The Financial Conduct Authority published an interactive discussion paper on consumer communications at the end of June 2015, thereby starting a debate on how firms can deliver information to consumers in more innovative and effective ways.
In the paper, the FCA reiterated its expectations that firms understand and recognise the importance of communicating effectively with consumers – or retail clients – while emphasising that it supports and encourages those that are writing for the consumer first and then ensuring communications are compliant, rather than the other way around.
The right medium
The FCA gave some examples of what it perceives as smarter, clearer communications, such as animated introductory guides to bank accounts and credit cards that are used to help educate a younger audience – in other words, using a medium that should get the relevant message across more effectively.
The FCA highlighted that it wants firms to focus particularly on their terms and conditions, which it considers too long generally. It gave one example of a firm that had reduced its T&Cs by 75%, with a significant increase in clarity as a result.
The regulator also wants firms to consider their disclosure of fees and charges, noting that more work needed to be done to distinguish them, and stressing that the total charges that might be incurred by a consumer should be clearer.
The closing deadline for comments on the discussion paper was at the end of September and a feedback statement is expected from the FCA imminently. The paper was published just three months after the regulator produced guidance on the use of social media in customer communications (‘finalised guidance’), where it stated that firms must have an adequate system in place to sign off on all such communications, and reiterated that each individual message, post or blog entry has to be “standalone compliant” and satisfy FCA rules, including incorporating risk warnings.
The subject of the finalised guidance and the discussion paper seem to suggest the FCA is keeping pace with changes in technology and remains vigilant to the risks posed to consumers, while actively encouraging firms to think about how their messages might be communicated to firms’ target audiences more efficiently.
The debate initiated by the finalised guidance and the discussion paper has necessarily included firms’ legal and compliance departments, product development teams and communications staff. This is because every client communication that includes an invitation or inducement to engage in investment activity will be a financial promotion and must therefore be signed off before it can be posted on a website or otherwise sent out.
