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FSA thwarts cherrypicking with new data rules for ads

The FSA is imposing rules to standardise the presentation of fund data in a bid to prevent groups cherrypicking favourable time periods when displaying past performance in advertising.

The rules, which were exclusively revealed in their proposed form in Money Marketing last March, insist that past performance is accompanied by a table showing five-year discrete annual returns expressed as a percentage. From June, fund groups must also place less emphasis on past performance and warnings must appear in the main body of an ad rather than being buried in the small print.

Groups with less than five years&#39 performance to present must give information for as many 12-month periods as possible, updated to the previous quarter. But no group may use past performance if they have less than one 12-month period to present as it would breach the FSA&#39s “clear, fair and not misleading” rule. Groups will also be banned from trying to link past performance with future performance.

The FSA says the rules – particularly the use of percentages in tables rather than sums of money – will give consumers a better understanding of the volatility of the investment and how it has performed over a period of time.

Fund firms, which were concerned that past performance would be banned, have welcomed the rules, agreeing that standardised data is the best way to present information to consumers.

FSA spokeswoman Kate Bristowe says: “The new rules will improve the quality and balance of past performance data. They will prevent firms cherrypicking time periods which shows their data in a flattering way.”

Artemis product development & communications director Nick Wells says: “By and large, the rules make sense. We do not have any issues with them. It is good to see that common sense has prevailed.”


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