There has been much controversy over the past few years regarding the use of past performance information when marketing financial products to consumers.
The industry regulator, the Financial Services Authority have been consulting on the issue and have now agreed that past performance data can be used, but only in a standardised format.
The problem with the past performance of investments is that people rely on it too heavily when purchasing. Over the last few years performance has generally been poor because of stock market volatility. However, before the markets went into decline, investment performance was generally good.
Tip
Past performance is as it says, in the past. If you are considering investing you should look at many other issues in addition to performance. For example, an investment may have done well over one or two years but then poorly for another five. This means that the investment might not be as stable as one that has consistently provided average returns. Check closely and research widely.
Check out our guides to performance and risk in the policy compare and buy product finder.