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