PERG 8.26 The investment must be a particular investment

For the purposes of article 53(1)1, advice must relate to a particular investment – generic or general advice is not covered. Generic or general advice may, however, be a financial promotion (see PERG 8.4).

Generic advice will not be caught by article 53(1)1. Examples of generic advice may include:

1. (1)

   financial planning;

2. (2)

   advice on the merits of investing in Japan rather than Europe;

3. (3)

   advice on the merits of investing in investment trusts as opposed to unit trusts or unit-linked insurance; and

4. (4)

   advice on the merits of investing offshore, or in fixed income rather than floating rate bonds.

PERG 8.30A includes material about2 guiding a person through a decision tree.2

Examples of a particular investment include:

1. (1)

   securities – shares in ABC plc, Treasury 10% 2001 stock, XYZ plc warrants;

2. (2)

   units in collective investment schemes - ABC smaller companies fund, XYZ Growth Trust;

3. (3)

   exchange-traded derivatives - LME Copper Grade A 3 months, LIFFE Japanese Government bond, ABC plc traded options;

4. (4)

   contractual investments, for example, futures and other contracts having specified terms and conditions such as duration, volume, interest rate or price and which are to be entered into with a particular person;

5. (5)

   contracts of insurance, which are both products and contractual investments; so a particular investment would include:

   1. (a)

      the ABC Life Personal Pension or the XYZ Life Guaranteed Bond; or

   2. (b)

      a contract having essential terms and provider specified – for instance, a 25 year with-profits low cost endowment contract covering husband and wife and to be issued by XYZ Life Plc.

1. (1)

   2Although giving generic advice is generally not a regulated activity, if it is given in the course of or in preparation for a regulated activity it can form part of that regulated activity.

2. (2)

   For example, if a firm gives generic advice (for instance about the merits of investing in Japan rather than Europe) and then goes on to identify a particular Japanese share, the generic advice will form part of the regulated activity of advising on investments (except P2P agreements).

3. (3)

   Another example is a firm that provides generic advice to a customer or a potential customer prior to or in the course of carrying on the regulated activity of arranging (bringing about) deals in investments for the customer. That generic advice is part of that regulated activity of arranging (bringing about) deals in investments.