FCA Handbook - COBS 14 Providing product information to clients

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COBS 14.1 Interpretation

In this chapter:

(1)
'retail client' includes the trustee or operator of a stakeholder pension scheme or personal pension scheme and the trustee of a money-purchase occupational pension scheme; and
(2)
(except in relation to the requirements for consumer composite investments under DISC) ‘sell’ includes ‘sell, personally recommend or arrange the sale of’ in relation to a designated investment and equivalent activities in relation to a cash-deposit ISA, cash-only lifetime ISA and cash-deposit CTF.

COBS 14.2 Providing product information to clients

Providing information about consumer composite investments

(1) DISC requires a firm which distributes a consumer composite investment to provide a retail investor with a product summary for that consumer composite investment.
(2) Since DISC imposes requirements in relation to the provision of information about consumer composite investments, this chapter does not apply to a firm when it is distributing a consumer composite investment (except where applicable to Solvency II Directive information).
(3)
A firm that sells a life policy that is also a consumer composite investment must provide the information required by COBS 14.2.1R(2). Some or all of this information may be included in a product summary if this is required to be provided by, and such inclusion is permitted under, DISC.

The provision rules for products other than consumer composite investments

A firm that sells, or (where relevant) gives effect to:

(1)
a non-CCI packaged product to a retail client, must provide a key features document and a key features illustration to that client (unless the packaged product is a unit in a regulated collective investment scheme);
(2)
a life policy to a client, must provide:
1. (a)
  the Solvency II Directive information to that client;
2. (b)
  a client with objective and relevant information about the policy:
  1. (i)
    in a comprehensible form to allow the client to make an informed decision;
  2. (ii)
    modulated in a way that takes into account the complexity of the policy and the type of client;
  3. (iii)
    whether or not the firm makes a personal recommendation or provides a ready-made suggestion to the client about the life policy; and
  4. (iv)
    irrespective of whether the policy is offered as part of a package pursuant to COBS 6.1ZA.16AR to COBS 6.1ZA.16ER;
3. (c)
  the information in (b) must be provided prior to the conclusion of the life policy and in accordance with COBS 7.4, rather than in accordance with the other rules in this section;
(3)
the variation of a life policy or personal pension scheme to a retail client, must provide that client with sufficient information about the variation for the client to be able to understand the consequences of the variation;
(3A)
[deleted]
(3B)
a retail client’s request to make income withdrawals from their personal pension scheme or stakeholder pension scheme for the first time must provide that retail client with:
1. (a)
  a key features illustration; and
2. (b)
  such other information as is necessary for the client to understand the consequences of the request;
(3C)
a retail client's request to make one-off or regular uncrystallised funds pension lump sum payments from their personal pension scheme or stakeholder pension scheme for the first time must provide that client with:
1. (a)
  a key features illustration; and
2. (b)
  such other information as is necessary for the client to understand the consequences of the request;
(3D)
a retail client’s request to designate personal pension scheme or stakeholder pension scheme funds to enable the retail client to make income withdrawals must provide that client with:
1. (a)
  a key features illustration; and
2. (b)
  such other information as is necessary for the retail client to understand the consequences of the request;
(3E)
a retail client’s request to make an income withdrawal subsequent to (3B) or uncrystallised funds pension lump sum payment subsequent to (3C) must provide:
1. (a)
  such information as is necessary for the client to understand the consequences of the request; and
2. (b)
  where relevant, the information required by COBS 13 Annex 2.2.9R (Additional requirements: drawdown pensions and regular uncrystallised funds pension lump sum payments);
(3F)
a retail client’s request for a short-term annuity must provide:
1. (a)
  a key features illustration; and
2. (b)
  such other information as is necessary for the client to understand the consequences of the request;
(4)
a cash-deposit ISA, cash-only lifetime ISA or cash-deposit CTF to a retail client, must provide a key features document to that client;
(4A)
a lifetime ISA, which is not a cash-only lifetime ISA, to a retail client must provide to that client the information in COBS 14 Annex 1; and
(5)
[deleted]
(5A) [deleted]
(6)
[deleted]
(7) [deleted]
(7A)
a unit in an OFR recognised scheme to a client, must provide the documents and information specified in COBS 14.2.1-BR.
(8)
[deleted]

