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Transcript of Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Marketing In a...
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Marketing In a Regulated World
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Since October 2004, new regulations on marketing and promotions exist.
And the FSA have made it a top priority.
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Are you included? Should you care?
Yes if you are in the UK, and
• providing qualifying credit• arranging qualifying credit• advising on qualifying credit
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Qualifying Credit Promotion (QCP)
A QCP is a financial promotion for a regulated mortgage contract, or a promotion for ‘qualifying credit’ which covers all secured lending.
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
• if a reasonable observer ( or rather someone from the FSA ) would:– Consider the intention/purpose of the
communication was to invite or induce...– Regard the communication as seeking
to persuade…
Promotional material breaks these regulations…
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Correct risk warnings included but have used the old ‘Your home is at risk…’
wealth warning and not made it prominent enough
Incorrectly applied rules
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
APR included but incorrectly worded. 4.4% unlikely to be representative APR
for the type of business being promoted!!
Risk warning included but incorrect. No adverse credit
wording included
Status disclosure included but incorrectly worded
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Appears to be guaranteeing a positive decision
Uses old wealth warning: ‘Your home is at risk..’
And not prominent enough
These statements need to be substantiated
No adverse credit warnings
No APR quoted
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Two types of promotions
• Real Time
• Non Real Time:– Letter– Press advertising– eMail– web site– sound or television
Content of this presentation
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
‘Clear, Fair & Not Misleading’
• Key aspect of regulation• Certain key information must
be in proximity to other information– tied products– risk statements– APR– multi-rate information– fees for advice or arranging
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Evidential provision of CF&NM
• A firm must be able to show that it has taken reasonable steps to ensure that a non real time qualifying credit promotion is clear, fair and not misleading…
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
For Example
• statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed…
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
For Example
• statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed…
• statements of opinion must be honestly held…
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
For Example
• statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed…
• statements of opinion must be honestly held…
• facts on which a comparison is made are verified, or assumptions prominently disclosed with the comparison presented in a fair and balanced way…
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
For Example
• statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed…
• statements of opinion must be honestly held…
• facts on which a comparison is made are verified, or assumptions prominently disclosed with the comparison presented in a fair and balanced way…
• design, content or format must not disguise the prominence of any prescribed information or text…
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Restriction on use of some expressions
• overdraft• interest free• no deposit• early repayment charge• higher lending charge• guaranteed mortgages• gifts• tied products must be
prominently disclosed
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
• compare qualifying credit meeting the same needs• objectively compare one or more material verifiable
feature• not create confusion• not discredit trade marks• not take unfair advantage• not present qualifying credit as an imitation• mention any restrictions on special offers• make no reference to approval by the FSA• make no false indications about the firm’s
independence, resources or the scarcity of the qualifying credit
Comparisons and Contrasts must
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Key elements• Headline• Image• Body Copy• Required Risk
Statements• Call to Action
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Headline• Plain intelligible language• Don’t omit or state things
which would make the QCP unclear, unfair or misleading
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
• Headline
Image• Ensure prescribed text is
not diminished by the design of the QCP
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
• Headline• Image
Body Copy• Plain intelligible language• Don’t omit things which
would make the QCP unclear, unfair or misleading
• Highlight disadvantages• Ensure accuracy of
statements can be substantiated
• Ensure the commercial purpose of the promotion is not disguised
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
• Headline• Image• Body Copy
Required Risk Statements
• Ensure the commercial purpose of the promotion is not disguised
• Ensure prescribed text is not diminished by the design of the QCP
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Simple Exemptions
Where a promotion contains only brand elements:
• Name of Firm (or AR)• Logo• Contact Point• Brief factual statement of the firm’s
occupation
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Exempt promotion Not exempt promotion
Exempt advert
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Common issues
• Jargon and confusing terms• Risk Warnings• Incorrect authorisation
status disclosure• APR Errors• Poor Audit Trails• Procedural Issues
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Don’t Ignore Online
Some providers now only accepting electronic forms
Online exclusive products and services
Advantages of being on the Internet from efficiency service perspective
Customer expectation has grown
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Online Tips
Take a ‘zero-click’ approach to online compliance.Disclosure at all stages is important.
Ensure you have a sign off process and record keeping process in line with your offline one.
Carefully review any links to and from your website to ensure they are compliant.A website is giving advice as soon as it uses personal information to promote a product.It must then follow full sales process (AIP, KFI…)
Spend some time surfing the Internet for examples of good and bad practice and new ideas.
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Golden Rule 1
Section 21 ~ FSMA • Do not communicate an invitation
or inducement to engage in an investment activity unless:– you are an authorised person– the content of your qualifying
credit promotion is approved by an authorised person
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Golden Rule 2
Confirmation of Compliance • Before a firm communicates or
approves a non real time QCP it must:– confirm that the QCP complies
with the rules– arrange for the confirmation to
be carried out by an individual with appropriate expertise
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Golden Rule 3
Withdrawing Confirmation • Where a promotion no longer
complies the firm must:– cease to communicate– withdraw approval– notify
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Golden Rule 4
Be prepared• Make Sure You Have
– Adequate Systems & Controls– Increased Time or Resources
• Make Sure You Know Of– Financial Promotions Dept– Supervision Visits– Monitoring
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Golden Rule 5
Get it right!
• FSA action can cost you more money:– Accepting advertiser’s response– Requiring amendments on next re-
print– Immediate re-print– Withdrawal of literature– Remedial action– Enforcement action
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
They are not shackles -
• Behind every problem lies a solution• We are all subject to the same rules• The best examples in the market today are
from firms who have embraced compliance• Think of new ways to engage your customers• If a marketer can see them you can be sure
the FSA has done too• If in doubt ask someone who knows
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Focus on your proposition
• Your customers experience is you and your employees
• It’s a relationship sell built on trust
• What the FSA are asking is that we reflect that in our promotions
• The point is that unlike brand promotions all sales promotions feature products where clarity has been the issue
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Focus on your differentiation
• The FSA are making finding new ways of communicating more important because you cannot mislead with price led communications
• New ways of communicating will give you stand out and says something about you (your ‘brand’)
• But this needn’t cost a fortune!
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Put simply, create impact
• All the FSA have done is to focus on content
• You can communicate with your customers effectively
• Use space intelligently• Keep your message simple
Matt Smith, Managing Director, wpb creative Marketing Regulation September 2005
Thankyou