Financial Promotions and Advertising
Financial firms often use advertising to attract customers.
For example, they may promote:
- mortgages
- savings accounts
- insurance
- loans
- financial advice
However, financial advertising can strongly influence customer decisions.
Therefore, firms cannot simply say whatever makes a product sound attractive.
Instead, financial promotions must follow rules.
The basic principle is:
Financial promotions should be fair, clear and not misleading.
For mortgage advisers, this affects websites, social media, leaflets, emails and many other forms of marketing.
What Is a Financial Promotion?
A financial promotion is broadly a communication that invites or encourages someone to take part in a financial activity.
For example, this could include:
- an advert
- a website page
- a social media post
- a leaflet
- an email campaign
- a video
- a brochure
Therefore, financial promotions can appear in many different forms.
The important question is not only:
Is this an advert?
Instead, ask:
Does this communication encourage someone to take financial action?
Why Are Financial Promotions Regulated?
Financial products can be complex.
Meanwhile, adverts are often short and designed to attract attention.
Therefore, there is a risk that important information could be left out.
For example, a mortgage advert might show:
Low 2.99% rate
However, it could also have:
- a large product fee
- a short deal period
- a high early repayment charge
Therefore, customers need a fair picture.
As a result, promotional material must not create a misleading impression.
Fair, Clear and Not Misleading
This is one of the most important phrases to remember.
Financial promotions should be:
Fair
Clear
Not misleading
Let’s look at each one.
Fair
A promotion should give a balanced picture.
For example, it should not highlight benefits while hiding important drawbacks.
Therefore, if a major charge or condition matters, it should not be buried where customers are unlikely to see it.
The overall message should be fair.
Clear
The wording should be easy to understand.
For example, a customer should not need specialist financial knowledge just to understand the main offer.
Therefore, firms should avoid:
- unnecessary jargon
- confusing wording
- unclear figures
- hidden conditions
As a result:
Important information should be easy to find and understand.
Not Misleading
A promotion must not give customers a false impression.
For example, it should not suggest:
Everyone will qualify
if the mortgage is available only to a small group of customers.
Likewise, a firm should not suggest a rate is guaranteed if it is not.
Therefore, accuracy matters.
A Simple Mortgage Advert Example
Imagine an advert says:
Mortgage from 3.49%
That statement may be true.
However, suppose the rate is available only to customers with:
- a 40% deposit
- excellent credit
- a particular property type
If the advert makes it sound available to everyone, customers may be misled.
Therefore, important limits should be explained clearly.
Promotions Can Use Many Channels
Financial promotion rules do not only apply to printed adverts.
They can also apply to:
- YouTube
- TikTok
- websites
- text messages
Therefore:
Online marketing is still financial marketing.
The same basic standards apply.
Social Media Can Still Be Regulated
A short social media post can still be a financial promotion.
For example:
Get a mortgage from just £699 per month – message me now.
That may encourage someone to take financial action.
Therefore, the firm should consider whether the communication meets FCA requirements.
So, the platform does not remove the regulatory responsibility.
Personal Posts and Business Posts
Advisers need to be careful when using personal social media accounts.
For example, a post may appear casual.
However, if it promotes a financial service, regulatory rules can still matter.
Therefore:
Personal-looking content can still become business promotion.
The substance of the message matters more than the account name.
Approving Financial Promotions
Unauthorised people cannot freely communicate all financial promotions.
In many cases, a promotion may need to be:
- made by an authorised person
- approved by an authorised person
- or covered by an exemption
Therefore, the legal framework controls who can communicate financial promotions.
This links back to FSMA.
Why Approval Matters
Imagine a marketing company creates a mortgage advert.
However, the company is not authorised to make or approve the relevant promotion.
The content may still need approval from an authorised firm before it is used.
Therefore, financial firms need proper controls over advertising.
Appointed Representatives and Promotions
An appointed representative may use financial promotions.
However, the principal firm has important oversight responsibilities.
Therefore, the AR may need to use:
- approved wording
- approved templates
- approved disclaimers
As a result, appointed representatives may not always be free to create their own marketing without checks.
Mortgage Promotions
Mortgage promotions can include statements about:
- rates
- monthly payments
- fees
- LTV
- eligibility
- broker services
Therefore, firms need to explain important information accurately.
For example, a mortgage promotion should not suggest a low monthly payment without making the wider cost clear where required.
