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Compliance tip of the week: Keep within the financial promotions rules

There are two financial promotions rules that are often broken


Do not use the FCA logo and remember the past performance rules apply to awards that may relate  to investment performance.

Unlike the Financial Ombudsman Service, the FCA/FSA has always been extremely twitchy about any firm using its trademark without its permission. So do not put it on your website, headed notepaper or other material. (I am even scared about including a photograph of the FCA rulebook on my annual newsletter because it contains the logo.)

Although those drafting Mifid almost certainly never intended this, the FCA continues to believe that using awards that could relate to past investment performance to promote a business constitutes a past performance claim. An award relating to service is exempt from this. However, how is one to treat “IFA of the year” titles? Unless the award specifically states that it is purely for service rather than selecting investments, you have to treat it as a past performance claim.

The regulator accepts that the obligation to quote five complete years for past performance claims is met by stating when in the previous five years the award was won. It is happy for customers to imply from silence relating to a year that the firm did not win then.

COBS 4.6.2R(4) contains a requirement that a past performance claim in a promotion includes “a prominent warning that the figures refer to the past and that past performance is not a reliable indicator of future results”. This does not make sense. So, the best thing to do is to say something like “we’re not complacent because we know that this refers to the past and that past performance is not a reliable indicator of future results”.

Adam Samuel is an independent compliance consultant


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Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


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