16 February 2024

Compliant FinProms: Five top tips

Eve McGrady

By Eve McGrady LinkedIn

Financial Promotions are on the FCA's radar. So, how can firms keep their adverts appealing, but maintain compliance? Our five top tips are a good place to start...

Before you’ve taken your first sip of coffee at your desk on a Monday morning, the likelihood is you’ve been exposed to at least one financial promotion on your way into work. It might have been a radio ad you heard, a billboard you mindlessly stared at, or an Instagram post you scrolled past. We might not think twice about these adverts as consumers who are exposed to them all the time.

But, for financial services providers, FinProms are a crucial means of attracting new customers – and making sure existing ones stick around. We want financial services markets to be highly competitive and dynamic – because when providers compete for customers, they are continually challenged to level up their products to better serve customers’ needs. So, creating successful FinProms – that are also compliant – is key.

So, what does the FCA want?

The FCA purposely hasn’t defined some of the key terms the rules rely on. The lack of definition means the regulation is open to some interpretation, and therefore, some grey areas.

The regulation is also applied proportionately by the FCA. In effect, the bar is highest for risky or complex products, for communications aimed at retail customers, and at customers who haven’t received advice as part of the application process.

Firms are also grappling with the Consumer Duty, which has raised the bar across the industry. Fair and compliant FinProms are just one aspect of the regulators’ commitment to securing good outcomes for customers. So, sticking to the FinProm rules isn’t just about compliance, it’s about building a trusting relationship between you and your customers. In the New Consumer Duty world, this isn’t just a ‘nice to have’ it’s a ‘must’.

Compliant FinProms: Five top tips

It can be difficult to know how to market products effectively and not fall foul of the FCA’s financial promotions regulations. We’ve put together five key things firms should keep in mind when it comes to creating compliant promotions.

  1. The golden rule: clear, fair and not misleading. Clarity and fairness have been core principles of the FCA’s commitment to improving outcomes for customers over the last decade. Firms must use language customers can understand and limit the use of overly formal language or technical jargon.
  2. Balance the benefits and limitations. When it comes to marketing, adverts must be balanced. They mustn’t overstate potential benefits without also highlighting weaknesses or risks associated with the product. For example, when advertising a savings product, firms must make any limitations on length of the term or withdrawals as prominent as the rate savers will get.
  3. Get real. The presentation of the product or service must show how it works in real life for the customer. This means showing the impacts of taking out the product over the whole potential lifespan – not just in the short term.
  4. Put risk warnings and key facts centre stage. Key facts and figures associated with the product must be presented prominently. These are things like rates and risk warnings. This means they shouldn’t be reserved for the small print or cut off by ellipses. Firms must also consider design elements such as font size and colour contrast to ensure text is legible.
  5. Consider who will see it – and where. Firms now have a whole array of marketing channels at their disposal to target customers. Not all channels are appropriate for all kinds of promotions. Complex products, like investments, may not be suited to a TikTok advert fronted by a ‘finfluencer’, or a Tweet that can only use 280 characters. Firms must also be mindful that putting an advert out on social media means it could be seen by just about anyone. A couple of clicks could also see it shared outside of its intended context, and viewed by someone outside of the target market for the product.

On the FCA's radar

The world of FinProms keeps moving on – and firms should stay abreast of updates.

The latest data from the regulator shows that in 2023, more than 10,000 financial ads or promotions were withdrawn or changed. This figure is up by 17% from the previous year.

New rules to prevent firms from greenwashing will restrict the use of ESG terminology for investments unless firms can meet certain conditions. The FCA is also consulting on new social media rules – an area that develops almost as fast as the regulator can put pen to paper.

We can bolster your approach to FinProms through our bespoke Training classes and Rewrite services. Read more here about how we can help.