All information provided to you throughout your business relationship with a firm should be ‘fair, clear and not misleading’. This principle refers both to the content of the information and to the way it is presented to you.
Your firm should provide you with the relevant information in good time before you invest so that you can make informed decisions. Types of information you will receive before investing include:
Marketing communications: Whether or not you are a client of a firm, you may receive advertisements and other marketing communications issued by a firm. All advertisements and marketing communications have to be presented in such a way that you can identify them as being of a promotional nature.
Contracts: If you are a new retail client that a firm has taken on for the provision of investment services other than investment advice, you will be asked to agree in writing to a contract which will contain your and the firm's essential rights and obligations.
Information about the firm: A firm must give you general information about itself, including who regulates it and the services it offers to clients, to help you understand the nature of the services on offer and the risks involved.
Information on investment management: Where you have asked a firm to manage investments on your behalf, you should expect to receive information including a description of the management objectives and the related level of risk, what types of products or transactions may be involved in your portfolio and information about the valuation method and the frequency of valuations of your investments.
Information about financial products: You will receive information explaining the nature, risks and costs of financial products. Such information includes, for example, a description of the products' risks and whether prices/values may fluctuate. The amount of information will depend on the type of product, its complexity and risk profile.
Information about costs and charges: You will receive information about the direct and indirect costs and charges of a service or product, including any commission charged or paid. This should clearly show you the total costs. Sometimes, however, the precise amount of the total costs is not available at the time when the information is communicated to you. In such cases, you should instead receive sufficient information to see how the costs are going to be calculated, so that you can verify the total price once it is available.
Inducements are payments or non-monetary benefits which a firm receives or pays out as a result of advising on or arranging investments for its customers. The firm is required to disclose to you, as its customer, the essential terms of any arrangements relating to such fees, commissions or non-monetary benefits in summary form. It may, on your request, provide you with more information. The aim of this requirement is to enable you to understand and be informed of any incentives which may reward the firm for promoting a particular product or service.
Before investing, it would be sensible for you to make sure that you know what the arrangements are if you need to make a complaint about the firm or seek redress, and which investor compensation scheme covers the firm. The firm should give you this information.