The FSA has given a further indication it is to soften its line on past
performance, with confirmation that IFAs can continue to use statistics in
In a draft of its new handbook, which was passed by the FSA board this
summer, the regulator says reasons used by IFAs in suitability letters can
include “price, service levels, performance track record, investment
prospects, medical evidence terms, reputation and financial strength”.
The new handbook, which comes into practice from December 1, comes just a
year after the FSA published a research paper asserting that past
performance provides no guide to the future. It consequently decided to
omit past performance from its forthcoming comparison tables.
The news is the second indication in less than a month that the FSA is
caving in to industry pressure to reverse its stance. Three weeks ago, FSA
consumer director Christine Farnish told the BBC that the use of past
performance data in advertising is now unlikely to be banned.
Plan Invest joint managing director Michael Owen says: “They seem to be
coming round. The press has been very vociferous in its view that you
cannot ignore performance, as has Autif. They are obviously listening to
some of the lobbying. I am pleased. I think it would have been folly to
completely discount past performance.”