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A week in compliance: 12% fixed returns, the cold calling ban and the FCA’s Dear CEO letter

Working in a heavily regulated environment as we all do, means compliance is a constant presence. Marketing and compliance go hand in hand; marketing inevitably leads to financial promotions, which means interacting with compliance.

We last wrote about the subject back in September, when we gave our eight top tips to get compliance and marketing working in harmony. You can still read that article by clicking here.

Since Christmas though, several things have got us thinking about the subject more than usual though…

The cold calling ban: Last week saw the introduction of the cold calling ban (take a bow, Darren Cooke!). Sure, it’s not perfect and it should’ve happened years ago. But, it’s an important step forward in the fight against financial fraud.

Being able to say that a cold call about a pension is illegal is a powerful message. It should also help people understand that all unsolicited approaches, whether by email, text or phone, are unwelcome and fraught with potential danger.

Dear CEO letter: Last week also saw the FCA add a letter to their website aimed at the CEOs of regulated firms and in response to them becoming aware of firms: “issuing financial promotions which suggest or imply that all of the activities which they undertake are regulated by us and/or the PRA when they are not.”

No one reading this email would dare do such a thing. However, the letter provides a timely reminder that all financial promotions must be clear, fair and not misleading and that the FCA “monitor(s) adverts across different media in the UK.”

You can read the letter by clicking here.

A 12% fixed return: Earlier this week I received an unsolicited email offering me a “12% fixed return per annum” if I invested in a residential care home in Stoke. The email also categorised me as a “Certified High Net Worth Investor”, which is news to me!

Well designed, with a credible if rather emotional message (“Help children get a better start in life”) it provides a great reminder that the cold calling ban should have been extended to other forms of communication. It goes without saying that particular financial promotion has been reported to the FCA; we’ll let you know if we hear anything in response.

It’s an example though of the type of promotion regularly seen by investors, many of whom might be susceptible to such approaches especially at a time of stock market volatility.

Necessary and ever-present

From reviewing and approving a simple blog to ensuring that a website is compliant, compliance is ever present.

Why? Marketing invariably means financial promotions, which must be compliant. That means working in partnership with your compliance team. However, the perception from some advisers and planners is that compliance will restrict their marketing. In our experience that isn’t the case; over the past two years, we have never had an occasion where a compliance department has stopped us running a specific promotion or campaign. However, we fear some advisers and planners might avoid more extensive marketing because of this misconception.

Surely that’s a mistake that will hold your business back? How can your business grow without marketing?

If perception turns to reality though and you find your network or compliance department constantly pushing back, there are two possible causes; you might be pushing the rules too far, or you may have the wrong compliance team.

Either way, something must change.

Poor practice

We firmly believe it’s incumbent upon us all to highlight poor practice when we see it. That means informing the regulator (as we did) but also taking more direct action. Calling it out on social media for example or alerting one of the excellent journalists who cover our sector.

I’m not generally in favour of criticising companies online. But, when the financial promotion rules are clearly being broken, which could cause a devastating financial loss for an unsuspecting investor, I’ll make an exception.

Calling out the miscreants hopefully means that the regulator is more likely to take notice. Equally importantly, investors who might otherwise have been tempted by high, guaranteed, returns, at a time when stock market volatility might leave them susceptible to such offers, might avoid a nasty fate.

So, go give your compliance team a big hug. Then keep a collective eye out for the real enemy; those people trying to part investors from their hard-earned cash.

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