Reset to Today

To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004.

Content Options:

Content Options

View Options:

Alternative versions

  1. Point in time
    2005-12-30

SIFA 9.2 Clear, fair and not misleading communication

SIFA 9.2.1G

When you communicate information to a customer, you must take reasonable steps to communicate in a way that is clear, fair and not misleading (COB 2.1.3 R). This is a requirement in COB, MCOB and ICOB. However MCOB and ICOB are more prescriptive about the terms that must or must not be used.

Why is it important to communicate clearly?

SIFA 9.2.2G

You will want to communicate clearly so that your customers understand the scope of advice, the range of products on which you will advise and the payment options. For example, a firm holding itself out as independent must provide whole-of-market advice and offer customers the option to pay by fee for that advice.

SIFA 9.2.3G

You will also want to ensure that they understand why you are recommending certain products or services and so suitability letters and statements of demands and needs should be clear, fair and not misleading.

SIFA 9.2.4G

Where your communications have been clear, fair and not misleading you face a reduced risk of complaints as your customers should be fully aware of the advantages and risks of the products you have recommended.

How should you communicate and where are the relevant rules?

SIFA 9.2.5G

COB 2.1 sets out the basic requirements for all types of communication to be clear, fair and not misleading.

SIFA 9.2.6G

COB 2.1 embraces all communications with customers. Communication with customers is not a one-off process. It begins with the initial disclosure document and fees and commission statement (also known as the menu) and continues through the advice and selling process ending with the production of the suitability letter and key features. The detailed requirements for these communications are found in COB 4, COB 5 and COB 6.

SIFA 9.2.7G

This is not to suggest that communications do not need to be clear, fair and not misleading once the suitability letter has been provided. The requirement to be clear, fair and not misleading continues throughout the customer relationship, for example, when dealing with a complaint or providing a report. It also applies to intermediate customers who do not receive initial disclosure documents and menus.

A further consideration:

SIFA 9.2.8G

COB Section 2.1 does not apply to a firm in respect of the communication and approval of financial promotions. This is dealt with separately under COB 3 (COB 2.1.1 R) but the same overarching standard of clear, fair and not misleading applies to all communications.

The following sections of the Guide are also relevant:

'Financial promotions' - Chapter 9.3

'Client classification' - Chapter 9.5

'Know your customer' - Chapter 9.8

'Suitability' - Chapter 9.9

'Assessing your customer's understanding of risk' - Chapter 9.10

If you do mortgage and general insurance business you should also refer to MOGI 2 and GIGI 3.