Financial Promotions Workshop – Suitable for All Regulated Firms

Part One

Introduction

• Financial promotions training begins by exploring the latest news

• Latest issues (high level): Consumer Duty

• FCA Reviews

• Social Media

• CONC 3

• Anti-greenwashing rules

• Redefining "professional" clients

• Funeral scandals fallout

• Finfluencers fallout

Session 1: What is a Financial Promotion?

• What is a Financial Promotion?

• Why do they matter? The meaning of “clear, fair and not misleading”

• The meaning of “in the ordinary course of business”

• Regulated activities

• The vital need to distinguish between regulated and unregulated products

• What rules apply – Conc 3, COBS 4, FPCOBS and/or MCOB3A

• Media types: no boundaries – any can be used

• Types of financial promotion

• Key issues to understand

Session 2: What is the Drive Behind Regulation? (Overview)

• FCA role, responsibility and general approach to FinProms

• Principles-based (outcomes) - regulation versus rules-based regulation

• Treating Customers Fairly (TCF)

• Principles for business – general FCA requirements of a regulated firm

• Clear, fair & not misleading in more depth

• Real-time promotions

• Non-real-time promotions

• Exercise: Consider a marketing proposal for a promotion. Is it a financial promotion? What changes are needed to either meet the mandatory requirements or to avoid the classification completely

Session 3: Recent FCA Initiatives, Proposals & Consultations – A Lot of Fine Tuning!

• Principle 12 and its impact. FCA watching progress

• Vulnerable Clients

• Revisions to Self-Certified Sophisticated Investors criteria

• Firms to self-assess if they have the necessary skills & knowledge to approve FPs

• “Finfluencers” under scrutiny – test case outcome awaited.

• Focus on High-risk Investments - NRRS. P2P loans, NMPI & SIS

• New designations – RRS, RMMI, NNMMI

• Risk warnings to be improved

• Inducements to be prohibited

• Addition of two “positive frictions” for web-based promotions

• Qualifying Crypto Assets Rules & Classifying Crypto as MMI’s

• Regulatory Gateway – deadline for registration now closed

• FP’s to include a date stamp and be reviewed more frequently

• Records to show how each FP was approved

Session 4: The General “Rules” (Overview)

• Which set of rules applies to your firm

• How the FCA regulates

• Client categories MiFID II definitions as a guide

Complexity and risk of individual products

Past, Simulated & Future Performance Data

Direct Offers

Cold Calling

Approving Financial Promotions

Exercise: A real-life example to consider and evaluate

Session 5:  Introduction to the Advertising Standards Authority (Overview)

• An independent body

• What is its role?

• ASA guidance

• Non-compliant adverts

• BCAP Rulings

• ASA complaints procedure

• Exercise: Recent or relevant rulings

Session 6: CONC3

• Definition

• Application

• APR’s

• Representative Examples

• Detailed provisions

• Risk Warnings

• Exercise: Reviewing a CONC 3 example

• Please note this section is delivered subject to delegate demand - we can also deliver MCOBS subject to delegate demand

Part Two

Session 1: Impact of FCA Anti-Greenwashing Rules (Delivered subject to delegate demand)

• Consultation Process – Rules effective 31.5.24

• Finalised Guidance FG24/3

• Impact on Financial Promotions – 4 key areas Correct and capable of being substantiated

• Clear and presented in a way that can be understood

• Complete – they should not omit or hide important information and should consider the full life cycle of the product or service

• Comparisons to other products or services are fair and meaningful

What does this mean in practice – a great deal of supporting documentation

Exercise: Reviewing FG24/ Examples

Session 2: Financial Promotions Regulation in Practice

• The Rules – Refresher

• Methodology - Financial Promotions suggested process and the importance of an audit trail and a clear thought process

• FCA approach = reviewing, investigating, assessing

• What to expect on an FCA visit

• Thematic reviews

• Common problems with FPs

Session 3: Financial Promotions Using New Media

• FCA Guidance – FG24/1 March 2024

• A detailed review of the recent guidance – not many changes in practice

• Going Forward – the collective views of regulated firms

Session 4: Principle 12 Consumer Duty

• Session 4 of this financial promotions course assesses the Consumer Principle: Three New Rules

• Four New Outcomes

Vulnerable Clients

Checking Understanding

Impact on Financial Promotions for retail clients

March 2024 - FCA comments on implementation to date

An ongoing process

Session 5: FCA Linking Financial Promotions with Complaints Handling

• Why is the FCA linking this with FinProms?