Representative Examples
Where financial promotions include certain borrowing costs, firms may need to provide a representative example.
This helps customers understand the likely cost of borrowing.
For example, it may include:
- amount borrowed
- interest rate
- fees
- APRC
- total amount payable
- monthly payments
Therefore, the advert gives more than one headline figure.
What Is APRC?
APRC stands for:
Annual Percentage Rate of Charge
It is designed to help show the overall cost of a mortgage over time.
Therefore, it can include more than the initial interest rate.
This helps customers compare mortgage costs more fairly.
We will study APRC in more detail later.
Headline Rates Can Mislead
A mortgage may have a very low starting rate.
However, that rate may last only for a short period.
After that, the customer may move onto a much higher rate.
Therefore, adverts should not create the impression that the low rate applies for the whole mortgage term.
This is another example of fair communication.
A Simple Rate Example
Imagine a mortgage offers:
2.99% for 2 years
Then:
7.49% variable rate
If the advert only shows:
2.99% mortgage
the customer may misunderstand the real position.
Therefore, the deal period matters.
Fees Must Not Be Hidden
Mortgage products can include fees such as:
- product fees
- broker fees
- valuation fees
- legal fees
Therefore, firms should not make a mortgage appear cheap by hiding major charges.
For example:
No upfront fee
may sound attractive.
However, if a £2,000 fee is added to the mortgage, the customer still pays it.
Therefore, the overall wording should remain clear.
Adding Fees to the Mortgage
If a fee is added to the mortgage, the customer may also pay interest on that fee.
Therefore, the final cost may be higher.
For example:
Product fee: £1,500
If added to the mortgage:
£1,500 becomes part of the borrowing
Therefore, the customer may pay interest on it.
This is why promotions should not oversimplify costs.
Promotions Should Not Create False Urgency
Advertising sometimes uses urgency.
For example:
Act now before it’s too late.
However, firms should not create false pressure.
Therefore, urgency should only be used where it is genuine.
Otherwise, the customer may feel pushed into a financial decision.
A Pressure Example
Imagine a mortgage rate is available for a limited period.
It may be fair to explain that.
However, saying:
Apply today or you will definitely lose the deal
could be misleading if that is not known.
Therefore:
Real urgency can be explained. False urgency should not be created.
Promotions Should Match the Target Customer
A mortgage promotion should be aimed at the right audience.
For example, a buy-to-let product may not be suitable for ordinary residential borrowers.
Therefore, firms should make clear who the product is designed for.
This links with Consumer Duty and target markets.
A Target Market Example
Imagine an advert says:
High-LTV mortgage for first-time buyers
That makes the audience clear.
However, if the product is actually only available to existing homeowners, the advert would be misleading.
Therefore, the promotion needs to match the product.
Comparisons Must Be Fair
Financial promotions sometimes compare products.
For example:
Cheaper than our competitors
However, comparisons need to be fair.
Therefore, firms should avoid:
- comparing different product types
- using old figures
- hiding fees
- choosing only favourable examples
As a result, comparisons should use a fair basis.
Testimonials and Reviews
A firm may use customer testimonials in marketing.
However, these should not create a false impression.
For example, a firm should not:
- invent reviews
- remove important context
- suggest every customer gets the same result
Therefore, testimonials should still be fair and accurate.
Promotions About Approval
Mortgage adverts should be careful with words such as:
- guaranteed
- approved
- certain
- instant
For example, saying:
Guaranteed mortgage approval
may be misleading if normal underwriting still applies.
Therefore, firms should avoid claims that give customers unrealistic expectations.
A Simple Approval Example
A customer may receive an Agreement in Principle.
However, this is not the same as a final mortgage offer.
Therefore, a promotion should not present an AIP as guaranteed lending.
This protects customers from misunderstanding the process.
Promotions and Vulnerable Customers
Advertising can affect vulnerable customers differently.
For example, someone in financial difficulty may be more attracted to messages promising:
Easy money
or:
Instant approval
Therefore, firms should consider whether marketing could cause harm.
This links with Consumer Duty.
Promotions and Consumer Understanding
Financial promotions are part of the customer journey.
Therefore, Consumer Duty applies from the start.
If the promotion creates confusion, the problem begins before the customer even speaks to an adviser.
As a result:
Good communication should start with the first advert.
