicts-of-interest-register`), Best
  Execution Policy (`compliance/best-execution-policy`), KYC and CDD
  Profile (`compliance/kyc-cdd-profile`).
-->

## Document control

<!-- Guidance: Identify the report, the client, the adviser and the service. A new recommendation is a new report with its own reference; a correction before delivery is a new version of the same report. -->

| Field | Value |
|---|---|
| Document ID | [SR-YYYY-NNN] |
| Version | [1.0] |
| Status | [Draft / Checked / Approved / Delivered / Superseded] |
| Owner | [@adviser] |
| Approvers/reviewers | [@supervisor], [@compliance-officer] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential: client personal data] |
| Firm | [Legal name], authorised by [competent authority], [licence number] |
| Client(s) | [Names], client reference [CL-NNN] |
| Client category | [Retail / Professional (opted in to suitability report)] |
| Service | [Investment advice (independent / non-independent) / Portfolio management / Advice on entering a portfolio management mandate] |
| Client risk profile used | [CRP-ID], dated YYYY-MM-DD |
| Report type | [Initial / Periodic (changes only) / Ad hoc after trigger event] |
| Language and medium | [Language], [PDF by secure portal / paper] |

*Example*: SR-2026-041, Mara and Theo Lind, retail clients of
Kestrel Bay Capital Europe (fictional MiFID investment firm), initial
suitability statement for a discretionary portfolio management mandate
of EUR 200,000 that replaces an existing account at another provider.
Risk profile CRP-2026-118 dated 2026-09-30.

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Adviser | [Name] | [Prepared] | YYYY-MM-DD |
| Supervisor or second-line reviewer | [Name] | [Approved / Returned with comments] | YYYY-MM-DD |
| Compliance (sampled or high-risk files) | [Name] | [Reviewed / Not in sample] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@adviser] | First draft after the recommendation meeting |
| 1.0 | YYYY-MM-DD | [@adviser] | Approved and delivered to the client |
| [x.y] | YYYY-MM-DD | [@author] | [Change] |

## Contents

1. [Report details and service type](#1-report-details-and-service-type)
2. [Your needs and objectives](#2-your-needs-and-objectives)
3. [The client profile we used](#3-the-client-profile-we-used)
4. [Our recommendation](#4-our-recommendation)
5. [Why the recommendation is suitable for you](#5-why-the-recommendation-is-suitable-for-you)
6. [Sustainability preferences](#6-sustainability-preferences)
7. [Disadvantages and risks](#7-disadvantages-and-risks)
8. [Costs and charges](#8-costs-and-charges)
9. [Switching analysis](#9-switching-analysis)
10. [Periodic review](#10-periodic-review)
11. [Inducements conflicts and independence](#11-inducements-conflicts-and-independence)
12. [Jurisdiction notes](#12-jurisdiction-notes)
13. [Declaration delivery and records](#13-declaration-delivery-and-records)
14. [Internal file note and suitability checklist](#14-internal-file-note-and-suitability-checklist)
15. [Glossary and references](#15-glossary-and-references)
16. [Standard and licence note](#standard-and-licence-note)

## 1. Report details and service type

<!-- Guidance: Tell the client what service this report covers and on what basis the advice is given. Article 52 of Delegated Regulation 2017/565 requires the firm to explain whether advice is independent, the range of instruments considered and any relationship with product providers. Pitfall: calling advice "independent" while the range is limited to group products. -->

This report explains the recommendation we made to you on
[date of meeting] and why we consider it suitable for you. Please read
it carefully before you agree to the transaction or sign the mandate.
If anything is unclear or wrong, tell us before you proceed.

| Item | Detail |
|---|---|
| Meeting dates and channel | [YYYY-MM-DD, in person / video / telephone (recorded)] |
| Adviser | [Name], [qualification held under national competence rules] |
| Service provided | [Investment advice / Portfolio management] |
| Basis of advice | [Independent / Non-independent], because [reason] |
| Range considered | [Types of instruments and number of providers analysed] |
| Relationship with providers | [None / Group products included: names] |
| Periodic suitability assessment offered | [Yes, annually / No] |
| Scope limits agreed with you | [Only the investment account; pensions and property excluded] |

