The financial regulator publishes reams of guidance on how to produce compliant financial promotions.
Yet in spite of this, firms continue to break the rules – either accidentally or by pushing the limits of what they can get away with.
How many firms break the rules? How does the FCA respond? And what can you do to make sure you don’t fall foul of the regulator’s rules?
What makes financial promotions non-compliant?
The Financial Conduct Authority has clear rules about financial promotions compliance.
Many of them relate to fairness and clarity, with the regulator at pains to ensure that customers are treated fairly and that any marketing, advertising or sales material is clear, fair and not misleading.
Any firm regulated by the FCA is bound by its ‘Principles for Business’, some of which directly relate to promotions:
Principle 2 – A firm must conduct its business with due skill, care and diligence
Principle 3 – A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems
Principle 6 – A firm must pay due regard to the interests of its customers and treat them fairly
Principle 7 – A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is fair, clear and not misleading
And when it comes to financial promotions compliance, it’s not just the end result – the promotion itself – that counts. You also need to make sure that it’s had correct sign-off, with approval from your Compliance team.
How many financial promotions are non-compliant?
Of course, it’s hard to produce a definite list of non-compliant promotions. Some will slip under the radar.
But in March this year, the FCA responded to a Freedom of Information request asking ‘How many financial promotions or adverts did the Financial Conduct Authority contact firms in regards to, to express concerns that they may be unclear, unfair or misleading’ in 2017 and 2018.
The response shows that the regulator contacted firms about 251 promotions in 2017 and 225 in 2018.
What happens if a promotion is non-compliant?
The FCA may contact you, as it did with the firms detailed above. You will be asked to amend or remove the relevant promotion.
This might mean cancelling ad bookings, pulping brochures or – because, remember, financial promotions aren’t just about hard copy, but cover your digital marketing too – deleting social media posts, removing content from your website or stopping online adverts.
If you don’t comply, the regulator has the power to ban your promotions.
When it comes to adverts, the Advertising Standards Authority polices and enforces advertising standards. These apply to all firms, including those not governed by any other regulator. Our blog on how to avoid producing misleading adverts has advice on how to comply with their rules.
If your promotions are withdrawn or your ads banned, you face obvious repetitional damage – potentially catastrophic when brand is growing increasingly important.
Then there’s the matter of potential fines. The FCA is not shy at giving out financial penalties.
How can you stay on the right side of the regulator?
So, you will want your promotions to NOT be among the 200 or so the FCA has to challenge every year. How can you do that?
- Have a clear understanding of what marketing compliance means, and how you can achieve it
- Compliance and creativity are often seen as polar opposites, leading to regulatory breaches as companies try to cut corners or bypass the rule. Read our tips on how to produce marketing content that’s both creative and compliant
- Get a feel not just for the FCA rules but the ASA and CAP guidelines that govern all ads, event for unregulated businesses
- Make sure your small print is fair. Include the right disclaimers and disclosures
- If you outsource design, digital marketing or anything else to external agencies, familiarise yourself with the FCA’s rules on outsourcing
- Make sure your approvals meet FCA standards, with an efficient approvals process that strips out unnecessary admin
- And explore whether marketing automation can help you to get compliant promotions to market faster.
Don’t get overwhelmed by regulatory compliance
The world of marketing compliance can be a confusing one – with ever-changing regulations, new guidelines and evolving terminology.
In an area with no shortage of jargon, we’ve produced a useful Financial Compliance Glossary to tackle acronym-fatigue and give every Marketer a desktop guide to the terms and abbreviations used. The glossary is free and you can download a copy from our resource library.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.