COBS 13.4 Contents of a key features illustration

1 A key features illustration must include appropriate charges information, information about any interest that will be paid to clients on money held within a personal pension scheme bank account5 and, if it is a packaged product which is not a financial instrument:

1. (1)

   must include a standardised deterministic projection;

2. (2)

   the projection and charges information must be consistent with each other so that:6

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   1. (a)

      the same intermediate growth rate and assumptions about regular contributions are used;6

   2. (b)

      a projection in nominal terms is accompanied by an effect of charges table and reduction in yield information in nominal terms; and6

   3. (c)

      a projection in real terms is accompanied by an effect of charges table and reduction in yield information in real terms;6

3. (3)

   it may also include stochastic projections if there are reasonable grounds for believing that a retail client will be able to understand the stochastic projection6 except that the most prominent projection must be a standardised deterministic projection.

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When the rules in this chapter require a key features illustration to be prepared, it must not take the form of a generic key features illustration:3

1. (1)

   unless 3there are reasonable grounds for believing that it3 will be sufficient to enable a retail client to make an informed decision about whether to invest; or

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2. (2)

   if it is part of a3 direct offer financial promotion which contains a personal recommendation; or3

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3. (3)

   if a personal pension scheme or a stakeholder pension scheme is facilitating the payment of an adviser charge; or3

4. (4)

   if a group personal pension scheme or a group stakeholder pension scheme is facilitating the payment of a consultancy charge and the combined effect of the consultancy charges facilitated by the product and the product charges is not consistent for all investors in the relevant group or sub-group; or3

5. (5)

   unless it is prepared for groups or sub-groups of employees in a group personal pension scheme or a group stakeholder pension scheme and it contains:3

   1. (a)

      a generic projection which is prepared in accordance with COBS 13 Annex 2 paragraph 1.3 and based on a default fund or other commonly selected fund;3

   2. (b)

      an effect of charges table calculated in accordance with COBS 13 Annex 4 R paragraph 2 and contains additional rows that show a range of typical periods to retirement age; and3

   3. (c)

      reduction in yield information which is calculated in accordance with COBS 13 Annex 4 R paragraph 3.3(2) and combines the product charge and, if applicable, the consultancy charge.3

There is no requirement under COBS 13.4.1 R5 to include a projection in a key features illustration:

1. (1)

   for a single premium life policy bought as a pure investment product, a product with benefits that do not depend on future investment returns or any other product if it is reasonable to believe that a retail client will not need one to be able to make an informed decision about whether to invest; or

2. (2)

   if the product is a life policy that will be held in a CTF or sold with basic advice (unless the policy is a stakeholder pension scheme).5

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