[Note: in respect of (2) article 185(1) of the Solvency II Directive and in respect of (2)(b) articles 20(1) first paragraph, 20(2), 20(4) and 23 of the IDD]

If a retail client is invested in a pathway investment and makes a request falling within COBS 14.2.1R(3B) or (3E), but which is clearly incompatible with the investment pathway option selected by the client under COBS 19.10.17R(1), this should be brought to the client’s attention.

For the purpose of COBS 14.2.1R(7A), in relation to a unit in a scheme which is an OFR recognised scheme, the specified documents and information are as follows:

(1)
[deleted]
(2)
Where the client is a retail client, the firm must provide separately (unless already provided):
1. (a)
  the information required by COBS 13.3.1R(2)(a) and (b) (General requirements);
2. (b)
  if the client is present in the United Kingdom, the information required by COBS 14.2.1R(5A)(b); and
3. (c)
  information that clearly explains:
  1. (i)
    whether the Financial Ombudsman Service is likely to be able to consider complaints against the scheme, its operator or its depositary; and
  2. (ii)
    what arrangements, if any, exist that would enable investors in the United Kingdom to have a complaint against the scheme, its operator or its depositary considered by an alternative dispute resolution mechanism in the relevant Home State;
  3. (iii)
    that the activities of the scheme's operator and its depositary are unlikely to be covered by the compensation scheme and investors might not be protected under the regulatory system if either person should become unable to meet its liabilities to them; and
  4. (iv)
    what arrangements, if any, exist in the Home State(s) of the scheme’s operator or its depositary for the payment of compensation to investors in the United Kingdom if either person should become unable to meet its liabilities to them.

In COBS 14.2.1-BR(2), the specified documents and information already provided may include the product summary and any additional product communication.

A firm should consider including further information likely to be useful to investors (including the information set out in COLL 9.5.7G(2)). Where the documents and information specified in COBS 14.2.1-BR are provided electronically, such information could be provided in the document itself or via a hyperlink to a website or another document.

Provision of a generic key features illustration

When the rules in this chapter require the offer or provision of a key features illustration, a firm may provide a generic key features illustration if that generic key features illustration has been prepared in accordance with COBS 13.4.2 R.

Provision of information: other requirements

A firm that arranges to facilitate the payment of an adviser charge or consultancy charge, or an increase in such a charge from an in-force packaged product, must provide to the retail client sufficient information for the retail client to be able to understand the likely effect of that facilitation.

Where a firm arranges to facilitate the payment of an adviser charge or consultancy charge for a new non-CCI packaged product, the information required by COBS 14.2.1CR should be included in the key features illustration.

The documents or information required to be provided or offered by COBS 14.2.1 R and COBS 14.2.1C R must be in a durable medium or made available on a website (where that does not constitute a durable medium) that meets the website conditions.

(1)
A firm that personally recommends that a retail client holds a particular asset in a SIPP must provide that client with sufficient information for the client to be able to make an informed decision about whether to buy or invest.
(2)
This rule does not apply if the asset is described in COBS 14.2.1 R.

Firm not to cause confusion about the identity of the producer of a product

When a firm provides a document or information in accordance with the rules in this section, it must not do anything that might reasonably cause a retail client to be mistaken about the identity of the firm that has produced, or will produce, the product.

Exception to the provision rules: key features documents

A firm is not required to provide:

(1)
a document, if the firm produces the product and the rules in this section require another firm to provide the document;
(2)
[deleted]
(3)
[deleted]
(4)
[deleted]

Exception: key features illustrations

A firm is not required to provide a key features illustration for a product if the information that would have been included in that illustration is included in the key features document provided to the client.

