DISC 2A General obligations

1. (1) Firms involved in the manufacture or distribution of a consumer composite investment must take reasonable steps to cooperate and share information with each other on a timely and appropriate basis so as to enable each firm to meet the information needs of retail investors and otherwise discharge its regulatory obligations in connection with the consumer composite investment.
2. (2) The obligation in (1) includes, in particular, a firm sharing information proactively or on reasonable request in the context of preparing or updating the product summary, such as a manufacturer sharing information about the consumer composite investment with a distributor or a distributor sharing information with a manufacturer about the characteristics and information needs of the retail investors in the consumer composite investment's target market.

1. (1) The regulatory obligations in DISC 2A.1.1R include, for an authorised person, relevant obligations under rules in DISC as well as other FCA rules– for example, under COBS, the Product Intervention and Product Governance sourcebook, COLL and Principle 12 and PRIN 2A (the Consumer Duty), as applicable.
2. (2) For the avoidance of doubt, a firm is not required to act in a way that may amount to a breach of its legal obligations. For example, the duty in DISC 2A.1.1R does not require a firm to disclose or receive commercially sensitive information which may be in breach of competition law, or the unnecessary sharing of customers’ personal data in contravention of data privacy law.

1. (1) The duty to share information in DISC 2A.1.1R should be interpreted in light of what is reasonably required by each firm to meet their regulatory obligations in connection with the consumer composite investment.
2. (2) In particular, where a distributor shares with a manufacturer information about the characteristics and information needs of retail investors in the consumer composite investment's target market, the level and quantity of that information should be proportionate and need not be fully comprehensive where, in the sharing firm's reasonable judgement, a representative sample provides sufficient information.

1. In complying with its obligations in DISC, a firm must:
2. (1) ensure that the information it provides to another firm involved in the manufacture or distribution of a consumer composite investment is accurate, clear, fair, and not misleading; and
3. (2) take reasonable care to avoid causing another firm involved in the manufacture or distribution of the consumer composite investment to be misled, or cause it to mislead retail investors, via the omission of information relevant to that firm's regulatory obligations.

In this chapter, references to a manufacturer and to manufacturing a consumer composite investment include, respectively, a firm that makes a material contribution to the manufacture of a consumer composite investment in collaboration with other manufacturers and the making of such a contribution.

Where firms collaborate in manufacturing a consumer composite investment, they must set out in a written agreement their respective roles and responsibilities in relation to the obligations under DISC.

Where more than one firm is involved in manufacturing a consumer composite investment, the written agreement in DISC 2A.1.6R may set out that one of the manufacturers is solely responsible for preparing and updating the product summary and for preparing and providing to distributors the underlying core information disclosures, provided this is reasonable in the circumstances.

In respect of each consumer composite investment it manufactures, a manufacturer must ensure the following are prepared and provided to each distributor in good time before the consumer composite investment is made available for distribution to retail investors:

1. (1) the product summary;
2. (2) the underlying core information disclosures; and
3. (3) sufficient and appropriate information about:
   1. (a) the consumer composite investment's target market, including the identified needs, characteristics and objectives of retail customers in the target market;
   2. (b) its assessment, including any relevant assumptions, in relation to the value to be provided by the consumer composite investment to retail investors in the target market;
   3. (c) any relevant risks it has identified in relation to retail investors, including in particular retail investors with characteristics of vulnerability; and
   4. (d) its distribution strategy for the consumer composite investment.

For the purposes of compliance with DISC 2A.2.1R and the related requirement in DISC 3.2.3R in relation to revised or updated product information, it will normally suffice for the manufacturer to make the required information and documents available on its website, provided they are easily accessible to all firms who may distribute the consumer composite investment.

1. (1) The purpose of providing the distributors with the core information disclosures is to:
   1. (a) assist the distributor in familiarising itself with the information underpinning the consumer composite investment's product summary; and
   2. (b) facilitate any further steps the distributor may consider appropriate to take to meet the information needs of retail investors by preparing and providing additional product communications such as further explanations, illustrations, or information that is more granular, or presented in a way that is more likely to be understood or engaged with by the relevant retail investors.
2. (2) Examples for the purposes of (1)(b) include:
   1. (a) layering information along the pre-sale investment journey;
   2. (b) supplementary product literature such as personalised illustrations of past performance and costs based on the retail investor's intended investment amount;
   3. (c) hover-over information that explains what different types of risk are and how they may be relevant to the retail investor; or
   4. (d) the use of graphics or images that support consumer understanding.

1. (1) A firm must not distribute a consumer composite investment to a retail investor unless the conditions in (2) are met.
2. (2) The conditions are that the firm must:
   1. (a) ensure that an up-to-date product summary for the consumer composite investment is available;
   2. (b) make the product summary available to the retail investor at an appropriate stage in the provision of the service or carrying on of the distribution activities;
   3. (c) take reasonable steps to promote engagement by the retail investor with the following information about the consumer composite investment, whether it is provided via the product summary or via any additional product communication:
      1. (i) its characteristics, reflecting the information disclosed under DISC 4.1.1R(5) and DISC 4.1.1R(9), as applicable;
      2. (ii) its ongoing costs figure, one-off entry costs figure and one-off exit costs figure, as applicable;
      3. (iii) applicable performance fees or carried interest, as per the information disclosed under DISC 6.3.6R;
      4. (iv) its risk and reward score and relevant material risks; and
      5. (v) any applicable warnings; and
   4. (d) provide the retail investor with a copy of the product summary in a durable medium at the time the sale is concluded or as soon as reasonably practicable afterwards and, in any case, before the retail investor is bound by any agreement to buy or otherwise invest in the consumer composite investment.

