Content Options

View Options

Status: You are viewing the version of the handbook as on 2005-06-30.

SIFA 9.2 Clear, fair and not misleading communication

SIFA 9.2.1G

When you communicate information to a customer, you must take reasonable steps to communicate in a way that is clear, fair and not misleading (COB 2.1.3 R).

Why is it important to communicate clearly?

SIFA 9.2.2G

You will want to communicate clearly so that your customers understand your advice and the products and services that you advise them on.

SIFA 9.2.3G

You will also want to ensure that they understand why you are recommending certain products or services and therefore suitability letters should be clear, fair and not misleading.

How should you communicate and where are the relevant rules?

SIFA 9.2.4G

Section 2.1 of the Conduct of Business (COB) sourcebook sets out how you should communicate investment-related issues with a customer.

SIFA 9.2.5G

You should consider your customer's knowledge of the particular investment business that the communication relates to and make reasonable steps to ensure that the communication is clear, fair and not misleading (COB 2.1.4 G).

SIFA 9.2.6G

All types of communication are covered by this requirement (COB 2.1.5 G), for example:

  1. (1)

    telephone calls;

  2. (2)

    financial reports;

  3. (3)

    any communication that is not a financial promotion; and

  4. (4)

    client agreements.

SIFA 9.2.7G

COB Section 2.1 does not apply to a firm when it communicates a financial promotion, when COB Chapter 3 will apply instead (COB 2.1.1 R). In other words, you have broadly similar obligations whether the communication is a financial promotion or not.

SIFA 9.2.8G

The following sections of this Overview are also relevant:

•'Financial promotions' - Chapter 9.3;

•'Client classification' - Chapter 9.5;

•'Know your customer' - Chapter 9.8;

•'Suitability' - Chapter 9.9; and

•'Assessing your customer's understanding of risk' - Chapter 9.10.