Thinking about investing? There are some big decisions to make – but, as a consumer, you have rights. Companies selling you ISAs, investment funds, life and pension policies and other investment and savings products must provide you with a Key Facts or a Key Investor Information Document, and a chance to change your mind.
What’s in this guide
Information about your product
When a firm sells or recommends you an investment product, such as:
- a fund
- pension
- life insurance policy; or
- particular savings products like Cash ISAs.
They need to provide you with information about it in a way that’s clear and easy to understand.
Did you know?
Firms are required to be fair, clear and not misleading when providing information about your product.
They do this with a Key Facts document – often called a Key Features Document, a Key Investor Information Document (KIID) or Key Information Document (KID).
This gives an overview of the product and it should be easy to understand.
It’s important to make sure you’ve got this information and have looked over it before you make the decision to invest.
Do you need help making smart investment choices?
Are you unsure about whether to invest your money, or don’t know where to start?
For help making smart investment choices, understanding risk, diversification and where to find regulated investments, find out more on the Financial Conduct Authority’s InvestSmart website
What’s in a Key Facts document?
A Key Facts document isn’t the full terms and conditions of the investment.
Instead, this document is designed to give you the main information you need to make an informed decision, although you might also need to refer to the full terms and conditions.
When you buy an investment fund you’ll be offered either a Key Investor Information Document (KIID) or a Key Information Document (KID), telling you what you need to know about the fund and how it works.
For an investment product the document will cover things such as:
- how the product works
- what you’re committing to
- the risks and possible benefits.
A separate document called a key features illustration might also be provided which will show:
- how the product might perform (given certain assumptions), although it’s unlikely to show how the product may also depreciate
- information on some of the charges you’ll pay, including the cost of any commissions and how these might affect what you get back. Note that some charges, such as the transaction costs, may be omitted, so you won’t be getting a comprehensive list of the charges applied.
The company also needs to tell you about:
- the process to follow if you want to make a complaint
- your right to cancel the product, and if there are any fees for doing so
- compensation that might be available from the Financial Services Compensation Scheme if the firm cannot meet its liabilities in respect of the product (if applicable)
Using key information
You should use Key Facts documents to help you compare different products.
To reassure yourself that you know what you’re getting into when you decide to invest, always:
- double-check the fees involved
- keep a copy of the key information documents
- ensure you know whether you’re dealing with a company authorised by the Financial Conduct Authority, and whether you have the right to take any complaints to the Financial Ombudsman Service
A chance to reconsider
No matter how carefully you do your research, it’s always possible to make a mistake and choose an investment you’re not quite happy with – especially if you get caught up in the excitement of investing.
Once you’ve cooled off and had time to think about your decision, you might see things in a different light, so financial firms normally have to give you a chance to reconsider.
What is a cooling off period?
Always check
The Key Facts document – it should tell you what the rules are.
Cooling-off periods must last for at least 14 or 30 calendar days, depending on the product. Firms may apply longer cooling off periods although they must make clear if any additional conditions apply.
Usually you won’t have to pay a penalty for cancelling, but you might with some products, like life insurance policies or funds, and this should be communicated when they explain your right to cancel.
You might also have to pay for any costs the company has incurred.
For example, if your investment lost money during the few days before you cancelled, you might not get the full amount that you invested back.
How to use your cooling off period
Be aware
You might not get the full amount of your investment back – check the terms and conditions of your product.
It’s important to use your cooling off period as an extra chance to make sure you’re comfortable with your choice.
If you’re having second thoughts, don’t delay.
The cooling off period might be only two weeks and it can fly past.
Contact the provider straight away. The Key Facts document will tell you how to exercise your right to cancel (usually you’ll have to cancel in writing). It’s important to keep a record of when you send your notification, as this is valid as long as it is dispatched before expiry of the cancellation.
Don’t be afraid to cancel. It’s your right as a consumer.
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