A firm is not required to provide a key features illustration in relation to a pension annuity if the firm provides the information required by COBS 19.9 (Pension annuity comparison information).

Exception to the provision rules: key features documents and key features illustrations

A firm is not required to provide a key features document or a key features illustration for:

(1)
[deleted]
(2)
a life policy if:
1. (a)
  [deleted]
2. (b)
  the client is habitually resident outside the United Kingdom and the sale is not by distance contract.
(3)
a traded life policy; or
(4)
an interest in an investment trust savings scheme.

[Note: in respect of (2), articles 4(1) and 16 of the Distance Marketing Directive and article 185 of the Solvency II Directive]

A firm is not required to provide a key features document or a key features illustration, if:

(1) the client is buying or investing in response to a direct offer financial promotion without receiving a personal recommendation or a ready-made suggestion to buy or invest; and
(2) the firm provides materially the same information in some other way.

Exception to the provision rules: key features documents

A firm is not required to provide a key features document or a key features illustration if:

(1)
the client is habitually resident outside the United Kingdom and not present in the United Kingdom when the relevant application is signed; or
(2)
the purchase is by a discretionary investment manager on behalf of a retail client; or
(3)
the sale is arranged or personally recommended by an investment manager and the client has agreed that a key features document is not required.
(4)
[deleted]

Exception: successive operations

In the case of a distance contract comprising an initial service agreement, followed by successive operations or a series of separate operations of the same nature performed over time, the rules in this section only apply to the initial agreement.

If there is no initial service agreement but the successive operations or separate operations of the same nature performed over time are performed between the same contractual parties, the rules in this section only apply:

(1)
when the first operation is performed; and
(2)
if no operation of the same nature is performed for more than a year, when the next operation is performed (the next operation being deemed to be the first in a new series of operations).

The timing rules

When the rules in this section require a firm to:

(1)
[deleted]
(2)
provide a key features document or any other document or information to a client, the document or information must be provided free of charge and in good time before the firm carries on the relevant business.
(3)
[deleted]

Exception to the timing rules: child trust funds

A key features document for an HMRC allocated CTF must be provided as soon as reasonably possible after the CTF has been opened.

Exception to the timing rules: distance contracts and voice telephony communications

(1) A firm may provide a document, or the information required to be provided by the rules in this section, in a durable medium immediately after the conclusion of a distance contract, if the contract has been concluded at a client's request using a means of distance communication that does not enable the document or information to be provided in that form in good time before the client is bound by the contract.
(2) [deleted]

(1)
Where the rules in this section require a document or information to be provided, in the case of a voice telephony communication, a firm must:
1. (a)
  if the client gives explicit consent to receiving only limited information, provide the abbreviated distance marketing disclosure information () orally to the client;
2. (b)
  if the client does not give explicit consent to only receiving limited information, and the parties wish to proceed by voice telephony communication, provide the distance marketing information () orally to the client;
3. (c)
  in the case of (a) or (b), send the documents or information to the client in a durable medium immediately after the contract is concluded.
(2) [deleted]

Providing additional information to the client

(1)
A firm that provides the product information required by this section is not precluded from providing additional information to the client (for example, in order to assist the client’s understanding of the proposed transaction).
(2)
When a firm provides additional information it should:
1. (a)
  ensure that the additional information does not disguise, diminish or obscure important information contained in the product information required by this section;
2. (b)
  consider whether any other rules or requirements in any EU-derived regulations apply to the communication of that additional information. For example, for marketing communications relating to a UCITS scheme see COBS 4.13.2 R; and
3. (c)
  have regard to the fair, clear and not misleading rule, the client’s best interests rule and Principles 6 and 7.

