9 steps to reducing risk in financial promotions

Dec 4th '15

The Financial Conduct Authority (FCA) is increasingly robust when it comes to enforcing their regulations. And the fines issued for non-compliance are getting bigger.


The regulator’s stance applies to financial promotions as much as it does to operations; if you are responsible for marketing or compliance in a regulated firm, you need to make sure you have a firm grasp of the regulator’s requirements.


As well as getting tougher, the regulator is changing the way it likes financial services firms to approach compliance. In the past, many firms had a tick-box approach to compliance. Making sure financial promotions met regulatory requirements was something that was ‘bolted on’ at the end of the production process.


This is no longer the way the FCA wants things done. The regulator itself has recognised that there is too much legislation at the moment – speaking at a City industry dinner in October, FCA acting chief executive Tracey McDermott told the audience that ‘the intensity and volume of regulatory activity over recent years is not sustainable’.


Instead, the regulator’s preference is for an industry that is – if not self-governing – certainly more responsible for compliance, with less need for regulatory policing or intervention. You need to make sure you have a culture where compliance is embedded into processes and policies.


Below are compiled 9 tips that will help you to minimise the risk of your financial promotions.


  1. Make sure you have a designated Financial Promotions Approved Person to review and sign off promotions This will ensure that an appropriate individual takes responsibility for financial promotions approval. They will need to be aware of the criteria financial promotions need to meet – not only in terms of content and the finished product, but also in terms of documenting the approval process, archiving versions of the promotion, and creating a compliant audit trail.
  2. Put training in place for approvers and individuals who draft financial promotions Regulatory requirements are updated fairly frequently. The teams drafting, reviewing and approving your financial promotions need regular training to make sure they keep up-to-date with current regulatory requirements.
  3. Ensure you have a rigorous system for producing, approving and storing your financial promotions Having the correct processes is essential if your compliance procedures are to be failsafe. Some firms find automated workflow systems, which remove the need for manual processes when reviewing, approving and archiving promotions, can help, as minimising the amount of manual intervention reduces the chance of errors and omissions. However you choose to manage your financial promotions process, it needs to be compliant, robust and consistent.
  4. Make sure your social media processes are compliant Did you know that social media posts, such as tweets, Facebook statuses and Linkedin posts, need to be archived in a compliant way? And that storing them on the social media platform itself is not enough? If you’re not aware of the FCA’s social media policy – which was updated earlier this year – you need to familiarise yourself with it.
  5. Double check that your web content approvals meet FCA standards Did you know that you need to keep a record of approved web content, showing the appropriate compliance approvals and version history? Some marketing workflow systems include modules where web content and your review process are automatically archived. Otherwise, you need to ensure you keep compliant manual records.
  6. Have written policies and procedures in place to ensure that your financial promotions meet regulatory requirements It’s vital that you document your policies and procedures around financial promotions. These need to be regularly reviewed by your compliance team and updated when necessary in line with FCA updates.
  7. Be aware of the FCA’s ‘Fair, clear and not misleading’ requirements, and know what your promotions need to do to comply Ensuring that communications are ‘fair, clear and not misleading’ is one of the regulator’s main objectives. If you’re not familiar with the requirements around this, you need to read up on it – the regulator’s website explains what they’re looking for.
  8. Make sure you comply with the ‘Treating Customers Fairly’ requirements Similarly, you need to be confident that the FCA’s ‘Treating Customers Fairly’ requirements are embedded in your firm’s financial promotions.
  9. Get a firm grip on all the financial promotions your business produces In many financial services firms, financial promotions aren’t just produced by the marketing and compliance teams. Sales and client management teams, as well as fee-earners, are often responsible for publishing external documents. You need to be confident that all collateral going out from your business – including sales presentations, social media posts and emails – has undergone the required compliance checks and approval.


Hopefully, this has given you some suggestions on reducing risk in financial promotions.


How Can We Help?          

LS Consultancy has wealth of experience in reviewing financial promotions and can do so on a one-off or on an on-going basis.


We are also skilled in reviewing and assessing your financial promotion procedures and can assist you to establish the necessary framework to help future compliance with regulatory requirements.


Remember: Not everything is black and white when it comes to Financial Promotions, and many of the rules are open to interpretation. If you are unsure how your activities fit within the rules, please contact us.


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