Keep Promotions Up to Date
Financial products change quickly.
For example:
- interest rates change
- lender criteria change
- fees change
- products are withdrawn
Therefore, old promotions can quickly become wrong.
As a result, firms need to review marketing regularly.
A Simple Website Example
Imagine a broker’s website says:
Rates from 2.5%
However, the product was withdrawn six months ago.
The page is now misleading.
Therefore, outdated information should be removed or updated.
Record Keeping
Firms should keep suitable records of financial promotions.
For example, they may need to show:
- what was published
- when it was approved
- who approved it
- when it was used
Therefore, record keeping also applies to marketing.
Why Records Matter
Imagine the FCA questions an advert from two years ago.
The firm may need to show:
- the wording
- the approval
- the evidence behind the claims
Therefore, good records help demonstrate compliance.
Influencers and Third Parties
Financial firms may use influencers or other third parties to promote services.
However, firms still need to think about regulatory standards.
Therefore, paying someone else to make the promotion does not remove responsibility.
The communication still needs to be fair and compliant.
A Simple Influencer Example
Imagine a social media influencer says:
This broker can get anyone a mortgage.
That claim may be misleading.
Therefore, the firm should control how its services are promoted.
As a result:
Third-party marketing still needs proper oversight.
What Should Mortgage Advisers Check?
Before publishing promotional content, ask:
Is it accurate?
↓
Is it clear?
↓
Could it mislead?
↓
Are important conditions explained?
↓
Is the audience appropriate?
↓
Has the promotion been approved where required?
This gives a simple compliance check.
A Full Mortgage Promotion Example
Imagine an advert says:
Buy your first home with just a 5% deposit.
This may be attractive.
However, the firm should also consider:
- eligibility
- lender criteria
- credit history
- affordability
- available products
Therefore, the advert should not imply that every customer with 5% automatically qualifies.
As a result, the wording needs to remain balanced.
What Financial Promotions Should Avoid
Firms should avoid promotions that:
- exaggerate benefits
- hide important costs
- create false urgency
- promise guaranteed approval
- use unclear wording
- target unsuitable customers
- use outdated information
Therefore, the main aim is honest communication.
A Simple Memory Aid
Remember:
Fair
↓
Clear
↓
Not Misleading
Then ask:
Who is this for?
↓
What does it cost?
↓
What are the limits?
↓
Could the customer misunderstand it?
This covers the main issues.
Key Terms to Remember
Financial Promotion
A communication that invites or encourages someone to take part in a financial activity.
Fair, Clear and Not Misleading
The key standard for financial communications.
Representative Example
A set of example figures showing the likely cost of borrowing.
APRC
Annual Percentage Rate of Charge.
Target Market
The group of customers a product is designed for.
Approval
The process through which an authorised person may approve certain financial promotions.
Clone Firm
A fraudulent business copying the identity of a genuine financial firm.
Quick Knowledge Check
1. What is a financial promotion?
A communication that invites or encourages someone to take part in a financial activity.
2. What are the three key standards for financial promotions?
Fair, clear and not misleading.
3. Can social media posts be financial promotions?
Yes.
4. Can personal social media accounts still create regulatory issues?
Yes, if the content promotes financial services.
5. Should a mortgage advert hide major fees?
No. Important costs should be presented clearly.
6. What does APRC stand for?
Annual Percentage Rate of Charge.
7. Can firms use false urgency?
No. Urgency should only be used where it is genuine.
8. Can an advert promise guaranteed mortgage approval where underwriting still applies?
No. That could be misleading.
9. Why should promotions be reviewed regularly?
Because rates, fees, products and criteria can change.
10. Does using a third-party marketer remove the firm’s responsibility?
No. Firms still need proper oversight.
Quick Summary
Financial promotions can strongly influence customer decisions.
Therefore, they must be:
Fair
Clear
Not misleading
This applies across many channels, including:
- websites
- social media
- emails
- videos
- leaflets
In addition, firms should make important information easy to understand.
For example:
Rates
↓
Fees
↓
Conditions
↓
Eligibility
↓
Risks
should not be hidden.
Most importantly:
Do not make a product look better by leaving out what matters.
For mortgage advisers, a useful final check is:
Is it accurate?
Is it clear?
Could the customer misunderstand it?
If the answer to the last question is yes, the promotion needs more work.
Next Page
Data Protection and Customer Confidentiality