The FSA has stripped detailed regulations from its investment product advertising rulebook.
The regulator says it has simplified the rules, which come in to force on November 1, to allow firms more flexibility with financial promotions.
Tony Katz, manager of funds promotion supervision at the FSA, says a less rigid approach to promotions will mean they are better tailored to consumers’ needs.
He says: “We’ve taken detailed rules and stripped out the detail and focused more on outcomes of what we are trying to achieve. Rather than a one size fits all, what we’ve done is get rid of that and allowed firms to be creative and help customers make an informed decision.”
David Geale, manager of consumer information and financial promotions policy at the FSA, says the changes aim to encourage firms to consider the advert’s context.
He says: “We found pages of rules saying these are the sorts of risks you could include but instead of putting themselves in the customers’ shoes, they checked boxes that ‘we’ve included that’.
“We want them to think more for themselves – ‘who is the consumer I’m talking to and are they going to understand?’ Consumers should have something that better enables them to understand what they are looking at. It’s about being more flexible. We’re making clear it is not lowering standards but designing things much more effectively.”
The changed rules will require firms to produce adverts without misleading consumers, with balance and sufficient information.
Geale says: “If you do that, you should end up with a better promotion.”
He says flexible rules will also mean the FSA will not have to update them as often as previously.
Katz says the FSA has consulted trade associations and examined written responses from firms in its review of the rules.
The regulator will investigate firms it believes do not follow the rules and ask them to withdraw sub-standard promotions.
The FSA will provide general training for the industry on all changes to the investment rules in the last quarter of this year and specific training in the first quarter of next year.
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