*Example*: Kestrel Bay Capital Europe provides portfolio management on
a non-independent basis. The models use funds and ETFs from 14
unrelated providers and two funds managed by the US affiliate Kestrel
Bay Capital; those two funds are identified in section 11. The advice
in this report covers the decision to enter the mandate and to move
the existing investment account. Pensions, the family home and the
employer shares held outside the account are outside the scope, but we
took them into account in assessing your financial situation.

## 2. Your needs and objectives

<!-- Guidance: Summarise in the client's terms what they told you they want and by when. Use the goal IDs from the risk profile so the report traces to the evidence. Pitfall: a generic objective such as "long-term growth" copied into every report. -->

Restate each objective in the words agreed with the client, with its
amount, date and priority. The summary should be specific enough that
the client recognises their own situation and a reviewer can test the
recommendation against it.

| Goal ID | What you told us | Amount and date | Priority |
|---|---|---|---|
| OBJ-001 *(Example)* | Build a pot to supplement your pensions from 2042 | About EUR 590,000 nominal by 2042 | Essential |
| OBJ-002 *(Example)* | Fund university costs for your two children | About EUR 66,000 nominal, drawn 2032 to 2037 | Important |
| OBJ-003 *(Example)* | Help your children with a first home deposit | No fixed amount, after 2040 | Aspirational |
| [OBJ-NNN] | [Goal] | [Amount, date] | [Priority] |

You also told us that you do not need income from the account before
2032, that your emergency reserve of 7.3 months of essential spending
is held separately, and that you prefer a simple portfolio of funds
over individual shares (*Example*).

## 3. The client profile we used

<!-- Guidance: Name the profile and summarise each element the law requires the report to address: investment term, knowledge and experience, attitude to risk, capacity for loss and sustainability preferences (Article 54(12) as amended). Pitfall: a report that refers to the profile without stating the outcome, so the client cannot check it. -->

Our recommendation is based on the information you gave us in the
client risk profile [CRP-ID] dated YYYY-MM-DD. Please tell us if
anything has changed since then: we rely on that information unless we
know or should know that it is out of date, inaccurate or incomplete
(Delegated Regulation 2017/565 Article 55(3)).

| Element | Outcome | Evidence |
|---|---|---|
| Financial situation | [Summary] | CRP section 2 |
| Investment term | [Years per goal] | CRP section 3 |
| Knowledge and experience | [Per product type] | CRP section 4 |
| Attitude to risk (willingness) | [Band] | CRP section 5.1 |
| Capacity for loss | [Amount and rating] | CRP section 5.2 |
| Combined risk rating | [Band per sleeve] | CRP section 5.3 |
| Sustainability preferences | [Choices on the three elements] | CRP section 6 |
| Liquidity needs and constraints | [Summary] | CRP section 7 |
| Support needs | [Adjustments agreed] | CRP section 8 |

*Example*: net worth about EUR 673,000 including the home; capacity for
loss EUR 50,000 on the mandate (rated Medium); both holders have
experience of funds and ETFs and no experience of structured products
or derivatives; attitude to risk Growth for Mara (score 34) and
Balanced for Theo (score 29), with the firm's joint-account rule applying the lower band;
combined rating Balanced (3) for the retirement sleeve and Cautious (2)
for the education sleeve; at least 20% sustainable investments and
consideration of greenhouse gas emissions and controversial weapons.
Theo asked for written summaries two days before each review.

