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SIFA 9.14 Projections

SIFA 9.14.1G

COB 6.6 applies to a firm in respect of projections for packaged products. A firm must not provide a projection for a packaged product unless the projection is calculated and presented in accordance with the rules in COB 6.6 . A firm should not provide its own unauthorised projections.

Why do you need to follow these rules?

SIFA 9.14.2G

To avoid committing an offence under section 397 of the Act (Misleading statements and practices) you should ensure that all forecasts of future values of investments are not misleading, false or deceptive. In respect of packaged products COB 6.6 amplifies Principle 7 which requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way that is clear, fair and not misleading. A projection needs to be carried out on a basis of consistent rates of investment return so that firms do not seek to compete on the basis of wholly speculative forecasts as to the potential value of future benefits from an investment.

How do you disclose this information?

SIFA 9.14.3G

An IFA firm must ensure that a projection given to a customer is relevant to that customer's circumstances (COB 6.6.7).

SIFA 9.14.4G

An IFA can hand over the projections prepared by a product provider. If you wish to make your own calculations then you must comply with the rules in COB 6.6 .

SIFA 9.14.5G

COB 6.5 sets out circumstances in connection with potential sales when projections must be given.

Other considerations

SIFA 9.14.6G

There is an exception to the rules in COB 6.6 for pension benefit projections that meet the requirements in COB 6.6.5 .

SIFA 9.14.7G

The FSA keeps the projection rates on investment products under review. In June 2003 the FSA announced that it will take a fundamental look at its role in setting projection rates and the standards it expects the industry to adopt in illustrating potential returns to its customers.