COBS 13 Preparing product information

A firm must prepare:

1. (1)

    a key features document for each non-CCI packaged product, cash-deposit ISA, cash-only lifetime ISA and cash-deposit CTF it produces; and

2. (2)

    a key features illustration for each non-CCI packaged product it produces;

in good time before those documents have to be provided.

A firm must prepare the Solvency II Directive information for each life policy it effects:

1. (1)

   in a clear and accurate manner and in writing; and

2. (2)

   in an official language of the State of the commitment, or in another language if the policyholder so requests and the law of the State of the commitment so permits or the policyholder is free to choose the law applicable;

in good time before that information has to be provided.

A firm is not required to prepare:

1. (1)

   a document, if another firm has agreed to prepare it; or

2. (2)

   a key features document for:

   1. (a)

      a unit in a regulated collective investment scheme; or

   2. (b)

      [deleted]

   3. (c)

      [deleted]

   4. (d)

      a stakeholder pension scheme, or personal pension scheme that is not a personal pension policy, if the information appears with due prominence in another document; or

   5. (e)

      an interest in an investment trust savings scheme; or

3. (3)

   a key features illustration:

   1. (a)

      for a unit in a regulated collective investment scheme; or

   2. (b)

      [deleted]

   3. (c)

      if it includes in a key features document;

      1. (i)

         the information from the key features illustration; and

      2. (ii)

         the summary key information required by COBS 13.4.1AR; or

   4. (d)

      [deleted]

   5. (e)

      for an interest in an investment trust savings scheme.

4. (4)

   [deleted]

A key features document and a key features illustration must also:

1. (1)

   (if it is a key features document) be produced and presented to at least the same quality and standard as the sales or marketing material used to promote the relevant product;

2. (2)

   (if it is a key features document) display the firm's brand at least as prominently as any other;

3. (3)

   (if it is a key features document or a key features illustration which does not form an integral part of the key features document) include the ‘Key facts’ logo in a prominent position at the top of the document; and

4. (4)

   (if it is a key features document or a key features illustration which does not form an integral part of the key features document) include the following statement in a prominent position:

   “The Financial Conduct Authority is a financial services regulator. It requires us, [provider name], to give you this important information to help you to decide whether our [product name] is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference”.

The documents and information prepared in accordance with the rules in this chapter must not include anything that might reasonably cause a retail client to be mistaken about the identity of the firm that produced, or will produce, the product.

A key features document must:

1. (1)

   include enough information about the nature and complexity of the product, how it works, any limitations or minimum standards that apply and the material benefits and risks of buying or investing for a retail client to be able to make an informed decision about whether to proceed;

2. (2)

   explain:

   1. (a)

      the arrangements for handling complaints about the product;

   2. (b)

      that compensation might be available from the FSCS if the firm cannot meet its liabilities in respect of the product (if applicable);

   3. (c)

      that a right to cancel or withdraw exists, or does not exist, and, if it does exist, its duration and the conditions for exercising it, including information about the amount a client may have to pay if the right is exercised, the consequences of not exercising it and practical instructions for exercising it, indicating the address to which any notice must be sent;

   4. (d)

      (for a CTF) that stakeholder CTFs, cash-deposit CTFs and security-based CTFs are available and which type the firm is offering; and

   5. (e)

      (for a personal pension scheme that is not an automatic enrolment scheme) clearly and prominently, that stakeholder pension schemes are generally available and might meet the client's needs as well as the scheme on offer; and

3. (3)

   (for a cash-only lifetime ISA) include the information set out in COBS 14 Annex 1.

A key features illustration;

1. (1)

    must include appropriate charges information;

2. (2)

    must include information about any interest that will be paid to clients on money held within a personal pension scheme bank account; and

3. (3)

    if it is prepared for a non-CCI packaged product which is not a financial instrument:

   1. (a)

       must include a standardised deterministic projection;

   2. (b)

       the projection and charges information must be consistent with each other so that:

      1. (i)

          the same intermediate growth rate and assumptions about regular contributions are used;

      2. (ii)

          a projection in nominal terms is accompanied by an effect of charges table and reduction in yield information in nominal terms; and

      3. (iii)

          a projection in real terms is accompanied by an effect of charges table and reduction in yield information in real terms; and

   3. (c)

       it may also include stochastic projections if there are reasonable grounds for believing that a retail client will be able to understand the stochastic projection except that the most prominent projection must be a standardised deterministic projection.

1. (1)

   If COBS 14.2.1R(3B), (3C) or (3D) applies, a key features illustration must also include the summary key information in COBS 13.4.7R.

2. (2)

   There is no requirement to provide the summary key information in COBS 13.4.7R if the retail client proposes to withdraw their pension scheme funds in full reducing the value of their rights to zero.

3. (3)

   Where (2) applies and a retail client subsequently does not withdraw their pension scheme funds in full reducing the value of their rights to zero, the firm must provide the client with the summary key information in COBS 13.4.7R.

When the rules in this chapter require a key features illustration to be prepared, it must not take the form of a generic key features illustration:

1. (1)

   unless there are reasonable grounds for believing that it will be sufficient to enable a retail client to make an informed decision about whether to invest; or

2. (2)

   if it is part of a direct offer financial promotion which contains a personal recommendation; or

3. (3)

   if a personal pension scheme or a stakeholder pension scheme is facilitating the payment of an adviser charge; or

4. (4)

   if a group personal pension scheme or a group stakeholder pension scheme is facilitating the payment of a consultancy charge and the combined effect of the consultancy charges facilitated by the product and the product charges is not consistent for all investors in the relevant group or sub-group; or

5. (5)

   unless it is prepared for groups or sub-groups of employees in a group personal pension scheme or a group stakeholder pension scheme and it contains:

   1. (a)

      a generic projection which is prepared in accordance with COBS 13 Annex 2 paragraph 1.3 and based on a default fund or other commonly selected fund;

   2. (b)

      an effect of charges table calculated in accordance with COBS 13 Annex 4 R paragraph 2 and contains additional rows that show a range of typical periods to retirement age; and

   3. (c)

      reduction in yield information which is calculated in accordance with COBS 13 Annex 4 R paragraph 3.3(2) and combines the product charge and, if applicable, the consultancy charge.