## 4. Our recommendation

<!-- Guidance: State exactly what you recommend: service, instruments or model, amounts, sequence and timing. If you recommend doing nothing or keeping an existing holding, say so; that is advice too. Pitfall: describing the model in general terms without the amounts and products the client will actually hold. -->

Describe the recommendation in enough detail that the client can see
what will be bought, sold, kept or transferred, in what amount and when.
If the firm decided not to recommend because nothing on its range is
suitable, record that decision and the reasons here instead (Delegated
Regulation 2017/565 Article 54(10)).

| Rec ID | Action | Instrument, model or service | Amount | Timing |
|---|---|---|---|---|
| REC-001 *(Example)* | Open | Discretionary mandate, retirement sleeve, Model B (Balanced), sustainable variant | EUR 160,000 | On signature |
| REC-002 *(Example)* | Open | Discretionary mandate, education sleeve, Model C (Cautious), sustainable variant | EUR 40,000 | On signature |
| REC-003 *(Example)* | Transfer in kind | Four ETFs from the existing account that are in the Model B universe | EUR 92,000 of the EUR 200,000 | Within 15 business days |
| REC-004 *(Example)* | Sell and reinvest | Three active funds that cannot be transferred or are not in the universe | EUR 108,000 of the EUR 200,000 | After transfer completes |
| REC-005 *(Example)* | Monthly contribution | Direct debit split 1,200 retirement and 300 education | EUR 1,500 a month | From the next month |
| REC-006 *(Example)* | No action (outside scope, noted) | Employer shares of EUR 40,000 held by Theo outside the mandate | Not applicable | Review a selling plan at the next trading window |

The amounts in REC-003 and REC-004 add up to the EUR 200,000 mandate
(92,000 + 108,000). The model allocations are:

| Model | Growth assets | Defensive assets | Main building blocks |
|---|---|---|---|
| Model B Balanced (*Example*) | 55% | 45% | Global equity index funds with sustainability screens, euro government and corporate bond funds, cash |
| Model C Cautious (*Example*) | 25% | 75% | Same building blocks with more short-dated bonds |

## 5. Why the recommendation is suitable for you

<!-- Guidance: This is the core of the report. For each criterion explain, in specific terms, how the recommendation fits this client. Article 54(2) sets three tests (objectives including risk tolerance and sustainability preferences, ability to bear the risks, knowledge and experience). Article 54(9) adds the comparison with equivalent, less costly or less complex options. Pitfall: boilerplate sentences that would fit any client. -->

Explain the fit criterion by criterion. Each reason should refer to a
fact in the profile and to a feature of the recommended service or
product. Where a criterion is only partly met, say so and explain why
the recommendation is still in your interest.

| Criterion | How the recommendation meets it |
|---|---|
| Investment objectives and term | [Link each REC to each OBJ] |
| Attitude to risk | [Model band versus profile band] |
| Capacity for loss | [Illustrative stress loss versus capacity] |
| Knowledge and experience | [Products used versus products known] |
| Financial situation and liquidity | [Reserve, withdrawals, debts] |
| Sustainability preferences | [See section 6] |
| Cost and complexity versus alternatives | [Equivalent options considered] |

*Example* reasons:

- **Objectives and term.** The retirement sleeve has a 16-year horizon
  before drawdown, long enough to hold a Balanced model through periods
  of falling markets. The education sleeve starts to pay out in 2032,
  so it uses the Cautious model and will move further into short-dated
  bonds from 2030, as agreed in the investment policy statement.
- **Attitude to risk.** Mara's answers pointed to Growth and Theo's to
  Balanced. Our joint-account rule applies the lower band, so the
  retirement sleeve uses Balanced. You both confirmed this in the
  meeting.
- **Capacity for loss.** The illustrative stress loss of the
  recommended portfolio is 20% x EUR 160,000 + 12% x EUR 40,000 =
  EUR 32,000 + EUR 4,800 = EUR 36,800, which is below the EUR 50,000
  you could absorb without changing an essential goal. A Growth model
  for the whole mandate (28% x EUR 200,000 = EUR 56,000) would not
  pass this test.
- **Knowledge and experience.** The models hold only funds and ETFs,
  which you have both bought before. No structured products or
  derivatives are used, in line with your profile.
- **Financial situation.** Your reserve stays outside the mandate, no
  withdrawal is planned before 2032, and the monthly contribution of
  EUR 1,500 comes from a monthly surplus of EUR 2,300, leaving EUR 800
  as a buffer (*Example* figures from CRP section 2.1). The mandate is
  29.7% of your net worth (200,000 / 673,000), and your employer
  pensions of EUR 185,000 secure a base retirement income.
- **Cost and complexity.** We compared the mandate with two equivalent
  options: keeping your existing account and rebalancing it yourself,
  and a single multi-asset fund. Section 9 shows the cost comparison.
  The mandate costs more than the single fund but separates the two
  goals and applies your sustainability preferences, which the single
  fund does not.

