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FSA warns fund managers over advertisements

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.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Clear, fair and not misleading, eh? What ~ like the FSA’s claim on its website to be “an open and transparent regulator”? There’s some guff on there too about how all new regulatory initiatives are subject to prior Cost:Benefit Analyses. What? Like the one it commissioned (at vast expense) to justify the launch of the RDR? You have to laugh, don’t you?

  2. Perhaps we should rename the FSA The Ministry of Doom.
    I’m not certain I have ever come across any organisation so fixated on the negative. Its almost as if they get an erotic kick out of spanking people.
    Which may hint at the boss of the CPMA – Max Moseley?

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