COBS 14.3 Information about designated investments (non-MiFID provisions)

Application

This section applies to a firm in relation to:

(1)
[deleted]
(2)
any of the following regulated activities when carried on for a retail client:
1. (a)
  making a personal recommendation about a designated investment; or
2. (b)
  managing investments that are designated investments (other than a P2P agreement); or
3. (c)
  arranging (bringing about) or executing a deal in a warrant, non-readily realisable security speculative illiquid security, or derivative; or
4. (d)
  engaging in stock lending activity; or
5. (e)
  operating an electronic system in relation to lending, but only in relation to facilitating a person becoming a lender under a P2P agreement; or
6. (f) operating a POP; or
7. (g) providing targeted support,
8. except to the extent that the carrying on of such a regulated activity constitutes MiFID, equivalent third country or optional exemption business.
(3)
[deleted]

A firm carrying on MiFID, equivalent third country or optional exemption business should consider whether the requirements in COBS 14.3A (Information about financial instruments (MiFID provisions)) apply.

Providing a description of the nature and risks of designated investments

A firm must provide a client with a general description of the nature and risks of designated investments, taking into account, in particular, the client's categorisation as a retail client or a professional client. That description must:

(1)
explain the nature of the specific type of designated investment concerned, as well as the risks particular to that specific type of designated investment, in sufficient detail to enable the client to take investment decisions on an informed basis; and
(2)
include, where relevant to the specific type of designated investment concerned and the status and level of knowledge of the client, the following elements:
1. (a)
  the risks associated with that type of designated investment including an explanation of leverage and its effects and the risk of losing the entire investment;
2. (b)
  the volatility of the price of designated investments and any limitations on the available market for such investments;
3. (c)
  the fact that an investor might assume, as a result of transactions in such designated investments, financial commitments and other additional obligations, including contingent liabilities, additional to the cost of acquiring the designated investments; and
4. (d)
  any margin requirements or similar obligations, applicable to designated investments of that type.

If afirm provides aretail client with information about adesignated investment that is the subject of a currentoffer of transferable securities to the public and a prospectus has been published in connection with that offer in accordance with therules inPRM, thatfirm must inform theretail client where that prospectus is made available to the public.

Providing a description of the nature and risks of designated investments

Where the risks associated with a designated investment composed of two or more different designated investments or services are likely to be greater than the risks associated with any of the components, a firm must provide an adequate description of the components of that designated investment and the way in which its interaction increases the risks.

In the case of a designated investment that incorporates a guarantee by a third party, the information about the guarantee must include sufficient detail about the guarantor and the guarantee to enable the retail client to make a fair assessment of the guarantee.

Satisfying the provision rules

Providing a key features document or product summary may satisfy the requirements of the rules in this section.

Firms advising on P2P agreements

Examples of information a firm advising on P2P agreements or P2P portfolios should provide to explain the specific nature and risks of a P2P agreement or a P2P portfolio include:

(1)
expected and actual default rates in line with the requirements in COBS 4.6 on past and future performance;
(2)
a summary of the assumptions used in determining expected future default rates;
(3)
a description of how loan risk is assessed, including a description of the criteria that must be met by the borrower before the operator of the electronic system in relation to lending considers the borrower eligible for a P2P agreement;
(4)
where lenders have the choice to invest in specific P2P agreements, details of the creditworthiness assessment of the borrower carried out;
(5)
whether the P2P agreement benefits from any security and if so, what;
(6)
a fair description of the likely actual return, taking into account fees, default rates and taxation;
(7)
an explanation of how any tax liability for lenders arising from investment in P2P agreements would be calculated;
(8)
an explanation of the operator of the electronic system in relation to lending's procedure for dealing with a loan in late payment or default;
(9)
the procedure for a lender to access their money before the term of the P2P agreement has expired; and
(10)
an explanation of what would happen if the operator of the electronic system in relation to lending fails, including confirmation that there is no recourse to the Financial Services Compensation Scheme.

