Compliance & Subjectivity 

I have, recently, found myself embroiled in a fascinating difference of opinion between an AR firm of ours, and the FCA's team which monitor financial advertising (or 'promotions').  The intermediary firm in question rarely embarks upon any kind of advertising, and what there is, is always highly generic.  That being the case, the firm was careful to run their new planned advert past ValidPath before it was unleashed upon an unsuspecting world.

As adverts go, it was fairly pedestrian.  No specific products were being promoted, and the risk warnings were therefore limited, and as equally prominent as anything else in the design.  It was a one-off, appearing in one booklet, and with no intention of repetition.

Ironically, the only response to the advertisement was from the FCA, which had also followed the matter up and spotted, it thought, non-compliance in the area of prominence of risk-warnings on the firm's website.  The supervisory letter, when it arrived, cited chapter and verse in MCOB 3.6.3R and 4R, as well as 13R.  Which was strange, because this is precisely where we had looked when the financial promotion was submitted to us for review.  There was, needless to say, nothing specific in the Handbook guidance which might have dictated an alternative approach.  This seems to be another example of how the FCA frames its regulations in such a way as to foster ambiguity, thus elevating the role of subjectivity in giving rise to outcomes that it can then deliver judgement on.

I have often wondered if the style and format of delivery of the FCA's guidance is in fact intentionally designed to 'prove' that we need a financial regulator, to intervene and tell us what to do.  If they were more specific at the delivery end, then presumably they'd have less to do at the supervisory end.

Of course, we and our Member Firm have made concessions, although in some respects doing so feels as if it goes against the grain.  Having reviewed again the FCA's Final Guidance, "Financial promotions - guidance: Prominence" (September 2011), I was struck by just how many examples of good practice were fulfilled by our Member's Advertisement.  There are perhaps two areas where it is possible to concede the point - meaning that the advert actually complies with six relevant criteria for 'good practice'.  More significantly, this financial promotion does not resemble any of the nine examples of 'bad practice' listed within the Finalised Guidance.

Let's put this into some kind of context.  I took a little time out to visit the websites of Lloyds Bank and Nationwide Building Society.  Both mention 'Mortgages' on their homepages.  Neither have any risk warnings whatsoever on their homepages.  Our Member Firm had the correct risk-warnings on every single page of their website, and they were as prominent as any other detail of importance.

Take care, folks.  It's a subjective old world out there!


Kevin Moss, 13/03/2015