Use the formula below when you illustrate the capacity test for a
multi-sleeve recommendation:

$$
L_{\text{stress}} = \sum_{i=1}^{n} s_i \times V_i \le C_{\text{loss}}
$$

where $s_i$ is the illustrative stress loss of sleeve $i$, $V_i$ its
value and $C_{\text{loss}}$ the capacity for loss from the profile.

## 6. Sustainability preferences

<!-- Guidance: Report how the recommendation meets each element the client chose under Article 2(7) of Delegated Regulation 2017/565. If no product met the preferences and the client adapted them, record the decision and reasons (Article 54(10) as amended). Pitfall: presenting a product with general ESG marketing as meeting a minimum proportion it does not report. -->

Compare each preference with the data the product manufacturer reports
(for funds, the pre-contractual and periodic disclosures under
Regulation (EU) 2019/2088 and the European ESG Template data where
used). Ask about sustainability preferences only after the other
objectives, and do not let them override risk or capacity.

| Element | Your choice | Recommended portfolio | Met? |
|---|---|---|---|
| (a) Minimum taxonomy-aligned share | [%] | [% reported] | [Yes / No / Adapted] |
| (b) Minimum sustainable investments share | [%] | [% reported] | [Yes / No / Adapted] |
| (c) Principal adverse impacts considered | [PAI indicators] | [Products and indicators] | [Yes / No / Adapted] |
| Exclusions outside the three elements | [Detail] | [Screens applied] | [Yes / No] |

*Example*: you chose no minimum for (a), at least 20% for (b), and
consideration of greenhouse gas emissions and exposure to controversial
weapons for (c). The sustainable variants of Model B and Model C report
26% and 22% sustainable investments respectively, weighted
by the product data at 2026-09-30. Across the mandate this gives
0.8 x 26% + 0.2 x 22% = 25.2%, above your minimum of 20%, and every fund in both models
considers the two PAI indicators you chose. Your preferences are met
without adaptation.

## 7. Disadvantages and risks

<!-- Guidance: Give the client an honest account of what could go wrong and what they give up. ESMA expects the report to cover the disadvantages of the recommended course of action. Pitfall: a generic risk warning page that does not mention the specific risks of this recommendation (for example, the costs and tax of switching). -->

List the risks that matter for this client and this recommendation,
and the disadvantages compared with the alternatives. Use the
manufacturer's documents (key information documents, prospectuses) for
product risks, and add the risks created by the advice itself.

| Risk or disadvantage | What it means for you | How it is managed |
|---|---|---|
| Market risk | The value of the portfolio will rise and fall; you may get back less than you invest | Diversified models, horizon matched to goals |
| Sequence risk for the education sleeve | A fall shortly before 2032 would reduce the money available for university costs | Cautious model, glide path from 2030 |
| Currency risk | Part of the equity funds invest outside the euro area | Hedged bond funds; equity currency exposure accepted |
| Out-of-market risk during the switch | Prices may move between the sale of old funds and the purchase of new ones | Transfer in kind where possible; sale and purchase on the same dealing day |
| Tax on switching | Selling funds may realise taxable gains | [Tax adviser] to confirm before REC-004 |
| Discretion | We make day-to-day decisions without asking you first | Mandate limits, quarterly reports, loss threshold notifications |
| Higher cost than a single fund | Section 9 shows the difference | Separate sleeves and sustainability filter justify it |
| [Risk] | [Effect] | [Mitigation] |

Where a portfolio management mandate applies, tell the client about the
loss notification: a portfolio manager informs the client when the
overall value, as valued at the start of the reporting period, falls
by 10% and at each further multiple of 10%, by the end of that
business day (Delegated Regulation 2017/565 Article 62(1)).