When complying with the information requirements set out in this chapter and other parts of the FCA Handbook, firms advising on a P2P agreement or a P2P portfolio may also wish to consider providing to retail clients any other information that an operator of an electronic system in relation to lending must disclose in accordance with COBS 18.12.

Firms providing information to clients, and communicating information, about an innovative finance ISA should also have regard to the guidance in COBS 4.5.9G.

Product information: form

The documents and information provided in accordance with the rules in this section must be in a durable medium or available on a website (where that does not constitute a durable medium) that meets the website conditions.

The timing rules

(1)
The information to be provided in accordance with the rules in this section must be provided in good time before a firm carries on designated investment business with or for a retail client.
(2)
A firm may provide that information immediately after it begins to carry on that business if:
1. (a)
  the firm was unable to comply with (1) because, at the request of the client, the agreement was concluded using a means of distance communication which prevented the firm from complying with that rule; and
2. (b)
  in any case where the rule on voice telephony communications (COBS 5.1.12 R) does not otherwise apply, the firm complies with that rule as if the client was a consumer.

Keeping the client up-to-date

A firm must notify a client in good time about any material change to the information provided under the rules in this section which is relevant to a service that the firm is providing to that client. That notification must be given in a durable medium if the information to which it relates is given in a durable medium.

Information about UCITS schemes and non-UCITS retail schemes

If a firm provides a client with a product summary that meets all of the requirements applying in relation to that document in DISC, it will have provided appropriate information for the purpose of the requirement to disclose information on:

(1)
designated investments and investment strategies (COBS 2.2.1R (1)(b)); and
(2)
costs and associated charges (COBS 2.2.1R (1)(d) and COBS 6.1.9 R;

in relation to the costs and associated charges in respect of the UCITS scheme or non-UCITS scheme itself, including the exit and entry commissions.

Distributor disclosure requirements for UCITS or non-UCITS retail schemes

A product summary provides sufficient information in relation to the costs and associated charges in respect of the UCITS or non-UCITS retail scheme itself. However, a firm distributing units in a UCITS or non-UCITS retail scheme should also inform a client about all of the other costs and associated charges related to the provision of its services in relation to units in the UCITS or non-UCITS retail scheme (see COBS 6.1ZA.14BR and DISC 6.6.1R(2)).

COBS 14.3A Information about financial instruments (MiFID provisions)

Application

This section applies to a firm in relation to its MiFID, equivalent third country or optional exemption business.

Certain provisions in this section require firms to provide clients with information ‘in good time’. Guidance on the provision of information ‘in good time’ can be found in COBS 1.4.2G.

Providing a description of the nature and risks of financial instruments

A firm must provide a client with:

(1)
appropriate guidance on, and warnings of, the risks associated with investments in financial instruments or in respect of particular investment strategies;
(2)
information on whether a particular financial instrument is intended for retail or professional clients, taking account of the identified target market in accordance with the rules in PROD 3; and
(3)
the information required by this section in a comprehensible form in such a manner that the client is reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis. That information may be provided in a standardised format.

[Note: article 24(4)(b) and article 24(5) of MiFID]

COBS 14.3A.3R supplements COBS 2.2A.2R (Information disclosure before providing services (MiFID provisions)).

