COBS 6 – Information About Investments

1. Chapter Summary

COBS 6 governs the requirements for firms regarding information provision about investments to clients, particularly retail clients. It ensures that firms provide accurate, clear, and not misleading information on the characteristics, risks, and charges of investments before clients make decisions. This chapter is fundamental to protecting consumers by promoting transparency and enabling informed investment choices, reducing the risk of mis-selling and enhancing market integrity.

2. Applicability

COBS 6 applies primarily to firms dealing with retail clients in the context of MiFID business and regulated investment activities. It covers information provision requirements when firms communicate about investment products, including during the sales process and on an ongoing basis. Professional clients and eligible counterparties are generally outside the scope of the full disclosure obligations here.

3. Key Rules and Their Meaning

• COBS 6.1.1R – Information Must Not Be False or Misleading Firms must ensure all information communicated to clients about investments is clear, fair, and not misleading. This protects clients from deceptive marketing or inaccurate product descriptions.
• COBS 6.1.4R – Pre-Contractual Information Firms are required to provide key information about the investment product before the contract is concluded. This includes essential product features, risks, costs, and any restrictions.
• COBS 6.1.6R – Risk Warnings Firms must provide appropriate risk warnings tailored to the nature of the investment product and the client’s profile, ensuring clients understand potential downside risks.
• COBS 6.1.8R – Disclosure of Charges and Costs Firms must disclose all relevant charges, fees, and costs associated with the investment product so clients can assess their financial impact.
• COBS 6.2.1R – Ongoing Information and Reporting Where applicable, firms must provide clients with regular updates on investment performance, charges incurred, and any material changes.

4. Interpretation Notes / FCA Expectations

• The FCA expects firms to tailor communications to the client’s knowledge and experience level to enhance understanding.
• Information should be balanced, presenting both benefits and risks clearly.
• Firms should avoid technical jargon unless properly explained.
• The FCA stresses the importance of timely provision of information, especially pre-contractually, to support decision-making.

5. Practical Considerations for Firms

• Develop standardized product information documents and risk disclosure statements.
• Train staff on effective communication and regulatory requirements for transparency.
• Keep thorough records of information provided, including dates and formats (e.g., digital, paper).
• Implement controls to regularly review client communications for accuracy and compliance.

6. Related Handbook References

• COBS 5 – Suitability and Appropriateness (ensuring product matches client needs)
• COBS 2 – Treating Customers Fairly (overarching principles for client treatment)
• PRIN – Principles for Businesses (principle on communications with clients)
• SYSC – Systems and Controls (governance over client communications and recordkeeping)
• COBS 10 – Client Money and Assets (related to disclosures involving client funds)

7. Regulatory Focus / Enforcement Risk

• The FCA closely monitors misleading or incomplete information provision, which is a frequent cause of complaints and enforcement action.
• Particular scrutiny is applied to risk disclosure adequacy for complex or high-risk investment products.
• Firms failing to provide clear cost and charges disclosures face high enforcement risk.
• Ongoing reporting obligations have become a focus in ensuring clients receive timely updates about their investments.