## 8. Costs and charges

<!-- Guidance: Show all costs and charges of the service and products in money and percentage, ex ante, with an illustration of the cumulative effect of costs on return (Article 50 of Delegated Regulation 2017/565, in particular paragraphs 2 and 10). Use the same figures as the separate ex-ante cost disclosure. Pitfall: showing the service fee only and leaving out fund and transaction costs. -->

State the conventions: currency, amount invested, period, and whether
figures are estimates. Ex-ante figures use actual costs incurred as a
proxy where available (Article 50(8)).

| Cost item | % per year | EUR in year 1 on EUR 200,000 | Type |
|---|---|---|---|
| Portfolio management fee (*Example*) | 0.80% | 1,600 | Service, ongoing |
| Custody and platform (*Example*) | 0.05% | 100 | Service, ongoing |
| Transaction costs of the service (*Example*) | 0.04% | 80 | Transaction |
| Fund ongoing charges, weighted (*Example*) | 0.16% | 320 | Product, ongoing |
| Transaction costs inside funds (*Example*) | 0.05% | 100 | Transaction |
| One-off switching dealing costs (*Example*) | 0.20% (once) | 400 | Service, one-off |
| Exit fee charged by the current provider (*Example*) | 0.075% (once) | 150 | Service, one-off (charged by the ceding provider, shown so that all one-off costs of the switch are aggregated) |
| Third-party payments received by the firm | 0.00% | 0 | Inducements (none, see section 11) |
| **Total year 1** | **1.375%** | **2,750** | |
| **Total in later years** | **1.10%** | **2,200** | |

Illustration of the cumulative effect of costs on return. The return
assumption is illustrative, not a forecast: 4.0% a year before costs.
After ongoing costs of 1.10% the return is taken as 2.9% a year, and
the one-off costs of EUR 550 (dealing 400 plus exit fee 150) are
deducted at the start. Costs are deducted from the annual return rate,
which is an approximation; the exact form is $(1+r)(1-c)$ and gives a
slightly lower net value.

$$
V_{\text{gross}}(t) = P(1+r)^t, \qquad V_{\text{net}}(t) = (P - c_0)(1 + r - c)^t
$$

| Year | Value without costs (EUR) | Value after costs (EUR) | Cumulative effect (EUR) |
|---|---|---|---|
| 1 *(Example)* | 208,000.00 | 205,234.05 | 2,765.95 |
| 3 *(Example)* | 224,972.80 | 217,310.23 | 7,662.57 |
| 5 *(Example)* | 243,330.58 | 230,096.98 | 13,233.60 |

With $P = 200{,}000$, $c_0 = 550$, $r = 4.0\%$ and $c = 1.10\%$. The
cumulative effect includes the return that the costs would have earned.
Ex-post costs are reported to you every year in the annual cost
statement (Article 50(9)).

