Dear CEO - Financial Promotions
Written on 16/04/2019

11th April 2019 saw the sending of another communication from the FCA to a great many businesses in the UK involved in financial services.

 We have seen a few of these from the FCA, the “Dear CEO” letter and some are relevant to our members and some not so much, for example the LIBOR letter of 19th September 2018 will probably be of little interest to most of our members (unless they advise on any form of LIBOR linked mortgage or investment of course) and the one sent on 31st October of the same year on General Insurance pricing may not have hit our members’ post boxes and the DB transfers one was aimed at providers and not the advisory market (but in the near future I will do an article on that doozy of a letter!)

But two will most likely have been of interest, these two concern Financial Promotions, marketing for the most part to you and me!

The original letter sent on the 9th January 2019 set out the FCA’s concerns over the production and issuing of financial promotions by regulated firms in the UK.

The follow up issued only last week was on exactly the same subject, only this was seeking to remind firms about the January letter, this suggests to me that despite the first letter back in January, the FCA is still seeing cause for concern in the UK retail financial services space.

So what’s this latest one all about and how might it affect me as a mortgage adviser/IFA/credit broker/plumber?

In essence the letter seeks to remind you the CEO/business principal that any promotions that you create and use must be fair, clear and unambiguous.

One of the risks that they chose to highlight was where a firm markets an unregulated investment and implies, directly or indirectly that it is regulated because the firm itself is just that, regulated, they cite various COBS sections but I will try to make this a little clearer for you…..

Now for most of IFAC’s members this may not be an issue as many of you only market regulated investments (good old fashioned pensions, ISAs, OEICs, Insurance Bonds, Platforms etc) but just in case some of you delve into the unregulated investment arena here is what the FCA mean by “Unregulated Investment” and it’s not all that helpful….

Any investment could potentially be unregulated, that is the simple answer, the FCA describes them as “Unregulated Collective Investment Schemes” (UCIS) but does not elaborate any further, so for retail clients it could be a struggle to know for certain if your investment is actually unregulated or not.

But despite their unregulated nature they must in the UK be registered with the FCA before they can be sold and they can only be sold and the most often encountered schemes are:

Off plan property schemes

Crypto currency

Gold (yes Gold!)

UK forestry

Precious metals

Overseas land


Student accommodation

There are plenty more but these caught my eye.

Ok so now that I have given you an example of what an unregulated investment might be (and in reality how many of you actually ever sell such things?), let’s get back to the latest “Dear CEO” letter from the FCA.

Despite the nature of what the FCA are saying and the likelihood that few of our members would sell unregulated schemes, there is a central and important message contained within and when you strip away a lot of the words in their latest letter, the message is simple and key:

Every promotion, flyer, advert and banner that you might use must be checked and approved by an approved person before you use it and you must have an on-going checking/governance/oversight for such things

  1. It must be fair, clear and unambiguous and if it is not you must cease using it
  2. Complicated investments with detailed terms are unlikely to be suitable to be advertised in a short promotional flyer or banner
  3. Firms must not imply directly or indirectly that any solution is regulated by the FCA if it is not, even if the firm is regulated S

So what does this mean if you are an IFA or mortgage adviser?

It doesn't mean that you can’t use financial promotions and marketing material, far from it, it means that any that you use should be fair, clear and unambiguous, must be approved properly before use and above all should be factual and contain any relevant warnings as deemed suitable (mortgage risk or investment risk for example)

Most of you using IFAC to check your promotions then are already meeting this requirement and so I would say that you are doing fine and if you are not using us to check these for you, I would urge you to start doing so!




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