We know that financial promotions or adverts are likely to be the most regular contact customers have with your firm, whether it a visit to a website, seeing a Facebook post, or logging on to Twitter to see your latest views in 280 characters or less. We also know that they can form a significant part of your consumer’s product knowledge and can influence their decision making when choosing a product.
It is therefore very important that when you run a campaign, hit the post button, or share what you believe is a worthwhile piece of information, that these promotions are fair, clear and not misleading, so that consumers can make informed decisions.
Promotions about financial services are regulated by the FCA, though there is some overlap with other regulatory bodies, such as the Advertising Standards Agency (ASA) and the Office of Communications (Ofcom). Both of these regulators complement the work of the FCA in terms of the elements of a financial promotion not generally covered under financial services legislation. Ofcom and the ASA tend to be reactive regulators, in that they respond to complaints about promotions, but the FCA is both reactive and proactive. The FCA has a special team dedicated to financial promotions and they actively review promotional content such as websites and newspaper articles for potential issues.
Here are the basics to ensure you comply with the rules:
- Make the material clearly identifiable as a financial promotion.
- It needs to be accurate and balanced, with the benefits and risks/exclusions given equal importance. It should be easy to understand and read or hear, using plain language.
- It mustn’t mislead but provide all the important information so that the customer can make a fully informed decision.
- It needs to be clear on who is making the financial promotion.
The Financial Conduct Authority has a clear view of how it expects firms to communicate with customers and you must combine any words in a clear, fair, and not misleading way, so you always achieve the same result where anything you want to write, promote, or talk about is to the best of your knowledge true and has a basis in fact whilst carrying the relevant warnings.
So, you shouldn’t make observations on the products you offer – the words “best” or “cheapest” are often used to describe mortgage products but how can you prove that they outperform the next on the list, or are available to the person seeing your financial promotion? In the fast-moving mortgage market, pricing changes on a regular basis, products are launched and pulled, and criteria altered. Therefore, what is correct today may be wrong tomorrow.
If you quote statistics, then the source of the information is required and if you start to mention specific mortgage products, then there are clear rules about what the promotion must include, such as the rate of interest, whether it is fixed, variable or both, expressed as a fixed or variable percentage, the nature and amount of any other charge included in the total charge for credit, the total amount of credit, the representative APR, the duration of the agreement, the list goes on. Lastly, there is the subject of risk warnings – “Your home may be repossessed” being the most common in our sector.
In summary, follow the basic rules of communication and promotion, regardless of the channel you’re using. Remember –
- Firms should aim to be clear and fair in all communication and never mislead customers
- Any post or piece of content that encourages financial activity has the potential to be deemed a financial promotion under FCA rules
- All tweets, posts, etc. need to be considered on their own merits and follow all relevant rules
- As with all promotions, firms should make potential customers aware of both the risks and potential benefits of a mortgage product
- Although we tend to think of social media communication as rather fleeting and ephemeral, a record is created each time we post or tweet, which is why FCA defines social media communication as ‘non-real time’