Case study 2: Fluency's more detailed promotion
Case study 2: High-level communication rules, but more detailed promotion - sufficient information and balance
The example promotion included in this case study is not meant to be copied as an example of good practice. It may have defects other than those identified.
Background
This promotion is the second part of MPBR's marketing campaign for its new fund. It picks up some of the themes from the first promotion and goes into more detail about the fund. The promotion is published as a quarter-page advert in a broadsheet paper.
Sufficient information and balance
COBS 4 requires communications to provide sufficient information for the audience:
| COBS 4.5.2R(3) | A firm must ensure that information is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to whom it is directed, or by whom it is likely to be received |
| COBS 4.5.2R(4) | A firm must ensure that information does not disguise, diminish or obscure important items, statements or warnings. |
| COBS 4.5.5G | When communicating information, a firm should consider whether omission of any relevant fact will result in information being insufficient, unclear, unfair or misleading. |
So, is MPBR's promotion sufficient for its audience?
In the marketing campaign, this promotion is communicated after the billboard and gives more information about the product. As mentioned earlier, if a promotion refers to the benefits of a product, firms cannot rely on risk warnings being provided earlier or later in the sales process to satisfy the requirement for balance in a promotion. Each promotion must be stand-alone compliant and balanced on its own terms. In this case, recipients may not have seen the first promotion anyway.
Here, MPBR needs to consider explaining what it means when describing this 'pan-European' fund. To what extent does it invest in 'new' Europe and how far does it invest in Europe? What are its investment limits? In saying that it invests in a 'resurgent' Europe, is it implying that it is a special situations fund? Also, what does 'pan-European elite' mean? Firms should be concerned about statements that may induce the target audience to invest when there isn't enough information for them to understand what is meant.
Firms may consider that as they are expected to provide sufficient detail about these concepts in their promotions, then it may be better to stay silent and leave it for the Simplified Prospectus or Key Features Document rather than overload promotions with information. As always firms need to think about the information that a promotion is intended to convey. If it provides more than just a high level of detail, firms are expected to disclose some of the most important features of the product. Also, the rules are quite clear: omitting material facts can contribute to a communication being unfair, unclear or misleading. A promotion need not go into the full detail, but there should be sufficient information.
The rule on sufficiency is linked to the concept of balance. In this promotion, there is quite a lot of reference to the potential benefits of the fund, so MPBR should also have included a fair and prominent indication of any relevant risks. MPBR has chosen to highlight what is perhaps the main risk of this investment, that 'you are not certain to make a profit and may not get back the full amount of your investment'. The warning is included in the main text of the promotion rather than in small print. It uses the same typeface and font size as the text for the benefits. So this is a prominent indication of one relevant risk, but others are missing.