FCA Financial Promotions: Past Performance Rules (COBS 4.6)
Past Performance Rules [COBS 4.6]
Rule: If you include past performance information in a financial promotion, you must follow specific presentation requirements.
Core requirements [COBS 4.6.2R]
| Requirement | Details | Citation |
|---|---|---|
| Not most prominent | Past performance must not be most prominent feature | COBS 4.6.2R(1) |
| Appropriate time period | Based on complete 12-month periods for last 5 years (or whole period if shorter) | COBS 4.6.2R(2) |
| Complete period | Must include complete 12-month periods | COBS 4.6.2R(2) |
| Reference currency | Clearly state reference currency | COBS 4.6.2R(3) |
| Gross vs net | State whether figures are gross or net of charges | COBS 4.6.2R(4) |
| Warning required | Must include past performance warning | COBS 4.6.2R(5) |
Required warning [COBS 4.6.2R(5)]
The promotion must state prominently:
“Past performance is not a reliable indicator of future results.”
Or words to similar effect.
Simulated past performance [COBS 4.6.6R]
Additional requirements when showing simulated past performance:
| Requirement | Details | Citation |
|---|---|---|
| Based on actual past performance | Must relate to same investment type | COBS 4.6.6R(1) |
| Based on actual performance of other investments | Those substantially the same | COBS 4.6.6R(1) |
| Charges included | Must take account of all charges | COBS 4.6.6R(2) |
| Clear warning | Simulated performance warning required | COBS 4.6.6R(3) |
Simulated performance warning:
“These figures refer to simulated past performance. Past performance is not a reliable indicator of future results.”
Future performance [COBS 4.6.7R]
| Requirement | Details | Citation |
|---|---|---|
| Not based on simulated past | Cannot be based solely on simulated performance | COBS 4.6.7R(1) |
| Reasonable assumptions | Must be based on reasonable assumptions | COBS 4.6.7R(2) |
| If based on gross | Must disclose effect of commissions, fees, charges | COBS 4.6.7R(3) |
| Warning required | Clear warning it’s projection/forecast | COBS 4.6.7R(4) |
Source Text
COBS 4.6.2R: A firm must ensure that information that contains an indication of past performance of relevant business, a relevant investment or a financial index:
(1) does not give that information undue prominence within that communication and does not make it the most prominent feature of the communication;
(2) contains appropriate performance information which covers the immediately preceding five years, or the whole period for which the investment has been offered, the financial index has been established, or the service has been provided if less than five years, or such longer period as the firm may decide, and in every case that performance information is based on and shows complete 12-month periods;
(3) indicates the reference currency and the fact that the return may increase or decrease as a result of currency fluctuations if relevant;
(4) indicates clearly whether the figures are gross or net of charges;
(5) states prominently that the figures refer to the past and that past performance is not a reliable indicator of future results, or words to similar effect.
COBS 4.6.6R: A firm must ensure that a financial promotion relating to a relevant investment that contains an indication of simulated past performance:
(1) relates to an investment or a financial index, and is based on the actual past performance of one or more relevant investments or financial indices which are the same as, or underlie, the relevant investment concerned;
(2) takes into account all relevant charges…
(3) contains a prominent warning that the figures refer to simulated past performance and that past performance is not a reliable indicator of future results.