Compliance consultants raise the question of financial promotions at initial and ongoing health checks with clients.
When we ask “do you do any?” we so often receive the same response: “No, we don’t advertise, most of our business comes through referrals.”
Whilst this is great to hear, as it means you’re keeping clients happy, it quite clearly isn’t true. What firm doesn’t have a website these days? We know, because we Googled you!
Understanding what constitutes a promotion
The FCA definition of a financial promotion is “Any form of communication of a promotional nature that invites or induces a client to purchase a financial product or to use a financial service.”
This can include correspondence with clients, suitability reports, social media posts, leaflets or adverts in the media, to name but a few.
Crucially, the FCA divides financial promotions into two distinct sub-sectors – real time and non-real time. The former is the easiest to explain. Real time promotions are those that are communicated in the course of a personal visit, telephone calls, or other types of interactive dialogue. They are regulated slightly differently to other financial promotions, in that the FCA recognises conversations cannot be compliance approved in the same way as published communications.
Since real time financial promotions cannot be pre-approved, it is essential they adhere to the ‘clear, fair and not misleading’ rule.
Keeping websites compliant
A non-real time promotion is defined as “a financial promotion which does not involve any simultaneous interactive dialogue.” This includes letters, emails and texts, as well as articles in newspapers, magazines or journals, adverts in other periodical publications, websites and, of course, digital media.
It is websites that are often the biggest cause of concern for us. We see many client sites that contain large amounts of technical information, using industry jargon that, to be fair, some advisers don’t understand!
Why not have a look at your own website? Consider your target audience. Can they really comprehend or do they need the level of detail you have provided? Many fail the compliance test on the ‘clear’ obligation rule.
Some websites provide information to consumers in the form of guides and factsheets. Whilst they are useful to have, they can become out of date very quickly. Again, have a look at your website – is there anything old on there? Do you have information about taxation that is out of date? Are your ISA/JISA limits correct?
Case studies can be informative, but consider how yours are worded. Could they enable a client to take action without seeking appropriate investment advice? If you do decide to add case studies to your website, we recommend adding a disclaimer on each one. It should state that the information is not an offer of investment and shouldn’t be relied upon in making financial decisions and that appropriate guidance should always be sought from a qualified adviser.
Do you have links to other parts of your website or external information? They might be good for SEO, but when was the last time you checked they worked, or that the information you are signposting to clients is still there? Again, always add a warning that you are directing visitors away from your website, so they can decide to click through, or not.
A word on cookies
We all acknowledge the immediacy of social media is key to successful promotions in this day and age, but it can also be a compliance minefield.
To ensure posts by your staff or external marketing support adhere to the Financial Promotion rules, it is vital to have a clear social media policy, so everyone knows what is expected of them.
Don’t forget, forwarding the posts of others also comes under the rules!