## 9. Switching analysis

<!-- Guidance: When advice or portfolio management involves selling one instrument to buy another, collect information on the existing investments and analyse costs and benefits (MiFID II Article 25(2) third subparagraph; Delegated Regulation Article 54(11)). For advice, tell the client whether the benefits are greater than the costs. Pitfall: counting only the fee saving and ignoring exit charges, tax and out-of-market risk. -->

Compare the existing arrangement with the recommendation on cost,
risk, fit to objectives and features. Include one-off costs of the
switch. State the conclusion in one sentence the client can understand.

| Item | Existing account (*Example*) | Recommended mandate (*Example*) |
|---|---|---|
| Ongoing costs per year | 1.45% (platform 0.30%, funds 1.05%, transactions 0.10%) | 1.10% |
| Ongoing costs in EUR per year on EUR 200,000 | 2,900 | 2,200 |
| Risk level | About 85% equity, above your Balanced profile | Balanced and Cautious sleeves matched to goals |
| Sustainability preferences | Not applied | Met (section 6) |
| Separate goal tracking | No | Yes |
| One-off costs of switching | Not applicable | EUR 550 (dealing EUR 400 plus exit fee EUR 150) |
| Tax on realised gains | Not applicable | [Amount to be confirmed by tax adviser] |

Payback on costs alone: annual saving EUR 700 (2,900 minus 2,200);
one-off cost EUR 550; payback 550 / 700 = 0.79 years, about 9.4
months, before any tax on realised gains.

*Example* conclusion: in our view the benefits of switching are greater
than the costs, because the switch lowers ongoing costs, brings the
risk level in line with your profile and applies your sustainability
preferences. The conclusion depends on the tax position, which your
tax adviser will confirm before we sell the three funds in REC-004.

## 10. Periodic review

<!-- Guidance: Tell the client whether the recommendation is likely to need a periodic review and, if the firm provides a periodic suitability assessment, its frequency, scope and how updates will be communicated (Article 54(12) and (13), Article 52(5)). Pitfall: promising an annual review in the report while the fee agreement does not include one. -->

State whether the client needs to seek a periodic review of their
arrangements, and what the firm will do. Firms providing a periodic
suitability assessment review the suitability of their recommendations
at least annually and more often where the risk profile or the
instruments require it.

| Item | Detail |
|---|---|
| Review needed | [Yes / No], because [reason] |
| Frequency | [Annual / Semi-annual] |
| Information reassessed | [Full profile every [n] years; changes every year] |
| Trigger events for an earlier review | [Job change, inheritance, health, goal date approaching, 10% loss notification] |
| How updates are communicated | [Updated suitability statement in periodic report] |
| Record | Client Portfolio Review (`finance/client-portfolio-review`) |

*Example*: the mandate includes an annual review in October. Every
second year we refresh the full profile; in other years we ask about
changes. The education sleeve is reviewed each year from 2029 to set
the glide path. Your quarterly report will include an updated statement
of how the portfolio still meets your objectives and preferences.

## 11. Inducements conflicts and independence

<!-- Guidance: Disclose any fees, commissions or non-monetary benefits from third parties and any conflicts that affect the recommendation, consistent with the firm's conflicts register. A portfolio manager may not keep third-party payments other than acceptable minor non-monetary benefits (MiFID II Article 24(8)). Pitfall: omitting group products from the conflicts disclosure. -->

| Item | Disclosure |
|---|---|
| Third-party payments received | [None / Amount and treatment] |
| Minor non-monetary benefits | [Training events, research under the minor benefits rules] |
| Group or related products in the recommendation | [Names and weights] |
| Adviser remuneration | [Fixed salary; no product-related variable pay] |
| Other conflicts | [Reference to register entries] |

*Example*: Kestrel Bay Capital Europe receives no payments from fund
providers for this mandate. Model B includes one fund managed by the
US affiliate Kestrel Bay Capital (6% of the sleeve); the selection was
reviewed against two unrelated alternatives on cost and tracking, and
the conflict is recorded as COI-014 in the conflicts register. Your
adviser's pay does not depend on the products selected.

