Advertising industry awards as a past performance claim

If you have won ‘Independent Financial Adviser of the Year’ you will likely want to crow about it – only you must first negotiate a regulatory minefield. Adam Samuel reports.

Adam Samuel BA LLM DipPFS MCISI FCIArb Certs CII (MP&ER) Barrister and Attorney may be contacted at AdamSamuel@aol.com. His book, ‘Complaints and Compensation: a Guide to the Financial Services Market’, is available from his website, www.adamsamuel.com.

The FSA’s concerns about past performance claims are well known and reasonably well researched. Essentially, past performance of investment funds is only a reliable indicator of the future when it is bad. Fund managers change and so do investment conditions. So, even if the European Commission had not intervened, the regulator would have been justified in maintaining its strict restrictions in this area. The problem is that most fund managers and tipsheets have no other sensible means of proving that they are any good at all other than promoting their historical performance. This is a serious issue but not the subject of this article because the rules laid down by MiFID are reasonably clear and must be complied with by the FSA as much as the industry.