This week, a bank was fined £1.89m for failings in its outsourcing processes.
The fines, levied by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), saw R. Raphael & Sons plc penalised for failing to manage its outsourcing arrangements properly.
The regulators’ action brings to light the potential hazards when regulated firms outsource. What lessons can regulated Marketers learn from it, and how can you avoid compliance breaches when outsourcing your own activities?
What are the benefits of outsourcing marketing?
Most firms outsource some element of their marketing. Even if you are the largest of corporates, it’s unlikely that you will have the expertise in-house to cover all aspects of your marketing strategy. Many of the skills needed to successfully market today are highly specialised. In a world of digital marketing, the technical ability and need for constant content leads many teams to look externally for help. Search engine optimisation and paid search and social activity, for instance, are specialist and technical areas that need specific expertise. Not surprising, then, that a survey carried out a few years ago showed SEO, social media and pay-per-click (PPC) as the top three areas handed over to external agencies.
There are a number of reasons why you may choose to outsource your marketing:
- If you are a small team with limited resource
- If you are looking for help with specific activity, particularly digital or technical
- If you need to focus on a particular project and delegate day-to-day marketing to others
- If you want a new, external viewpoint on your current activity
It can be hugely beneficial in giving you the specialist expertise, new perspective, or just extra pair of hands you need, enabling you to deliver on your objectives. If you work in a regulated sector, though, outsourcing comes with its own, additional, set of considerations.
Tackling the unique challenges for regulated Marketers
If you work in a regulated industry, such as financial services, you’ll be only too aware of the challenges posed by regulatory compliance. Over and above the usual marketing issues, like budget, resource and finding a good story to tell your audience, you face additional pressures.
The need to comply with the requirements of your regulator – whether the FCA, PRA or any other industry body – gives you another element to consider. Any marketing activity you carry out – regardless of whether you or an outsourcing partner is in charge – is your responsibility when it comes to regulatory compliance.The FCA has strict rules on this and announced in its 2019-20 business plan that it intends to set ‘clear expectations on outsourcing to third party providers’.
In terms of financial promotions, both the end result – the item itself – and the process used to produce it, need to be compliant. This applies to any digital marketing activity as well as to printed material. The risk of compliance breaches needs to be taken into account when regulated firms outsource marketing activity. In particular, you should consider:
The risk of compliance breaches needs to be taken into account when regulated firms outsource marketing activity. In particular, you should consider:
- Do your outsourced processes stack up?
Compliance isn’t just about the end result. The production processes for your financial promotions need to be up to scratch too. Any outsourced partner has to create an audit trail that’s acceptable to the FCA, showing that your Compliance team has reviewed and approved any promotions you issue.
- Does your agency understand the rules around digital?
According to the survey we mentioned, social media is the second most popular area to delegate to agencies. But if you outsource your social media, what compliance checks do you have in place?
The FCA views social media in the same way as any other marketing activity. Content must meet the regulator’s ‘fair, clear and not misleading’ requirements, and include regulated statements where needed. It also needs record-keeping rigour; you have to keep an audit trail of all social media posts for compliance purposes. Relying on Twitter, Facebook or whatever platform you’re using to store them for you is not enough.
If you outsource your social media, are you confident that your agency is aware of all this? Do they get content signed off by your Compliance team, and keep accurate records of tweets and other posts?
Videos and podcasts are two media increasingly used – and often outsourced – by regulated marketers. If this is a route you plan to go down in 2019, these tips for making compliant videos and podcasts will be helpful.
- Is your content under control?
As with social media, any content produced for your website as part of your content marketing strategy needs to meet the same high standards. Review, sign-off and publication processes all need to be documented. Make sure you brief any agency clearly – this blog on best practice agency briefing has some useful tips – so they know what’s expected of them.
Anyone writing on your behalf needs to understand the need for claims to be substantiated. They need to include the correct regulated statements, disclaimers and disclosures, which can be a minefield.
When planning your content marketing schedule, any agency you work with needs to build in time for Compliance team reviews and approvals.
Make the most of outsourcing – while avoiding the drawbacks
Outsourcing can be a huge help to Marketing teams – but it can also come with potential pitfalls for regulated firms. Following some best practice tips can make all the difference when it comes to compliant outsourced financial promotions.
If you want to remind yourself of the FCA’s financial promotions rules, so you can make sure your activity – whether outsourced or in-house – you can try our financial promotion copy advice service.
At LS Consultancy, we offer a complete solution with a range of cost effective, regulatory compliance and marketing products and solutions including copy advice that are uniquely suited to supporting firms.