Website promotions: Our findings - March 2005
We have been reviewing regulated firms' websites for compliance with our rules.
Websites may themselves be financial promotions, so should comply with our rules and contain the information required in any stand-alone promotion. Websites that allow consumers to buy straight from them may also constitute ‘direct offer financial promotions’ and so need to comply with the relevant rules in this area.
With the introduction of the Distance Marketing Directive, the requirements in this area have changed and the amount of information that should be included has increased, so please see COB App 1. As well as exhibiting many of the general concerns set out in the previous section, we found other concerns relating specifically to websites. Here we set out the main issues we have found in reviewing websites.
Risk warnings that are missing or lack sufficient prominence
Risk warnings should generally appear on pages that are promoting the firm's products or services. We noted that some sites do not have any risk warnings at all, while others buried the risk warnings in the small print at the bottom of the page. People using the site should not need to scroll down the page to see the risk warnings; nor should risk warnings appear only in the 'legal notes', 'notes' or 'terms and conditions' pages, or other equivalent pages – we would consider such risk warnings to be insufficiently prominent (Rule COB 3.8.5 E(1) ).
Non-compliant past performance warnings
We noted that some sites contain inadequate past performance warnings, while other sites did not include the warning on every page that mentioned past performance (see rules COB 3.8.11 R onwards).
Use of the FSA logo on websites
We noted that some firms are using our logo on their websites. Just as firms cannot generally use the FSA logo on paper promotions, they are not allowed to use it on a promotion in any other media.
Firms are only permitted to use the FSA logo on letters or their ‘electronic equivalent’ – and this does not include websites [GEN 5].
Banner advertisements and hypertext links
Banner advertisements and hypertext links may also be financial promotions. As with any other form of advertising, whether they are inducements to engage in investment activity – and therefore financial promotions – will depend upon their content. Banner advertisements and hypertext links that are financial promotions need to be clear, fair and not misleading. Where they are product specific, they should give a balanced indication of the product or service, the risks involved and the commitment required (unless an exemption applies).
There will of course be banner advertisements and hypertext links which are not financial promotions or are not subject to the detailed financial promotions rules because they contain only limited factual information. If the banner advertisement or hypertext link contains nothing more than the name of the firm/investment, a brief factual description of the firm's activities, fees, investment products and the price and charges of the investments then it will fall within the relevant exemption. We note that some firms include only limited information in the banner advertisements/hypertext websites, but find their promotions are not exempt as they contain wording of a promotional nature.
Even if the communication does not constitute a financial promotion or is exempt, it still needs to be clear, fair and not misleading.