There is no requirement under COBS 13.4.1 R to include a projection in a key features illustration:

1. (1)

   for a single premium life policy bought as a pure investment product, a product with benefits that do not depend on future investment returns or any other product if it is reasonable to believe that a retail client will not need one to be able to make an informed decision about whether to invest; or

2. (2)

   if the product is a life policy that will be held in a CTF or sold with basic advice (unless the policy is a stakeholder pension scheme); or

3. (3)

   if a retail client proposes to withdraw the funds in full from their, personal pension schemestakeholder pension scheme or drawdown pension reducing the value of their rights to zero.

Where COBS 13.4.4R(3) applies, if a retail client subsequently does not withdraw the funds in full from their personal pension scheme, stakeholder pension scheme or drawdown pension reducing their rights to zero, the firm must provide the client with a standardised deterministic projection.

1. (1)

   The summary key information is:

   1. (a)

      the value of the crystallised and uncrystallised funds in the retail client’s personal pension scheme;

   2. (b)

      the value of the pension commencement lump sum, if applicable;

   3. (c)

      the projected value of the retail client’s personal pension scheme or stakeholder pension scheme 5 and 10 years after the date of withdrawal;

   4. (d)

      reduction in yield information prepared in real terms in accordance with COBS 13 Annex 3 3R or COBS 13 Annex 4 3R and presented as A% or D% accordingly;

   5. (e)

      the retail client’s age when their funds are projected to reduce to zero (if relevant);

   6. (f)

      first year charges expressed in cash terms and determined in accordance with (2);

   7. (g)

      if applicable, the following information about the income withdrawal or uncrystallised funds pension lump sum arrangement offered:

      1. (i)

         an assumed start date;

      2. (ii)

         for one-off payments, the withdrawal figure and date of withdrawal; and

      3. (iii)

         if the retail client has chosen to take regular withdrawals or uncrystallised funds pension lump sum payments, the value of those withdrawals on an annual basis.

2. (2)

   The first-year charges must be determined on the basis of the level of charges that the retail client would be expected to pay in the first year in accordance with the firm’s charging structure before any promotional discount or reduction is applied, and:

   1. (a)

      where the effect of charges table has been prepared in accordance with COBS 13 Annex 3 2.2R(2), using the amount representing the “effect of deductions to date” for the first year of the projection; or

   2. (b)

      where the effect of charges table has been prepared in accordance with COBS 13 Annex 4 2.2R, using the amount representing the difference between the values of “before charges are taken” and “after all charges are taken from this plan’ for the first year of the projection.

1. (1)

   The summary key information must:

   1. (a)

      be on the front page of the key features illustration or key features document (where COBS 13.1.3R(3)(c) applies);

   2. (b)

      not exceed a single side of A4-sized paper when printed; and

   3. (c)

      include the ‘Key facts’ logo in a prominent position at the top of the document.

2. (2)

   The requirement in (1)(b) does not apply if a retail client asks for summary key information to be provided in an accessible format and the fulfilment of that request will necessitate the use of more than a single side of A4-sized paper.

A firm that communicates a projection for an in-force packaged product which is not a financial instrument:

1. (1)

   must include a standardised deterministic projection;

2. (2)

   may also include a stochastic projection except that the most prominent projection must be a standardised deterministic projection; and

must follow the projection rules in COBS 13 Annex 2.

The requirement in COBS 13.5.1R does not apply where a retail client proposes to withdraw the funds in full from their personal pension scheme, stakeholder pension scheme or drawdown pension reducing the value of their rights to zero.

1. (1)

    A firm that communicates a projection for a packaged product which falls within (2) must ensure that the projection is either a standardised deterministic projection or a stochastic projection in accordance with COBS 13 Annex 2.

2. (2)

    This rule applies to a packaged product which is:

   1. (a)

       not a financial instrument or an in-force packaged product; and

   2. (b)

       either:

      1. (i)

          a non-CCI packaged product for which a key features illustration is not required to be provided; or

      2. (ii)

          a consumer composite investment where the projection is not in a product summary.

The requirement in COBS 13.5.2R does not apply where a retail client elects to withdraw the funds in full from their personal pension scheme or stakeholder pension scheme or drawdown pension reducing the value of their rights to zero.

A firm that communicates a projection of benefits for a packaged product which is not a financial instrument, as part of a combined projection where other benefits being projected include those for a financial instrument or structured deposit, is not required to comply with the projection rules in COBS 13.4, COBS 13.5 and COBS 13 Annex 2 to the extent that the combined projection complies with the future performance requirements in either:

1. (1)

   COBS 4.5A.14R where the firm is carrying on MiFID, equivalent third country or optional exemption business; or

2. (2)

   COBS 4.6.7R where the firm is not carrying on MiFID, equivalent third country or optional exemption business.

A firm that agrees to facilitate the payment of an adviser charge or consultancy charge, or an increase in such a charge, from a new or in-force packaged product, must prepare sufficient information for the retail client to be able to understand the likely effect of that facilitation, in good time before it takes effect.