FCA Financial Promotions: Fair, Clear and Not Misleading (COBS 4.2)
Fair, Clear and Not Misleading [COBS 4.2]
Rule: All financial promotions must be fair, clear and not misleading.
Requirements:
- Present a balanced view of risks and benefits
- Don’t hide or obscure important information
- Don’t emphasise benefits without giving equal prominence to risks
- Use plain language
- Ensure claims are accurate and verifiable
Common failures:
- Headline claims not supported by body text
- Risk warnings in small print
- Cherry-picked performance figures
- Omitting material information
Source Text
COBS 4.2.1R (1) A firm must ensure that a communication or a financial promotion is fair, clear and not misleading.
COBS 4.2.2G A firm should consider whether a communication or financial promotion: (1) fails to put information in an appropriate context or give appropriate prominence to relevant information, particularly warnings or risk information; (2) presents information in a way which is likely to emphasise the benefits of a product or service over any risks or limitations; (3) contains statements which, although accurate, are likely to mislead or be misunderstood; (4) obscures or disguises material information or important warnings.