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Taskforce rejects ad ban over past performance

A full-scale ban on past performance in ads has been rejected by the FSA taskforce but it says the way performance is presented is in need of a major overhaul.

Following the recommendations from the taskforce, the FSA plans to consult with the industry on creating a standard measure for using past performance, price information and risk in ads.

The regulator will be intensifying its scrutiny of the way past performance is used. From December, the current guidance that past performance is not an indicator of future growth will become a rule.

The FSA hopes to introduce new rules to improve ad standards and will clamp down on misleading claims.

The regulator accepts that past performance figures constitute factual information wanted by consumers but it wants to ensure that information is not used in an unfair, unclear or misleading way.

The taskforce suggests that past performance should not be the main message of an ad and that a past performance warning should be presented clearly in the ad&#39s main text.

It also says a method for showing the risk of a fund in relation to others in the same sector or other investments such as cash should be considered in the FSA&#39s consultation.

The taskforce suggested that a symbol could be des-igned which would give a standard measure to indicate past performance, price information and fund risk.

Autif has welcomed the move to reject a past performance ban but agrees the current rules need to be changed.

Director general Richard Saunders says: “We are keen to start a dialogue with the FSA about how information for investors might be presented in a more meaningful way. Clear historic information is an important ingredient in investment decision-making.”

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