There is no need for a specific regulatory regime to cover advertising and selling financial service...
There is no need for a specific regulatory regime to cover advertising and selling financial services through the internet, according to solicitors Field Fisher Waterhouse.
Kirstene Baillie, head of investment funds and product group at the firm, told a conference on e-commerce and internet compliance for the financial services industry that financial providers should not create a set of detailed rules just for online business.
Baillie said: "Financial services regulation rightly concentrates on the product and what one communicates about it rather than how the communication is made. The internet is not a new product in its own right with its own magical quality but rather a new communications medium.
"Of course it would be naive to underestimate the vastly increased potential the internet offers for cross-border abuse compared with other communications media.
Global regulation is needed, which is more likely to be co-operation than strict harmonisation. If you adopt a practical approach, the opportunities the internet affords can, to some extent, already be exploited in a way which minimises the regulatory risks."
Baillie suggested that providers assess the risks posed by the internet and establish ground rules for e-commerce. She said they should then implement strict verification and compliance procedures, such as maintaining evidence of receipt of documents and terms of contracts.
A common-sense application of FSA principles should be adopted and the detailed rules from the first principles, draft disclaimers should be applied, Baillie noted.
She said: "Restrict access to products accordingly. Promoting and selling products online does not raise unique financial services regulatory issues. This task is not so difficult if one goes back to first principles and looks at the purpose of financial services regulations."
The FSA has repeatedly stated that it had no plans drawn up at this time to establish a new set of guidelines for the selling of investment products over the internet. It has stated that the internet would be treated similarly to telephone sales but it has warned on the misuse of the internet in regards to the advertisement of financial services products overseas.
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