New FSA guidance on financial promotions warns adverts should not separate out the risks and benefits of a product or focus purely on headline charges.
The guidance warns against “serving up a risk sandwich” by separating out information on the benefits and risks of a product. It also says promotions should not just focus on headline charges, especially if they are likely to change.
It says: “If you are advertising a fund that invests overseas, for example, you could talk about the currency risk at the same time as introducing the overseas feature of the fund. Be careful not to diminish or obscure important
statements or warnings.
“If the promotion refers to charges does it fairly represent these?”
Isa promotions should make clear how money will be invested and properly describe any tax implications and interest rate conditions.
Promotional material covering fund performance must have standardised information so consumers can effectively compare it with other funds. Other performance related information can be included but it must not “be the most prominent part of the advert”.
Anyone referred to as an investment professional in promotional material must be an authorised person or an exempt person for the relevant controlled activity or someone else who carries out the controlled activity for the firm.
What the FSA describes as “image adverts” will be exempt from the rules, though they will still need to be clear, fair and not misleading. An image advert must only include the name, logo or other image associated with the firm, contact details and reference to the type of regulated activities provided by the firm.
It says: “Research shows consumers tend to shy away from something they do not understand. This is another reason why you should consider your target audience, and aim your promotions carefully, considering your content and what channel you use. And finally, always consider, from the customer’s point of view, whether your advert is fair, clear and not misleading.”