Key information and cooling off periods
Thinking about investing? There are some big decisions to make – but, as a consumer, you have rights. A company 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.
Information about your product
When a company sells or recommends you an investment product, like a fund, a pension or a 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.
The way they do this is with a key facts document – often called a key features document or a key investor information document (KIID). It’s an overview of the product and it should be easy to understand.
Always make sure you’ve got this information and have looked over it before you decide to invest.
What’s in a key facts document?
A key facts document isn’t the full terms and conditions of the investment. Instead, key information documents should give you the information you need to make an informed decision – you might also need to refer to the full terms and conditions.
For an investment product they cover things such as:
- How the product works
- The risks and possible benefits
- What you’re committing to
A separate document called a key features illustration might also be provided which will show:
- How the product might perform
- The charges you will pay, including the cost of any commissions and how these might affect what you get back
The company also needs to tell you about:
- Your right to cancel the product, and if there are any fees for doing so
- The process if you want to make a complaint
- 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 information documents to help you compare different products, and to help you assure yourself that you know what you’re getting into when you decide to invest.
- Double-check the fees involved
- Ensure you know whether you are 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
- Keep a copy of the key information documents
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, 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?
Cooling-off periods last for 14 or 30 days, depending on the product. Usually you won’t have to pay a penalty for cancelling, but you might with some products, like life insurance policies or funds.
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.
Always check the key facts document – it should tell you what the rules are.
How to use your cooling off period
Cooling-off periods last for 14 or 30 days. During that time you have the right to change your mind about the investment. Never be afraid of exercising this right.
You should use your cooling off period as an extra chance to make sure you’re comfortable with your choice.
If you are 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 will have to cancel in writing).
But be aware that you might not get the full amount of your investment back – check the terms and conditions of your product.
Don’t be afraid to cancel. It’s your right as a consumer.