On 21 January 2011, the FSA published a consultation on financial promotions guidance focusing on the advertising of individual savings accounts (“ISAs”) and advertisements intended for investment professionals (GC11/3).

The proposed guidance relates to the FSA’s financial promotion rules in chapter 2 of BCOBS 2 and to certain rules in chapter 4 of COBS4 and will be of most relevance to firms approving financial promotions.

The proposed guidance reminds firms that they must promote their products and services in a way that treats their customers fairly. It highlights some of the questions a firm could ask itself while developing promotional material relating to ISAs to help it create clear, fair and not misleading promotions. Issues covered in the questions include clarity about what the customer’s money will be invested in, whether charges are fairly represented, fair and not misleading references to ISA tax status, the need to balance the risks and benefits, past performance, the impact of ISA transfers, and the prominence of risk warnings. Firms are reminded that they are expected to apply their usual compliance procedures to ensure that the promotion complies with the FSA’s rules.

The proposed guidance also sets out the FSA’s expectations of financial promotions that are stated to be “for investment professionals”. Such promotions must be effectively targeted through the publication or advertising medium used, be fair clear and not misleading, and clearly state the target audience (the guidance sets out how this can be achieved through the prominence of warnings and by using content and language that reflects the target group, amongst other things).