On September 21, the UK Financial Services Authority (FSA) released a speech entitled “Financial Promotions: Keeping Connected and Compliant” delivered by Clive Gordon, FSA’s Head of Conduct Risk. The speech highlighted common poor practices identified by the FSA during its routine monitoring of digital media promotions.
Mr. Gordon drew particular attention to what he termed “a couple of common regulatory myths about using digital media”
First, there is no ”one click rule”. Website banner adverts or sponsored search engine results need to be compliant in their own right. Being one click away from the information does not necessarily make it compliant.
Roll-over risk warnings are not sufficient on website banner adverts. In most cases he does not think a roll-over risk warning is appropriate, as many people may still read the advert without hovering over it.
He emphasized the need for risk information to be prominent and clearly displayed and for digital promotions to meet the FSA’s requirements for stand-alone compliance regardless of where or how a promotion appears.
It is proposed under the Financial Services Bill currently before Parliament that the FSA’s successor regulator the Financial Conduct Authority (FCA) will have the power to ban misleading financial promotions. Mr. Gordon stated that the FCA “will be ready to take faster and more effective action from the first day we get these powers” and will act to remove misleading promotions from the market immediately. When it uses this power, the FCA will publish the promotion and the reasons for banning it to act as a deterrent to other regulated firms.