1The provision of purely factual information does not become regulated advice merely because it feeds into the customer’s own decision-making process and is taken into account by them.
1Regulated advice includes any communication with the customer which, in the particular context in which it is given, goes beyond the mere provision of information and is objectively likely to influence the customer’s decision whether or not to buy or sell.
1A key to the giving of advice is that the information:
Information may often involve:
company news or announcements; or
an explanation of the terms and conditions of an investment; or
a comparison of the benefits and risks of one investment as compared to another; or
league tables showing the performance of investments of a particular kind against set published criteria; or
details of directors’ dealings in the shares of their own companies; or
alerting persons to the happening of certain events (for example, XYZ shares reaching a certain price).
In the FCA's opinion, however, such information may take on the nature of advice if the circumstances in which it is provided give it the force of a recommendation. For example:
a person may offer to provide information on directors’ dealings on the basis that, in his opinion, were directors to buy or sell investors would do well to follow suit;
a person may offer to tell a client when certain shares reach a certain value (which would be advice if the person providing the information has offered to do so on the basis that the price of the shares means that it is a good time to buy or sell them); and
a person may provide information on a selected, rather than balanced, basis which would tend to influence the decision of the recipient.
1A key question is whether an impartial observer, having due regard to the regulatory regime and guidance, context, timing and what passed between the parties, would conclude that what the adviser says could reasonably have been understood by the customer as being advice.
1An explicit recommendation to buy or sell is likely to be advice. However, something falling short of an explicit recommendation can be advice too. Any significant element of evaluation, value judgment or persuasion is likely to mean that advice is being given.
1A person can give advice without saying (or implying) categorically that the customer should invest. The adviser does not have to offer a definitive recommendation as to whether the customer should go ahead.
For example, saying the following can still be advice:
The examples in (2):
1One factor in deciding whether what was said by an adviser in a particular situation did or did not amount to advice is to look at the inquiry to which the adviser was responding. If an investor asks for a recommendation, any response is likely to be regarded as advice.
1On the other hand, if a customer makes a purely factual inquiry it may be the case that a reply which simply provides the relevant factual information is no more than that. In this case it is relevant whether the adviser makes it clear that it does not give advice; or whether the adviser runs an advisory business.