The FSA has called on fund managers to ensure their advertisements are clear, fair and not misleading by proposing guidance on financial promotions.
The guidance consolidates previous messages issued by the regulator, on its website and in industry updates, into a single document.
It includes strict definitions of the types of advertisement that can qualify as image advertising, where a company solely promotes its brand rather than specific products, and therefore be exempted from financial promotions rules.
The proposed guidance says: “Advertising is an important part of a firm’s business, in financial services as in other sectors, otherwise financial services firms would not spend over £2m a week on press advertising alone.”
On fund performance the FSA says customers must receive standardised information to be able to compare like for like. Further information can be added but this must not be the most prominent part of the advert.
The guidance says only adverts that consist simply of a firm’s name, logo of the firm, a contact point and reference to types of activities carried out or fees and commissions can qualify as image advertising.
The FSA says: “When a communication goes beyond the definition of image advertising, it must comply with all relevant financial promotions rules.”
Firms must consider customers’ journey through their websites, and avoid serving up a ‘risk sandwich’ where risk warnings are preceeded and followed by sections on benefits, the guidance says.
It says: “If a firm repeatedly issues non-compliant adverts, this may well indicate that their systems and controls lack robustness.
“Always consider, from the customer’s point of view, whether your advert is fair, clear and not misleading.”