## 12. Jurisdiction notes

<!-- Guidance: Keep this section if the firm serves clients in more than one regime. It is internal reference for the adviser and may be removed from the client copy. Rows are as of 2026-10; check local law. Pitfall: applying the EU text to a UK client after Brexit without checking the FCA Handbook. -->

As of 2026-10. Check the current law and the competent authority's
rules in each jurisdiction.

| Jurisdiction | Rule set (names and numbers) | Notes for this report |
|---|---|---|
| EU | MiFID II Art. 24, 25, 29a; Delegated Reg (EU) 2017/565 Art. 50, 52, 54, 55, 62; ESMA35-43-3172 | National transposition and competent authority rules apply |
| EU (pending) | Retail Investment Strategy package (provisional agreement December 2025) | Not in force; expected to add value-for-money and inducement test changes; suitability broadly retained. Track the Official Journal |
| UK | FCA Handbook COBS 9A (suitability for MiFID business), COBS 9 (other business), PRIN 2A Consumer Duty | FCA consultations in 2026 propose merging advice rules; reference only, obtain the Handbook text |
| US | SEC Regulation Best Interest (17 CFR 240.15l-1) for broker-dealers; Advisers Act fiduciary duty (Release IA-5248, 2019) for advisers; FINRA Rule 2111 | No MiFID-style suitability report; document the basis of recommendations and the Form CRS delivery |
| [Other] | [Rule] | [Note] |

## 13. Declaration delivery and records

<!-- Guidance: Record when and how the report reached the client, and keep it with the profile and meeting notes. Retail clients get the statement before the transaction unless the distance-communication conditions in Article 25(6) are met. Pitfall: no evidence of delivery date, so the firm cannot show the report came first. -->

**Adviser declaration.** I confirm that this recommendation is based on
the client profile referred to in section 3, that the reasons in
section 5 reflect the information the client gave, and that I have
explained the risks, costs and alternatives.

| Item | Detail |
|---|---|
| Delivered by | [Secure portal / email / post / in person] |
| Delivery date and time | YYYY-MM-DD hh:mm |
| Before the transaction | [Yes / No: distance-communication exception used] |
| If exception used: client consent recorded | [Reference] |
| If exception used: option to delay offered | [Reference] |
| Client acknowledgement | [Signed / Portal confirmation / Not required] |
| Professional client opt-in to report | [Yes, dated YYYY-MM-DD / Not applicable] |
| Records location | [Client file path], retained for [period under national law] |

**Client acknowledgement (optional).** We have read this report. The
information about us in section 3 is correct and complete as of the
date below.

| Client | Signature | Date |
|---|---|---|
| [Name] | | YYYY-MM-DD |
| [Name] | | YYYY-MM-DD |

## 14. Internal file note and suitability checklist

<!-- Guidance: Internal only. Use this checklist before approval and keep it in the file. Each line traces a legal requirement to the section of the report that meets it. Pitfall: ticking the checklist without re-reading the reasons against the profile. -->

```mermaid
flowchart LR
  A["Client risk profile signed"] --> B["Recommendation drafted"]
  B --> C{"Suitable on all criteria?"}
  C -- No --> D["Do not recommend, record reasons"]
  C -- Yes --> E["Costs and switching analysis"]
  E --> F["Supervisor review"]
  F --> G["Report delivered in durable medium"]
  G --> H["Transaction or mandate starts"]
  H --> I["Periodic review"]
```

| Check ID | Requirement (reference) | Report section | Done |
|---|---|---|---|
| SR-CHK-001 | Profile complete and current (Reg 2017/565 Art. 54(2) to (8)) | 3 | [ ] |
| SR-CHK-002 | Basis of advice and range explained (Art. 52) | 1 | [ ] |
| SR-CHK-003 | Outline of the advice given (Art. 54(12)) | 4 | [ ] |
| SR-CHK-004 | Fit to objectives, term, knowledge, risk, capacity for loss (Art. 54(12)) | 5 | [ ] |
| SR-CHK-005 | Sustainability preferences met or adaptation recorded (Art. 54(10), (12)) | 6 | [ ] |
| SR-CHK-006 | Equivalent, less costly or complex options considered (Art. 54(9)) | 5, 9 | [ ] |
| SR-CHK-007 | Disadvantages and risks of the recommendation (ESMA35-43-3172) | 7 | [ ] |
| SR-CHK-008 | Ex-ante costs and cumulative effect illustration (Art. 50(2), (10)) | 8 | [ ] |
| SR-CHK-009 | Switching cost-benefit analysis (MiFID II Art. 25(2); Art. 54(11)) | 9 | [ ] |
| SR-CHK-010 | Periodic review need and arrangements (Art. 52(5), 54(12), (13)) | 10 | [ ] |
| SR-CHK-011 | Inducements and conflicts disclosed (MiFID II Art. 24(8), 24(9), 23) | 11 | [ ] |
| SR-CHK-012 | Delivery before the transaction or valid exception (MiFID II Art. 25(6)) | 13 | [ ] |
| SR-CHK-013 | Product is within the target market or deviation justified (`compliance/mifid-target-market-assessment`) | 4, 14 | [ ] |

