2011

Social Advertising
Financial Promotions
When is a Non-Advert an Advert?

June 2011
30 June 2010
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Lee Werrell FInstSMM Chartered MCSI Cert PFS CEI Compliance Consultancy

Introduction
The FSA have warned that Financial services firms should pay particular attention to their various social networking and other internet communications including iPhone apps to make sure that they stay up to date and compliant with the FSA handbooks

Problem
The FSA has studied the way that financial services companies communicate to the public and has found that some of communication through new media channels lacks compliance with its safeguards.

The Rules
Financial Promotions rules are clearly provided in Conduct of Business Sourcebook (COBS) Chapter 4 and firms must apply all the strict advertising rules their formal communications are subject to, strangely enough, use of Twitter, Facebook, networking sites or message boards.

CEI Solutions Contents

Introduction Problem The Rules CEI Solutions Summary 2 2 2 2 3

Solution 1 Ensure that whenever you advertise on any other new media communication channel, make sure that you do not include anything other than image advertising content. Solution 2 If you are going to post anything on a message board or Networking Site page, ensure that it fulfills the requirements of the FSA. See COBS 4, MCOBS 3 and dont forget ICOBS contains no exceptions for image advertising. Solution 3 If in doubt call us to look into your campaign and the impact of the regulations.

Summary
The safest way of using the new media is to ensure you apply the specific financial promotions rules with the fundamental starting point of clear, fair and not misleading. The FSA call this stand-alone compliance. This describes their expectation that every financial promotion must comply with all of the relevant financial promotions rules. It is not acceptable, for example, for any firm or individual to purposely omit important risk information just because they intend to give it later in the specific sales process. What you have to consider about your financial promotion is COBS 4.2.2, which states "in a way that is appropriate and proportionate taking into account the means of communication and the information the communication is intended to convey". It is unclear if you were to state your company name on a tweet in Twitter and added a link to your company website whether this would be image advertising or a standalone financial promotion using all 140 characters of that medium. It is unlikely that the FSA would be particularly stringent or prescriptive in that area.

need to comply with all of the relevant financial promotions rules. The treatment of image advertising varies depending on which sourcebook applies. So whatever medium you use to spread the word you need to consider the financial promotions rules in most cases as they apply to your discipline. The FSA are continuing to review and assess adverts across all media types and categories. However the message is clear from the regulator that they will take action against any firms that fail to produce stand-alone compliant financial promotions picked up through their monitoring or thematic reviews. For the FSA Publication, please click here. For a description of Stand Alone Compliance please click here.

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So what is Image Advertising? Firms cannot assume that because a communication is made using new media, it is an image advertisement and exempt from the financial promotion rules. An image advertisement only consists of the name of the firm, a logo or other image associated with the firm, a contact point and a reference to the types of regulated activities provided by the firm or to its fees or commissions. When a communication goes beyond the definition of image advertising, no matter how well intentioned or innocent it may seem, it will

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