The Financial Services Authority has revealed its financial promotions rulebook will be cut by half in line with the move to principles-based regulation.
Nausicaa Delfas, head of Treating Customers Fairly, financial promotions and unfair terms at the FSA, today set out the new regime for financial promotions, which will come into effect on November 1 this year.
The new approach will focus on the outcomes to be achieved rather than prescriptive rules, which the FSA says will give firms greater flexibility in deciding how best to meet the standards.
However, Delfas says: Our ability to apply a principles-based approach will continue to be restricted in some areas, for example with regard to mortgages where the handbook is still quite prescriptive.
In this area our approach will continue as now has the firm complied with the detailed rules and, more generally, does the promotion as a whole meet our high-level TCF outcomes?
The new regime will centre around a series of high-level requirements, which reflect the FSA’s overarching principle that requires promotions to be fair, clear and not misleading.
Under the principles, communications must be accurate and presented in a way that is likely to be understood by their audience.
Where benefits are discussed, there must be a fair and prominent indication of any relevant risks and firms must not disguise, diminish or obscure important statements or warnings.
Comparisons should be meaningful and presented in a clear and balanced way.
There will be greater responsibility on senior management to oversee marketing.
Although the FSA has removed much of the detailed product-focused rules, some detail will remain necessary to achieve the desired regulatory outcome of promotions being fair, clear and not misleading.
In addition to the range of material the FSA currently provides, it will continue to consider ways in which it could assist the industry to raise standards further and to improve consumer outcomes.