*Example* file note: SR-2026-041 checked on 2026-10-14 by the
supervisor. All checks met. Target market: all funds in Model B and
Model C list retail clients with basic knowledge and a medium-term or
long-term horizon as their positive target market; no deviation.

## 15. Glossary and references

<!-- Guidance: Define terms the client meets in the report and list the sources the firm relied on. Keep definitions short and in plain language. Pitfall: undefined acronyms in a report addressed to a retail client. -->

| Term | Meaning in this report |
|---|---|
| Suitability | Whether a recommendation fits your objectives, finances, knowledge and attitude to risk |
| Capacity for loss | The fall in value you could absorb without changing an essential goal or your standard of living |
| Attitude to risk | How much fluctuation in value you are willing to accept |
| Durable medium | A format you can store and reproduce unchanged, such as a PDF |
| Portfolio management | A service in which we make investment decisions for you within agreed limits |
| Switching | Selling an investment to buy another, or changing the terms of an existing one |
| Sustainable investment | An investment that meets the definition in Article 2(17) of Regulation (EU) 2019/2088 |
| Principal adverse impacts | The most significant negative effects of investment decisions on sustainability factors |
| Target market | The group of clients for whom a product is designed |

References (obtain the official texts):

- Directive 2014/65/EU (MiFID II), Articles 16, 23, 24, 25, 29a, as
  amended by Directive (EU) 2021/338 (applied from 2022-02-28) and
  Directive (EU) 2024/790.
- Commission Delegated Regulation (EU) 2017/565, Articles 2(7), 50, 52,
  53, 54, 55, 62 and 72, as amended by Delegated Regulation (EU)
  2021/1253 (applies from 2022-08-02).
- ESMA Guidelines on certain aspects of the MiFID II suitability
  requirements, ESMA35-43-3172 (applied from 2023-10-03).
- Regulation (EU) 2019/2088 (SFDR) and Regulation (EU) 2020/852
  (Taxonomy), for sustainability preference data.
- SEC Release IA-5248 (2019) and Regulation Best Interest, for US
  comparison only. FINRA Rule 2111 and the FCA Handbook are cited by
  number only.

## Standard and licence note

Based on Directive 2014/65/EU (MiFID II), Directive (EU) 2021/338,
Commission Delegated Regulation (EU) 2017/565 and Delegated Regulation
(EU) 2021/1253 as published on EUR-Lex (reuse authorised with
acknowledgement under Commission Decision 2011/833/EU), and on the
structure of the ESMA Guidelines ESMA35-43-3172 (source: ESMA,
esma.europa.eu; this template is not endorsed by ESMA, and the
guidelines are available free of charge on the ESMA website). US
references are to public SEC materials. FCA Handbook modules and FINRA
rules are cited by reference only. All text is original; no
legislative or guideline text is reproduced, and article numbers are
given so that the reader can check the requirement. The client names,
Kestrel Bay Capital Europe and all figures are fictional. Check the
current consolidated texts, national transposition and any adopted
Retail Investment Strategy changes before use. This is a document
format, not financial, investment, tax or legal advice. Template
licence: MIT.