Compliant FCA record-keeping

Sep 22nd '16

Compliant financial promotions record-keeping

When it comes to financial promotions, any regulated business should know that it’s not just the end result that’s important. The promotion’s review process and sign off procedure – and the audit trail created as a result – are all equally relevant when it comes to regulatory requirements.


And making sure your record-keeping for all of this is up to scratch is the last piece of the compliance puzzle.


Here we look at this important aspect of FCA compliance financial promotions record-keeping.


Below we examine how to make sure your record retention for financial promotions meets the FCA’s requirements.


What does the FCA say about financial promotions record-keeping?

The FCA is quite prescriptive when it comes to record retention for financial promotions. The regulators Code of Business Sourcebook (COBS) 4.11 states that: A firm must make an adequate record of any financial promotion it communicates or approves, other than a financial promotion made in the course of a personal visit, telephone conversation or other interactive dialogue.


Any promotion made during a personal visit, or over the phone, is considered a ‘real time’ promotion by the regulator and is subject to different rules. The exception to the telephone rule is telemarketing, where conversations are more structured and planned, and where firms must keep ‘an adequate record’ of any scripts used.


What do we need to keep records of?

A log should be kept of all financial promotions approvals. This needs to include quite a large amount of information.


As a minimum, you need to record:


• A unique log item number or identifying reference number for each financial promotion
• The name of the campaign, campaign item or individual financial promotion
• A description of the product(s) in question
• The name of the promotion’s owner/ originator
• The date
• Details of the media to be used
• The name of the person providing Compliance sign off
• The date final approval was given by the approved person
• The name of the approved person providing final approval
• Adequate space for notes, comments or cross-referencing
• The expiry date or review date for the promotion


Is there anything else it would be good to include?

You might also want to include additional optional information, such as:


• The date of sponsor sign off
• The date of marketing sign off


As well as the financial promotions log, you should keep physical or soft copies of the promotion and any related documents. These need to be easily accessible for anyone who might need to look at them.


The sorts of things you need to keep copies of include:


• A copy of the final approved item, with evidence of approval from your Compliance/Quality Assurance/Legal team. This approval can be either in the form of a manual or electronic signature
• A Marketing approval form, showing sign-off from an appropriate member of the Marketing team
• Any relevant documentation, e.g:


o Substantiation / rationalisation for any claims
o Suitable evidence of any facts, figures or options used
o Signed consent from anyone providing endorsements or testimonials
o Product details (if applicable)


Is that everything?

The FCA’s COBS 4.11 says that ‘A firm should consider maintaining a record of why it is satisfied that the financial promotion complies with the financial promotion rules.’ So this is worth thinking about. It may help you if in future you need to defend the decision you made to sign off a particular financial promotion.


How long should we keep financial promotions records?

For most financial promotions, the FCA’s COBS 4 states that records should be kept for three years. There are quite a number of exceptions to this, though:


• If a financial promotion relates to a pension transfer, pension conversion, pension opt-out or FSAVC, it needs to be kept indefinitely
• If it relates to a life policy, occupational pension scheme, SSAS, personal pension scheme or stakeholder pension scheme, it needs to be kept for six years
• If it relates to MiFID (the Markets in Financial Instruments Directive) or ‘equivalent third country business’, it needs to be kept for five years


Can records be kept electronically?

It doesn’t matter if these records are kept in paper form or in electronic or scanned form, provided that the scanned or electronic items are easily accessible, can be printed and are regularly backed up.


Read: Financial promotion – topics


In addition to the above the regulator expects firms to perform risk management in this area and assess for themselves what they consider ‘Significant communications’ to keep records of. When making such assessments firms need to bear in mind the need to demonstrate compliance as well as queries and complaints from customers which may require evidence.


All firms should also keep adequate records of any communications. As well as helping protect consumers these records enable firms to deal effectively with subsequent claims and complaints.


How can we help you?          

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.


Explore our full range today.


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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