PERG 8.26 The investment must be a particular investment

PERG 8.26.1G

For the purposes of article 53(1)1, advice must relate to a particular investment – generic or general advice is not covered. Generic or general advice may, however, be a financial promotion (see PERG 8.4).

PERG 8.26.2G

Generic advice will not be caught by article 53(1)1. Examples of generic advice may include:

  1. (1)

    financial planning;

  2. (2)

    advice on the merits of investing in Japan rather than Europe;

  3. (3)

    advice on the merits of investing in investment trusts as opposed to unit trusts or unit-linked insurance; and

  4. (4)

    advice on the merits of investing offshore, or in fixed income rather than floating rate bonds.

PERG 8.26.3G

In the FCA's view, guiding a person through a decision tree should not, of itself, involve advice within the meaning of article 53(1)1 (it should be generic advice). For example, helping a person to understand what the questions or options are and how to determine which option applies to his particular circumstances. But a recommendation that the person concerned should, if the results of using the decision tree so indicate, buy a stakeholder personal pension from a particular provider (or any other particular investment) would be advice for the purpose of article 53(1)1. An unauthorised person guiding another through a decision tree needs to make it clear that the decision tree aids generic decisions and that the person doing the guiding is not recommending any particular investment.

PERG 8.26.4G

Examples of a particular investment include:

  1. (1)

    securitiesshares in ABC plc, Treasury 10% 2001 stock, XYZ plc warrants;

  2. (2)

    units in collective investment schemes - ABC smaller companies fund, XYZ Growth Trust;

  3. (3)

    exchange-traded derivatives - LME Copper Grade A 3 months, LIFFE Japanese Government bond, ABC plc traded options;

  4. (4)

    contractual investments, for example, futures and other contracts having specified terms and conditions such as duration, volume, interest rate or price and which are to be entered into with a particular person;

  5. (5)

    contracts of insurance, which are both products and contractual investments; so a particular investment would include:

    1. (a)

      the ABC Life Personal Pension or the XYZ Life Guaranteed Bond; or

    2. (b)

      a contract having essential terms and provider specified – for instance, a 25 year with-profits low cost endowment contract covering husband and wife and to be issued by XYZ Life Plc.