(1) A firm must provide a client with a general description of the nature and risks of financial instruments, taking into account, in particular, the client's categorisation as either a retail client, professional client or eligible counterparty.
(2)
The description in (1) must explain, in sufficient detail to enable the client to take investment decisions on an informed basis:
1. (a)
  the nature of the specific type of financial instrument concerned;
2. (b)
  the functioning and performance of the financial instrument in different market conditions, including both positive and negative conditions; and
3. (c)
  the risks particular to that specific type of financial instrument.
(3)
Where relevant to the specific type of financial instrument concerned and the status and level of knowledge of the client, the description of the risks in (1) and (2) must include:
1. (a)
  the risks associated with that type of financial instrument including an explanation of leverage and its effects;
2. (aa)
  the risk of losing the entire investment, including the risks associated with insolvency of the issuer or related events, such as bail in;
3. (b)
  the volatility of the price of such instruments and any limitations on the available market for such instruments;
4. (c)
  information on any impediments to, or restrictions on, disinvestment (which may, for example, be relevant to illiquid financial instruments or financial instruments with a fixed investment term). This must include:
  1. (i)
    an illustration of the possible exit methods and consequences of any exit;
  2. (ii)
    possible constraints on the sale of such instruments; and
  3. (iii)
    the estimated time frame for the sale of the such instrument before recovering the initial costs of the transaction;
  (d) the fact that an investor might assume, as a result of transactions in such instruments, financial commitments and other additional obligations, including contingent liabilities, additional to the cost of acquiring the instruments; and
5. (e) any margin requirements or similar obligations, applicable to instruments of that type.

If a firm provides a retail client with information about a financial instrument that is the subject of a current offer of transferable securities to the public and a prospectus has been published in connection with that offer in accordance with the rules in PRM, that firm must inform the client where that prospectus is made available to the public.

Where a financial instrument is composed of 2 or more different financial instruments or services, a firm must provide an adequate description of:

(1) the legal nature of that financial instrument;

(2) the components of that financial instrument; and

(3) the way in which the interaction between the components affects the risks of the investment.

(1) Where a financial instrument incorporates a guarantee or capital protection, a firm must provide the client with information about the scope and nature of that guarantee or capital protection.

(2) When the guarantee is provided by a third party, the information in (1) must include sufficient detail about the guarantor and the guarantee to enable the client to make a fair assessment of the guarantee.

Satisfying the provision rules

(1)
Where a firm is required to provide information to a client before the provision of a service, each transaction in respect of the same type of financial instrument should not be considered as the provision of a new or different service.
(2)
But a firm should ensure that the client has received all relevant information in relation to a transaction which subsequently takes place, such as details of product charges that differ from those disclosed in respect of the prior transaction or transactions.

Timing of disclosure

A firm must provide a client with the information required by this section in good time before the provision of investment services or ancillary services to a client.

Medium of disclosure

The information provided in accordance with the rules in this section must be provided in a durable medium or by means of a website (where it does not constitute a durable medium) provided that the website conditions are satisfied.

Keeping the client up-to-date

(1) A firm must notify a client in good time about any material change to the information provided under the rules in this section which is relevant to a service that the firm is providing to that client.

(2) The notification in (1) must be given in a durable medium if the information to which it relates was given in a durable medium.

Record keeping

A firm to which SYSC 9 applies is required to keep records of all services, activities and transactions undertaken by it.

In complying with the requirements in SYSC 9, a firm to which those rules apply must keep a record of the information provided to each client in compliance with the rules in this section applicable to MiFID, equivalent third country or optional exemption business.

COBS 14.4 Provision of information by an intermediate Unitholder

[not used]

Information requests by authorised fund managers for liquidity management purposes

If an intermediate Unitholder receives a reasonable request from an authorised fund manager for information relating to the beneficial owners of the units of a scheme that it operates which the authorised fund manager reasonably needs for the purposes of liquidity management, the intermediate Unitholder must provide that information to the authorised fund manager as soon as is reasonably practicable.

Examples of information which may be reasonably requested by an authorised fund manager include:

(1)
a breakdown of the total number of units held by the intermediate Unitholder in each scheme to indicate the number of units attributable to individual beneficial owners; and
(2)
information about the types of distribution channel which have been used to sell the units to the relevant beneficial owners.

In determining whether a request from an authorised fund manager is reasonable, an intermediate Unitholder may take into account the frequency with which such requests have been received from that authorised fund manager.

