Financial promotions is a subject that’s getting a lot of attention at the moment, primarily because the FCA is quite active in this area. The challenge this presents for firms is that if they don’t get their promotions right, there are a number of parties ready to bring them to account, and the FCA has shown that it’s not afraid to take action against firms who get their promotions wrong.
This month, the FCA has published a Guidance Consultation on the use of social media when communicating with customers. Also, back in April, it announced that there had been a review of circa 1,500 promotions issued by consumer credit firms, reinforcing the need for promotions to be compliant.
It’s easy to think that these are targeted activities and that for the majority of firms, financial promotions don’t cause a problem. But take a closer look at what the FCA is actually saying and you’ll see that all firms still have challenges to meet here.
Not convinced? Well, consider the points below:
1 The rules for financial promotions are essentially the same for all firms.
And they boil down to one thing which you’ll see the FCA repeat time and time again in their materials – promotions must be clear, fair and not misleading. Yes, there are specific technical requirements relating to certain product types, such as mortgages and general insurance, but everything comes back to this core requirement. And there are no differences for firms using social media – the FCA has made it clear that its rules on promotions are meant to be media-neutral.
2 There’s nowhere to hide if promotions are non-compliant.
It’s true that the FCA can’t be everywhere, but it doesn’t need to be. Whilst it’s focusing its efforts for example, on consumer credit firms, this doesn’t mean other firms can escape its gaze. Both members of the public and representative bodies such as consumer groups can approach the FCA’s financial promotions team, and complain about particular promotions; and often these complaints lead to action being taken. The FCA can ask firms to withdraw promotions and to issue apologies. If the breach is serious enough, then this could lead to enforcement action. All of these things are damaging for firms’ reputations, and are costly in terms of both money and time.
3 This isn’t just a problem for small firms or new market entrants.
It’s easy to think that because the FCA has been focusing its effort on new market entrants (such as online consumer credit firms) and on emerging communication channels, such as social media, that everyone else is getting their promotions right and has nothing to worry about. This is not true as the recent cases of Credit Suisse International and Yorkshire Building Society have proven. Both of these long-established firms were fined hefty sums for failing to ensure that promotions relating to a capital protected product were clear, fair and not misleading. So no firm, regardless of its size or stature, is immune from regulatory action if it gets its promotions wrong.
So now you may be asking yourself: “What can I do to make sure my firm’s promotions are compliant and avoid attention from the FCA?”
The answer is actually quite simple, and I’m sorry for repeating the point, but it really just comes down to this.
Make sure that all your promotions are "clear, fair and not misleading".
But if it’s that simple, then why do firms continue to get it wrong? There are a number of reasons, but there’s one that I want to focus on in particular. Think about this:
Financial promotions can only be as good as the people who produce them and who ultimately sign them off for publication. This means these people have to have the skills and competence to be able to produce compliant promotions.
There are two groups of people involved in the production of promotions; those on the creative side (usually the marketing department) and those on the control side (usually the compliance department or in larger firms, a specific financial promotions control team). Whilst they will have different agendas, ultimately they both have to work to the same set of rules.
And that means that those involved in both the creative and control side of promotions need to understand what the rules require – that’s where training comes in.
To demonstrate to the FCA that the right systems and controls are in place to produce effective and compliant promotions, firms need, amongst other things, to evidence that the training and development needs of their people are taken care of.
Good news! That process has now become a lot easier. Industry Events Online provides a quick and efficient way for both you and your people to find courses, webinars, conferences, forums and more that provide a wide range of regulatory training opportunities. This means that training opportunities can be identified quickly, development plans can be structured with less effort, and the whole process becomes easier to manage.
So, instead of waiting for the next email alert to come into your inbox about a course that would interest you or your colleagues, click here and search for it now. It’s that easy!
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By Martyn Oughton a Professional Member of the International Compliance Association (ICA). Martyn now writes a regular blog for Industry Events Online focusing on the importance of training in all aspects of compliance. Read Martyn's other publications at Martyn's Writers' Residence website.
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