1. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Marketing In a Regulated World

2. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Since October 2004, new regulations on marketing and promotions exist. And the FSA have made it a top priority.

3. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Are you included? Should you care? Yes if you are in the UK, and providing qualifying credit arranging qualifying credit advising on qualifying credit

4. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Qualifying Credit Promotion (QCP) A QCP is a financial promotion for a regulated mortgage contract, or a promotion for ‘qualifying credit’ which covers all secured lending.

5. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative if a reasonable observer ( or rather someone from the FSA ) would: –Consider the intention/purpose of the communication was to invite or induce... –Regard the communication as seeking to persuade… Promotional material breaks these regulations…

6. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative

7. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Correct risk warnings included but have used the old ‘Your home is at risk…’ wealth warning and not made it prominent enough Incorrectly applied rules

8. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative APR included but incorrectly worded. 4.4% unlikely to be representative APR for the type of business being promoted!! Risk warning included but incorrect. No adverse credit wording included Status disclosure included but incorrectly worded

9. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Appears to be guaranteeing a positive decision Uses old wealth warning: ‘Your home is at risk..’ And not prominent enough These statements need to be substantiated No adverse credit warnings No APR quoted

10. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Two types of promotions Real Time Non Real Time: –Letter –Press advertising –eMail –web site –sound or television Content of this presentation

11. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative ‘Clear, Fair & Not Misleading’ Key aspect of regulation Certain key information must be in proximity to other information –tied products –risk statements –APR –multi-rate information –fees for advice or arranging

12. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Evidential provision of CF&NM A firm must be able to show that it has taken reasonable steps to ensure that a non real time qualifying credit promotion is clear, fair and not misleading…

13. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative For Example statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed…

14. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative For Example statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed… statements of opinion must be honestly held…

15. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative For Example statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed… statements of opinion must be honestly held… facts on which a comparison is made are verified, or assumptions prominently disclosed with the comparison presented in a fair and balanced way…

16. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative For Example statements of fact, promise or prediction must be clear, fair and not misleading and relevant assumptions must be prominently disclosed… statements of opinion must be honestly held… facts on which a comparison is made are verified, or assumptions prominently disclosed with the comparison presented in a fair and balanced way… design, content or format must not disguise the prominence of any prescribed information or text…

17. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Restriction on use of some expressions overdraft interest free no deposit early repayment charge higher lending charge guaranteed mortgages gifts tied products must be prominently disclosed

18. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative compare qualifying credit meeting the same needs objectively compare one or more material verifiable feature not create confusion not discredit trade marks not take unfair advantage not present qualifying credit as an imitation mention any restrictions on special offers make no reference to approval by the FSA make no false indications about the firm’s independence, resources or the scarcity of the qualifying credit Comparisons and Contrasts must

19. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Key elements Headline Image Body Copy Required Risk Statements Call to Action

20. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Headline Plain intelligible language Don’t omit or state things which would make the QCP unclear, unfair or misleading

21. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Headline Image Ensure prescribed text is not diminished by the design of the QCP

22. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Headline Image Body Copy Plain intelligible language Don’t omit things which would make the QCP unclear, unfair or misleading Highlight disadvantages Ensure accuracy of statements can be substantiated Ensure the commercial purpose of the promotion is not disguised

23. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Headline Image Body Copy Required Risk Statements Ensure the commercial purpose of the promotion is not disguised Ensure prescribed text is not diminished by the design of the QCP

24. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Simple Exemptions Where a promotion contains only brand elements: Name of Firm (or AR) Logo Contact Point Brief factual statement of the firm’s occupation

25. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Exempt promotionNot exempt promotion Exempt advert

26. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Common issues Jargon and confusing terms Risk Warnings Incorrect authorisation status disclosure APR Errors Poor Audit Trails Procedural Issues

27. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Don’t Ignore Online Some providers now only accepting electronic forms Online exclusive products and services Advantages of being on the Internet from efficiency service perspective Customer expectation has grown

28. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Online Tips Take a ‘zero-click’ approach to online compliance. Disclosure at all stages is important. Ensure you have a sign off process and record keeping process in line with your offline one. Carefully review any links to and from your website to ensure they are compliant. A website is giving advice as soon as it uses personal information to promote a product. It must then follow full sales process (AIP, KFI … ) Spend some time surfing the Internet for examples of good and bad practice and new ideas.

29. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Golden Rule 1 Section 21 ~ FSMA Do not communicate an invitation or inducement to engage in an investment activity unless: –you are an authorised person –the content of your qualifying credit promotion is approved by an authorised person

30. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Golden Rule 2 Confirmation of Compliance Before a firm communicates or approves a non real time QCP it must: –confirm that the QCP complies with the rules –arrange for the confirmation to be carried out by an individual with appropriate expertise

31. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Golden Rule 3 Withdrawing Confirmation Where a promotion no longer complies the firm must: –cease to communicate –withdraw approval –notify

32. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Golden Rule 4 Be prepared Make Sure You Have –Adequate Systems & Controls –Increased Time or Resources Make Sure You Know Of –Financial Promotions Dept –Supervision Visits –Monitoring

33. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Golden Rule 5 Get it right! FSA action can cost you more money : –Accepting advertiser’s response –Requiring amendments on next re- print –Immediate re-print –Withdrawal of literature –Remedial action –Enforcement action

34. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative They are not shackles - Behind every problem lies a solution We are all subject to the same rules The best examples in the market today are from firms who have embraced compliance Think of new ways to engage your customers If a marketer can see them you can be sure the FSA has done too If in doubt ask someone who knows

35. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Focus on your proposition Your customers experience is you and your employees It’s a relationship sell built on trust What the FSA are asking is that we reflect that in our promotions The point is that unlike brand promotions all sales promotions feature products where clarity has been the issue

36. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Focus on your differentiation The FSA are making finding new ways of communicating more important because you cannot mislead with price led communications New ways of communicating will give you stand out and says something about you (your ‘brand’) But this needn’t cost a fortune!

37. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Put simply, create impact All the FSA have done is to focus on content You can communicate with your customers effectively Use space intelligently Keep your message simple

38. Marketing Regulation September 2005 Matt Smith, Managing Director, wpb creative Thankyou