PROMOTIONS: COMMON COMPLIANCE MISTAKES

Hello boys! (and girls). Great advertising – and I mean really great – isn’t just memorable, it enters the nation’s zeitgeist. Drumming gorillas, money-saving meerkats and a striptease in a laundrette all prove you can remember the product without me even mentioning the brand.

But, for every marketing success story, there’s thousands that sink into obscurity and very few stand-out examples come from our industry (black horses and women in capes spring to mind).

The FCA has strict rules on promoting financial products and services to protect consumers and ensure your communications are clear and fair. They cover everything from TV adverts to websites, social media posts and notices to customers.

Part of our role as compliance consultants is to ensure our clients don’t fall foul of these rules. There are so many ways to market your firm these days, it’s quite easy to find yourself on the wrong side of the line. To help, we’ve put together a list of the most common mistakes we encounter. Here we go…

Use of the FCA logo

Straight in at number one is using the FCA’s logo. The regulator is pretty clear that firms are not permitted to apply its logo in any way that suggests endorsement or approval. It would take a pretty dim view on anyone suggesting:

• The FCA has approved or endorsed a firm’s activities
• They were more trustworthy or lower risk than other FCA-registered firms
• The FCA is actively monitoring or guaranteeing the firm’s services

To do any of the above would leave you in breach of Principle 7 of the Principles for Business.

Omitting regulatory or statutory text off your website

Yes, it’s boring and yes, no one is likely to read it, but FCA-registered firms must state clearly their authorisation status, firm reference number and provide a link to the regulator’s register on their website.

Failing to include these details could be seen to mislead consumers and again, breach the Principles for Business. Additionally, the Companies Act 2006 requires you to display your full registered name, company number, registered office address and country of incorporation.

Poorly worded privacy policies

Your privacy policies must reflect how you process personal data. Thanks to the Data Protection Act 2018, you are obliged to provide transparent and accurate information about how you collect, use, store and share this information.

A vague or misleading privacy policy could result in a breach of the law and expose you to fines from the Information Commissioner’s Office (ICO). It could also result in potential legal action by affected individuals. If you are any doubt about the contents of your policies, we’d be happy to check them for you.

Missing risk warnings

They don’t make for a great read, but you’ve got to put prominent risk warnings on your communications. This ensures customers understand the potential downsides of financial products and services.

It is particularly crucial that firms offering investments, credit, insurance or high-risk financial products don’t make this mistake. Not only will you be in breach of Principle 7 again, but also Consumer Duty, which mandates that firms help customers make informed decisions.

Risk warnings should be applied to all financial promotions, including social media and the FCA expects them to be clear, prominent and without a design feature that reduces their visibility.

No financial promotions register

Keeping a financial promotions register allows you to track, review and evidence that you have followed the rules governing marketing, ensuring all communications meet the FCA’s standards. Without a proper record, you may struggle to demonstrate compliance if the regulator comes knocking.

Not having a register also increases the chances that your messages will be inconsistent, that outdated promotions will stay in circulation and non-compliant materials will be used again. This could result in consumer harm and breach the regulations. Likewise, inadequate record keeping can hinder your ability to respond to FCA supervision requests, potentially leading to fines, sanctions or marketing restrictions.

Your register should include an expiry date for financial promotions and ones that are no longer relevant should be archived.

Reviewing financial promotions

Whilst keeping a register of your promotions is important for tracking and evidencing compliance, regular reviews are equally vital.

Marketing materials can become outdated quickly, due to changes in regulation, product terms, interest rates or internal policies. If you fail to reassess your promotions, you risk advertising products or services that are no longer available or compliant. This could mislead consumers and result in enforcement action.

Reviews aren’t a one-off thing you do at the point of approval. You should be ensuring a promotion remains compliant on an ongoing basis. This is especially important if you are advertising high-risk investments, as you need to attain attestations of ‘no material change’ every three months.

It is good practise to schedule regular reviews, based on how often you put out promotions. This could be added to your compliance monitoring plan, along with a link to your financial promotions register, to ensure it is being reviewed.

Over-regulating social media

Good grief, where to start! The minefield that is social media can lead some firms to treat all posts as financial promotions, even when they are not. For example, advertising your office opening hours at Christmas is not the same as promoting a product.

Over-regulating non-promotional content can lead to unnecessary regulatory burden, inefficiencies and confusion. It may also divert attention from genuinely high-risk promotions that require thorough scrutiny.

The FCA expects you to apply a risk-based approach to compliance, focusing your efforts where they are most needed. Treating routine and operational social media updates as financial promotions could dilute oversight of actual marketing materials, increasing your chances of breaking the rules.

Social media oversight

It might sound onerous, but you’ve got to keep a check on social media, especially when staff post independently, under the remit of their role within your firm, or where they are easily identifiable as an employee.

For example, we would expect someone to be overseeing posts on LinkedIn or Facebook if an employee was commenting on things relating to his/her role. Likewise, if that person can be connected to the firm, his/her opinions could be construed as those of the wider firm or be taken as advice.

It is good practice to have an adequate system in place to sign off digital media communications that relate to the business. It should be done by a person of appropriate competence and seniority.

Take appropriate action

For all FCA-registered firms, mistakes in financial promotions can lead to serious consequences, including regulatory breaches, financial penalties and reputational damage.

If you would like to know more about how we can help you navigate the complexities of financial promotions, don’t hesitate to contact us. We can assist with privacy policies and registers, along with promotions and website reviews. Contact B-Compliant on (0161) 521 8641 or email: info@b-compliant.co.uk