• What are the latest complaint-handling rules?

• Root cause analysis

• Liaising with FinProm approvers and the front-line

• Lessons learned

• Holistic approach

• FOS rulings

• Exercise: Looking at recent FOS examples

Session 6: Exceptions to the Rules

• Not many in practice

• The somewhat shortlist

Session 7: Record Keeping

• Recording communications

• Time periods

• FP records requirements

Session 8: Prominence & Financial Promotions

• Detailed guidance contained in FG24/1 – a welcome update

• CONC 3 on Prominence

• FCA requires equal prominence of risk warnings

Course Conclusion

• Summary

• Open Forum

Note – not all financial institutions have the product range covered by this comprehensive public course. For in-house or bespoke courses, content can be amended with additions or deletions as required.

Training Objectives

• Keep up to date with the latest news and thoughts on FinProms

• Explain why financial promotions matter and why there is so much focus on this area

• Understand the rules and be able to follow both the letter and the spirit of FCA guidelines

• Create powerful promotions that are capable of appropriately selling products

• Understand the approval process and the need for clear internal instructions, guidelines and processes

• Recognise the significance and importance of the brand or image advertising, and how and when to use it

• Consider some topical and selective practice guidance publications (Thematic Reviews) and their impact on FPs

• Be aware of the impact of the Advertising Standards Authority on FPs

• Become familiar with the “rules” of financial promotions and exceptions

• Consider the rules from your organisation’s perspective, COBS 4 & or CONC 3 or similiar

• Know the difference between Real-Time and Non-Real Time Financial promotions (and what this distinction means in practice)

• Understand the responsibilities of intermediaries, brokers and other third parties

• How to approve a Financial Promotion from start to finish

• Have in place an effective review process

• Expand the understanding of record keeping, including time periods, recording communications and FP records requirements

• Learn about financial promotions FCA using new media – the key marketing media for most firms

• Gain insight into prominence and FinProms by looking at the thematic review and the guidance in CONC3

• Assess examples and case studies in this financial promotions course to understand what good and bad look like

Training Course Summary

Financial Promotions compliance remains a very high-profile issue for the FCA. Based on client feedback, they're increasingly combining this with reviews of complaints handling procedures to ensure a joined-up process of marketing financial products to retail clients. Complaints are seen by the regulator as feedback from the client that something is wrong and are now an essential component of Principle 12 validation. Any lessons learned as a result must be communicated through to the financial promotions team.

FinProms are how customers are persuaded to buy, invest or use regulated financial products. For retail clients, it is important to remember the FCA guidance. The firm promoting the regulated product or service knows all about the product, its suitability, its strengths and weaknesses and whether it meets the needs of the applicant. The applicant/client does not have this knowledge (normally!). It is reasonable for the FCA to expect all regulated firms to recognise this imbalance and manage it.

Social media and the internet are now key marketing platforms. But promotion can be in almost any form via any media. All promotions must be clear, fair, and not misleading, and in many cases, this means exercising judgment.

For Retail consumers, the Consumer Duty has enhanced this obligation to be clear, fair and not misleading. This has compelled firms to take positive, proactive steps to test understanding and ensure the process is delivering the required outcomes in practice. The FCA expects all financial promotions for regulated activities to provide the prospective client with the information needed to make a clear and balanced judgement. In the case of some products – Mortages and Funeral Planns for example – the guidance is very detailed.

Financial promotions training courses at Redcliffe provide you with a comprehensive overview of the FCA approach and how it applies in practice.

Please Note: if requested in advance, there is the option to add some specialised modules such as MCOB 3 / Funeral Plans / Claims Handling / Leveraged Products / Motor Finance.