guidance advertising promotion and dist

8/11/2019 Guidance Advertising Promotion and Dist

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Guidance Note on Advertising, Distributionand Promotion of Financial Products or

Services

Supervision DivisionFinancial Supervision CommissionNovember 2012 (updated February 2014)

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Guidance Note on Advertising, Distribution and Promotion ofFinancial Products and Services

Introduction

One of te Financial Supervision Commission!s (te Commission!s) re"ulatory ob#ectivesis$ to secure an appropriate degree of protection for the customers of persons carryingon a regulated activity%&

'o enable it to meet tis ob#ective te Commission as a ule *oo+1containin" specificrules applicable to its licenceolders as ,ell as a number of statutory po,ers it can useto enforce tese rules%

-n common ,it many oter re"ulators te Commission!s rules are a mi.ture of detailedrules for some circumstances and also i" level "eneral rules% /icenceolders mustal,ays consider te i" level "eneral rules in relation to any situation as ,ell as anyspecific detailed rules%

'e rationale for i" level rules is to permit conduct and culture as a ,ole to beconsidered% 'ey also allo, for re"ulatory #ud"ment to be applied accordin" to tecircumstances of a particular firm or se"ment of te industry and tey avoid te creationof loopoles ,ic specific rules tend to inadvertently cause%

'is "uidance is intended to remind licenceolders o, particular rules can apply to teadvertisin" distribution and promotion of financial products and services and also toillustrate te tools available to te Commission ,ic it ,ill use to enforce te rules%

'e "uidance is illustrative% -t is not e.austive and does not limit or restrict teCommission in e.ercisin" its discretion re"ardin" ,ic action it may feel is te most

appropriate in any particular circumstance% -t is not a substitute for reference to teapplicable primary and secondary le"islation%

'e "uidance is relevant to all licenceolders involved eiter directly or indirectly ,it tesupply or advertisin" of financial products and services or te provision of advice orinformation tereon% 'e rule numbers relate to all licenceolders apart fromprofessional officers ,o ave a specific rule relatin" to teir advertisin" (rule %)%

General Rules

-n relation to te topic of advertisin" distribution and promotion of financial products orservices te follo,in" "eneral rules are of particular importance$

6.2 Sill, care and diligence

'e reuirement to use s+ill care and dili"ence e.tends to te adeuacy andaccuracy of advertisin" and oter promotional materials and to care in relation to,om products and services are promoted%

1Financial Services Rule Book 2013

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6.! "nsuring fair and reasonable be#aviour

'e reuirement to obtain business in a ,ay ,ic is clear fair and notmisleadin" includes clear advertisin" or promotional material free from #ar"onand small print and ,itout misleadin" 3teaser! rates of return etc%

6.6 Action liel$ to bring Island into disre%ute

'e promotion of local products and services into #urisdictions ,ere tis is notpermitted or in a manner outside of permitted parameters could brin" tereputation of te -sle of an into uestion%

6.& Integrit$ and fair dealing

'is rule applies in relation to te carryin" on of all re"ulated activities andincludes dealin" fairly ,it clients in an open ,ay%

6.' Informed decisions

'is rule includes a reuirement to avoid misleadin" or deceptive representationsor practices and is particularly important in relation to te information provided toclients about te nature of products provided by 5 or advised upon by telicenceolder and te adeuacy of te promotional material%

'.! (anagement controls

'is rule includes te reuirement to ensure systems and controls are in place toensure fair treatment of clients and effective communication ,it tem ,ic,ould include controls over te suitability of advertisin" and promotionalmaterials%

'.6 Ris management

'is rule includes te reuirement to mana"e te ris+s applicable to telicenceolder% -n relation to product desi"n or coice te advertisin" of productsand teir distribution to tar"et customers tese matters sould be included ,itinris+ revie,s and ris+ frame,or+s 6 ,ere consideration sould be "iven to teris+s to te business caused by te product its inappropriate description or saleor inappropriate remuneration structures relatin" to it%

'.)* Functions of com%liance officer

'is rule includes te reuirement to ave robust and documented arran"ementsfor compliance and to monitor te operational arran"ements 6 ,ic souldinclude operational arran"ements for product desi"n distribution advertisin"etc%

S%ecific Rules

-n addition to te "eneral rules te follo,in" specific rules apply to tis topic$

6.)+ 7dvertisements 6 "eneral (,ic includes te reuirements for fair and

accurate information)

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6.)& eference to compensation sceme (and oter protection arran"ements)

in advertisements

6.2* 8no,led"e of client (,ic includes for investment clients teir attitude to

ris+ and time ori9ons)

6.+ Suitability

6.+) /ife policies 6.+)A - Collective investment scemes

6.+! Disclosure and information

6.+ :nderstandin" of ris+

6.+6 Disclosure of product particulars

-n addition te Collective -nvestment Scemes 7ct 200; contains specific provisions inrelation to restrictions on promotion and secondary le"islation made under tat 7ctcontains specific reuirements in relation to eac type of sceme and all relevantfunctionaries includin" mana"ers administrators promoters and te "overnin" bodies ofscemes must adere to tese reuirements%

/t#er Guidance

-n addition to tis "uidance te Commission as also issued oter pertinent "uidancedocuments and material to assist licenceolders and consumers as follo,s$


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be used to specify product types ,ic are proibited%

Section 14 FS7 0; -mposin" a direction to reuire action in relation tore"ulated activity 6 for e.ample te Commission mayreuire sometin" to be done (or not done) or it mayreuire sometin" to be rectified and can use tis po,erto suspend or discontinue a particular re"ulated activity%

Section 1A FS7 0; 'e issuance of a public statement if te Commissionconsiders tat tis is desirable for public protection or inte event of a contravention%

C-S7A0; = Scedules 'e Commission as te ability to ,itdra, tereco"nition or autorisation of a sceme%

Section 1B FS7 0; 'is issuance of a civil penalty 6 at present tis is only foradministrative failin"s% Consultation is under,ay tobroaden te re"ulations ,ic ,ill enable teCommission to issue penalties for oter matters 6 ,ic,ould include mis=sellin"%

Section 20 FS7 0; 7n application to te court for restitution for ,ron"edparties%

Section 1 C-S7 0; 7n application to te 7ttorney

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