COBS 14 Annex 1 Lifetime ISA information

	This Annex belongs to COBS 13.3.1R(3) and COBS 14.2.1R(4A).
	Information which comprises the following:
1	Features of a lifetime ISA
1.1	R	An explanation to the retail client of the key features of a lifetime ISA, including:
		(1)	eligibility criteria to open and subscribe to a lifetime ISA;
		(2)	annual lifetime ISA subscription limits;
		(3)	tax treatment of qualifying investments held in a lifetime ISA;
		(4)	process for transferring a lifetime ISA;
		(5)	eligibility for the lifetime ISA government bonus; and
		(6)	the lifetime ISA government withdrawal charge and the circumstances in which this might be incurred.
1.2	R	The explanation in COBS 14 Annex 1 1.1R(6) should include a warning that:
		(1)	the lifetime ISA government withdrawal charge recovers any lifetime ISA government bonus and any investment growth on that bonus plus an additional amount; and
		(2)	if the lifetime ISA government withdrawal charge is incurred, the retail client could receive back less than they paid in.
2	Additional factors for a retail client to consider when deciding whether to invest in a lifetime ISA
2.1	R	An explanation to the retail client of:
		(1)	the different savings objectives for which the lifetime ISA is intended, being house purchase and/or saving for retirement, either in the alternative or in combination; and
		(2)	the types of qualifying investments which can be held in the lifetime ISA being sold by the firm.
2.2	R	A warning that if a retail client saves in a lifetime ISA instead of enrolling in, or contributing to, a qualifying scheme, occupational pension scheme or personal pension scheme:
		(1)	the retail client may lose the benefit of contributions by an employer (if any) to that scheme; and
		(2)	the retail client's current and future entitlement to means tested benefits (if any) may be affected.
2.3	G	The explanation in COBS 14 Annex 1 2.1R should:
		(1)	encourage a retail client to consider their lifetime ISA subscription level and choice of qualifying investment in relation to their savings objectives, their expected investment horizon and their financial circumstances as a whole, including other provision for retirement; and
		(2)	inform the retail client that the factors in (1) may change over time and that the retail client should regularly review their lifetime ISA subscription and/or qualifying investments.
3	Example outcome of retirement saving by a retail client in a lifetime ISA
3.1	R	A descriptive heading such as ‘What a lifetime ISA might be worth at age 60?’
3.2	R	A completed version of the table in COBS 14 Annex 1 3.5R.
3.3	R	An explanation, positioned adjacent to this table on the same page, stating that:
		(1)	the table is designed to:
			(a)	help the retail client understand what the value of a lifetime ISA might be at age 60, depending on the age at which saving starts and assuming the maximum annual subscription at the beginning of each tax year up to age 50 and receipt of the lifetime ISA government bonus; and
			(b)	provide information for a retail client who is saving for retirement in a lifetime ISA and so may not be relevant to a retail client whose saving objective for a lifetime ISA is house purchase; and
		(2)	the estimated outcomes in Columns 4 and 5:
			(a)	are based on standardised rates of return which may not reflect:
				(i)	actual or expected returns; or
				(ii)	the retail client’s choice of qualifying investment for a lifetime ISA (accompanied by an indication of how the retail client can access information relating to the qualifying investments which the retail client may purchase from the firm); and
			(b)	include the effect of lifetime ISA charges and inflation on estimated outcomes from a lifetime ISA; and
		(3)	Column 6 shows the effect of lifetime ISA charges and inflation on the returns from a lifetime ISA which the retail client can use to compare the lifetime ISA charges applicable to other lifetime ISAs and charges applicable to longer-term savings products.
3.4	R	The explanations in COBS 14 Annex 1 3.3R(2) and COBS 14 Annex 1 3.3R(3) must include a statement that lifetime ISA charges taken into account in the table:
		(1)	may vary over time; and
		(2)	exclude any fee or charge:
