Following consultation in 2011 FSA has published guidance on Financial Promotions, Fund Performance and Image Advertising and Financial Promotions – Advertising ISAs & Adverts for Investment Professionals.
- The guidance emphasises the requirement to explain products and services clearly and to give consumers fair and clear information, which is not misleading. This is consistent with Principle 7 of the Principles for Business and is the central high level rule in chapter 4 of the Conduct of Business Sourcebook (COBS 4).
- It warns of the "risk sandwich" where promotions describe risks of a product between sections highlighting benefits and explains the purpose and importance of FSA's rules on past performance indicators. Advertising on the past performance of funds must comply with FSA "Past Performance: Key Points". Further performance information can be added as long as it complies with the rules and is not the most prominent part of the advertisement, and overall the advert is fair, clear and not misleading.
- Brand advertising must not be confused with "Image advertisements" which are strictly defined. "Image advertisements" consist of only basic information about a firm. They attract exemptions from the financial promotions rules and their treatment will depend on the type of product and therefore which sourcebook applies.
- Key questions to ask when creating promotions for ISAs have been provided by FSA. These questions will help firms create promotions that are fair, clear and not misleading.
- The exemption from financial promotions restrictions available to "investment professionals" is usually only relevant for unauthorised firms or unregulated Collective Investment Schemes (CIS) and those exemptions in the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 are not available for "MiFID business". Firms wanting to communicate a promotion to investment professionals should be clear about who the promotion is directed at and on what basis.