Financial Promotions


INSIGHT
Published
Feb 27th '23
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In August 2022, the Financial Conduct Authority (FCA) issued the Policy Statement PS22/10 “Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions” which outlined the stricter approach the regulator is taking to high-risk products, placing consumer awareness and protection in their spotlight.

 

Why are these rules coming through now?

The FCA are concerned that given the current economic climate, notably inflation rates being as high as they are, consumers will be more likely to invest in high-risk investments, due to the potential returns they can generate. At a time when people are dealing with a cost-of-living crisis, there is concern consumers may look to engage with investments outside of their risk tolerance.

 

The FCA hopes that the implementation of these new rules will help to ensure firms are:

 

 

Who will these effect and when will they be introduced?

Although these rules are aimed at High-Risk Investments it is expected that these rules will be transferred to other products and promotions in time.

 

For High-Risk Investments, changes to the main risk warning and risk summary requirements came into effect on 1st December 2022. The remainder of requirements came into effect on 1st February 2023.

 

What should Firms be doing?

Firms that promote high-risk investments need to familiarise themselves with the FCA’s final rules and carry out the following:

 

  • Identify/classify high-risk investments they promote (RMMI/NMMI)
  • Update and change risk warnings as per the guidelines (the guidelines provide prescribed wording which must be used)
  • Train staff on the new rules

 

Firms that approve financial promotions need to:
  • Ensure that their name and date of approval are included on all future promotions
  • Carry out self-assessments as to whether they have the necessary competence and experience to approve financial promotions
  • If an S21 approver, obtain necessary attestations that there are no material changes to previously approved promotions

 

How can we help?
We can:
  • Conduct a health check of your firm’s ‘Consumer Journeys’ or Onboarding Procedures to ensure they are compliant with the new rules.
  • Carry out an Independent Review of your Financial Promotions and provide feedback to the relevant teams internally.
  • Procedure Evaluation: For firms who already have a Financial Promotion sign off procedure in place, LS Consultancy can review whether it continues to be fit for purpose.
  • Training: LS Consultancy can deliver training to Marketing or Compliance teams alike on what the rules mean for their work and what they should be looking out for when preparing Financial Promotions.
  • Templates: LS Consultancy are also able to provide useful templates for your sign off process including a Financial Promotion ‘Cheat Sheet’, process ‘Decision Tree’ and a Sign Off form.

 

Find out about Marketing Compliance 101.

 

Download: Financial Promotion Guide

 

Related: 5 emerging challenges of FCA financial promotions you should look into

 

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.

 

LS Consultancy is ideally placed to support firms of all sizes and types with this Financial Promotions review.

 

Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.

 

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