			(a)	payable by or on behalf of a retail client to a firm in relation to the provision of a personal recommendation or ready-made suggestion by the firm in respect of the lifetime ISA; and
			(b)	relating to the qualifying investments held in the lifetime ISA (including in relation to the provision of a personal recommendation or ready-made suggestion in respect of those investments).
3.5	R	This table belongs to COBS 14 Annex 1 3.2R.
		1	2	3	4	5	6
		Age saving in a lifetime ISA started	Total amount paid in by lifetime ISA saver/ investor	Total amount paid in, plus lifetime ISA government bonus	Estimated outcome at age 60 from 0% return	Estimated outcome at age 60 from x% return	Charges and estimated inflation would reduce a x% return to
			£	£	£	£	%
		18
		25
		30
		35
		40
3.6	R	In preparing the table in COBS 14 Annex 1 3.5R, firms must:
		(1)	Round all sterling amounts down to the nearest whole pound.
		(2)	Complete Column 2 on the basis of:
			(a)	the retail client attaining each age listed in Column 1 in the tax year in respect of which the retail client is proposing to make a lifetime ISA subscription; and
			(b)	a maximum annual lifetime ISA subscription being made on 6 April of that tax year and each subsequent tax year, up to and including the tax year in which the retail client would reach age 50 (based on each assumed age in (a)).
		(3)	Complete Column 3 on the basis of:
			(a)	subscriptions as calculated in Column 2; and
			(b)	receipt by the retail client of the lifetime ISA government bonus on:
				(i)	5 April 2018 for the tax year 2017/18 (where relevant); and
				(ii)	6 April of each subsequent tax year, up to and including the tax year in which the retail client would reach age 50 (based on each assumed age in 2(a)).
		(4)	Complete Columns 4 and 5 on the basis of:
			(a)	investment of the retail client’s assumed subscriptions and the lifetime ISA government bonus, as calculated for the purposes of Columns 2 and 3;
			(b)	(for Column 4) a nominal annual rate of return of 0%;
			(c)	(for Column 5) a nominal annual rate of return equal to the maximum intermediate rate of return ‘x’ given in COBS 13 Annex 2 2.3R; and
			(d)	the outcome in sterling in real terms:
				(i)	based on the nominal annual rate of return in the relevant column;
				(ii)	net of the intermediate rate of price inflation given in COBS 13 Annex 2 2.5R;
				(iii)	net of the effect of any lifetime ISA charges; and
				(iv)	compounded annually at the end of each tax year, up to and including the tax year in which the retail client would reach age 60 (based on each assumed age in 2(a)).
		(5)	Complete Column 6 on the basis of a percentage rate ‘y’ (rounded to the nearest tenth of 1%), where ‘y’ is the annual rate of return which must be applied to each amount shown in Column 3 and compounded annually over the relevant period to achieve the sterling amount shown in Column 5.
4	Projections
4.1	R	Where a firm chooses to provide a projection, including a personal projection, in relation to investing in a lifetime ISA in addition to the information in COBS 14 Annex 1 3 (Example outcome of retirement saving by a retail client in a lifetime ISA), a firm must ensure that:
		(1)	the information in COBS 14 Annex 1 3 is displayed at least as prominently as the projection;
		(2)	where a firm that communicates a projection for a lifetime ISA in relation to its MiFID or equivalent third country business, the projection complies with the future performance requirements in COBS 4.5A.14R; and
		(3)	where a firm that communicates a projection for a lifetime ISA which is not in relation to its MiFID or equivalent third country business, the projection must be either a standardised deterministic projection or a stochastic projection in accordance with COBS 13 Annex 2.
5	Qualifying investments
5.1	G	The information which a firm provides to a retail client in accordance with this Annex is intended to inform the retail client about the implications of that retail client saving and/or investing in a lifetime ISA (as opposed to saving and/or investing outside a wrapper or in a different wrapper or pension wrapper). A firm must still take into account and comply with any other requirements of this sourcebook in connection with the sale by the firm of qualifying investments to be held in a lifetime ISA.