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COBS 13.4 Contents of a key features illustration

COBS 13.4.1RRP

1 A key features illustration must include appropriate charges information, information about any interest that will be paid to clients on money held within a personal pension scheme bank account5 and, if it is a packaged product which is not a financial instrument:

  1. (1)

    must include a standardised deterministic projection;

  2. (2)

    the projection and charges information must be consistent with each other so that:6

    6
    1. (a)

      the same intermediate growth rate and assumptions about regular contributions are used;6

    2. (b)

      a projection in nominal terms is accompanied by an effect of charges table and reduction in yield information in nominal terms; and6

    3. (c)

      a projection in real terms is accompanied by an effect of charges table and reduction in yield information in real terms;6

  3. (3)

    it may also include stochastic projections if there are reasonable grounds for believing that a retail client will be able to understand the stochastic projection6 except that the most prominent projection must be a standardised deterministic projection.

    6

Exceptions

COBS 13.4.2RRP

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:3

3
  1. (1)

    unless 3there are reasonable grounds for believing that it3 will be sufficient to enable a retail client to make an informed decision about whether to invest; or

    3
  2. (2)

    if it is part of a3 direct offer financial promotion which contains a personal recommendation; or3

    3
  3. (3)

    if a personal pension scheme or a stakeholder pension scheme is facilitating the payment of an adviser charge; or3

  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; or3

  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:3

    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;3

    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; and3

    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.3

COBS 13.4.3GRP

A generic key features illustration 3is unlikely to be sufficient to enable a retail client to make an informed decision about whether to invest if the premium or investment returns on the product will be materially affected by the personal characteristics of the investor.

3
COBS 13.4.4RRP

There is no requirement under COBS 13.4.1 R5 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); or7

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  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. 7

COBS 13.4.4AR

7Where 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.

COBS 13.4.5GRP

Although there may be no obligation to include a projection in a key features illustration, where a firm chooses to include one, the projection must follow the appropriate requirements, as outlined in this section, or for financial instruments under COBS 4.6.7 R.