1. (1) The purpose of the steps required under DISC 2A.3.1R(2) is to help ensure the retail investor is equipped to make effective, timely and properly informed decisions about the merits of investing in the consumer composite investment, in keeping with firms' obligations under DISC 3.1.2R.
2. (2) In the FCA's view, the appropriate stage for making the product summary available to the retail investor will normally be early on in the investment journey and before the investor has initiated the transaction to buy or otherwise invest in the consumer composite investment, or provided instructions to the firm to arrange it for them.
3. (3) If it is not reasonably practicable to provide the retail investor with access to the product summary at an early stage in the investment journey, the firm should endeavour to provide it as soon as it is practicable.

1. (1) Where the conditions in (2) apply, the firm's obligations under DISC 2A.3.1R will be met by the firm if it complies with DISC 2A.3.1R(2)(d) and takes reasonable steps to encourage the retail investor to consider the information within the product summary before they are bound by the agreement to buy or otherwise invest in the consumer composite investment.
2. (2) The conditions are that:
   1. (a) the retail investor has approached the firm to buy or otherwise invest in the consumer composite investment or to give instructions for the firm to arrange a deal in the consumer composite investment for the retail investor to enter into as buyer; and
   2. (b) the firm has neither promoted the consumer composite investment to the retail investor nor advised the retail investor on the merits of investment in the consumer composite investment.

A firm is not required to comply with DISC 2A.3.1R where the consumer composite investment is distributed to or through a discretionary investment manager acting on behalf of a retail investor.

A firm may satisfy its obligations under DISC 2A.3.1R by providing the product summary to a person who is legally empowered (solely or jointly with others) to make investment decisions on behalf of the retail investor.

DISC 2A.3.1R does not apply where a distributor is acting on instructions of another distributor who is its client.

Where DISC 2A.3.6R applies, the responsibility is on the distributor with a direct relationship with the retail investor to ensure the retail investor is provided with a product summary in compliance with DISC 2A.3.1R.

The obligation in DISC 2A.3.1R is modified in respect of regular or repeated investments by the same retail investor in the same consumer composite investment, as follows:

1. (1) the firm must provide the product summary in respect of the initial transaction; and
2. (2) in respect of subsequent transactions, it suffices for the firm to notify the retail investor, at least at yearly intervals, of where they can find the latest version of the product summary.

In this section, a multi-option consumer composite investment is a product which is a combination of a wrapper and underlying investment options which are consumer composite investments and where the wrapper and the selected underlying consumer composite investments must be purchased together.

In relation to a multi-option consumer composite investment, the conditions in DISC 2A.4.4R and DISC 2A.4.5R apply instead of those in DISC 2A.3.1R.

The firm must verify that an up-to-date product summary for each of the underlying consumer composite investment options is available for provision to retail investors, as well as a general summary of the wrapper, including, as a minimum, an explanation of the wrapper’s general terms and conditions and information on the wrapper’s costs and charges as well as any benefits.

The firm must take reasonable care to ensure it, or another person in the distribution chain for the multi-option consumer composite investment, will provide the retail investor with:

1. (1) access to the general summary of the wrapper as well as the product summary, for each of the underlying consumer composite investment options, at an appropriate stage in the provision of the service or carrying on of the distribution activities, so as to assist the retail investor's consideration of the merits of investing through the wrapper and the investor’s consideration of the merits of investing in the underlying consumer composite investment options; and
2. (2) any of the following, in a durable medium, at the time the sale is concluded or as soon as reasonably practicable afterwards and, in any case, before the retail investor is bound by any agreement to buy or otherwise invest in the consumer composite investment:
   1. (a) the general summary of the wrapper together with the product summary for each of the options selected by the retail investor;
   2. (b) the general summary of the wrapper together with links to where the relevant product summaries for each of the options selected by the retail investor are to be found; or
   3. (c) a bespoke product summary comprising the information and links in (b), together with relevant information about the underlying consumer composite investments chosen by the retail investor and including, as a minimum, information on costs and charges as well as the risk and return information for the underlying options or the overall investment, such as in the firm's reasonable judgement may meet the retail investor's information needs.

Where the consumer composite investment is a share or unit in a fund with different share or unit classes, the manufacturer must prepare a product summary for each class of shares or units, except where DISC 2A.4.7R or DISC 2A.4.8R apply.

The manufacturer may combine information about two or more classes of the same consumer composite investment into a single product summary, provided the resulting document complies with DISC 3.1.2R.

Where, in the manufacturer's reasonable judgment, the core information disclosures for one class of a consumer composite investment is representative of other classes, it may select that class as the basis for a product summary to be provided to retail investors in respect of the representative class as well as the classes being represented, provided:

1. (1) the choice of representative class is fair to prospective retail investors in the classes being represented;
2. (2) the resulting product summary complies with DISC 3.1.2R in respect of the representative class as well as the classes being represented;
3. (3) the manufacturer keeps a record of the choice of representative class and of the classes being represented, as well as of the rationale for the choice.

Where DISC 2A.4.8R applies, the manufacturer must keep the record in DISC 2A.4.8R(3) for at least 3 years from the last date the share class is used as the representative class for a product summary.