marketing of financial services and financial … from 1 october 2006 markets act (chapter 2,...

Standard 2.2

Market ing of f inancia l serv ices and f inancia l instruments

Regulations and guidelines

THE FINANCIAL SUPERVISION AUTHORITY Issued on 22 August 2006

2 Code of conduct Valid from 1 October 2006 until further notice

Marketing of financial services and financial instruments 2.2 J. No. 7/120/2006 2 (26)

TABLE OF CONTENTS

1 Application __________________________________________ 4

2 Objectives ___________________________________________ 6

3 International framework and financial sector self-regulation____ 7

4 Legal basis __________________________________________ 8

5 Crucial marketing principles _____________________________ 9

5.1 General ________________________________________________9

5.2 Good marketing practice__________________________________10

5.3 General code of conduct for the marketing ___________________10

5.4 False and misleading marketing and the correction required ______13

5.5 Impartial description of financial services and instruments and disclosure of risks _______________________________________13

5.6 Who is the provider of the service or product marketed _________14

5.7 Assertions and comparisons _______________________________14

5.8 Information on historical developments in yield________________15

5.9 Yield forecasts__________________________________________16

5.10 Terminology and product names ___________________________16

6 Special characteristics of certain financial instruments with impact on the marketing_____________________________________ 18

6.1 Marketing of loans ______________________________________18

6.2 Offering competing financial instruments in a payment situation___18

tel. +358 10 831 51 For further details, please contact:

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Conduct of business, tel. +358 10 831 5336




6.3 Reference to legally required prospectuses ___________________19

6.4 Combined investment instruments __________________________19

6.5 Marketing of bonds ______________________________________20

6.6 Mutual funds ___________________________________________21

7 Definitions__________________________________________ 23

8 Further details ______________________________________ 25

9 Obsolete guidelines and statements ______________________ 26


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1

Issued on 22 August 2006 Valid from 1 October 2006

(1) (1 o the following supervised entities referr e Financial Supervision Authority (587/

s of foreign investment firms • Finnish branches of foreign fund management companies.

sued on 22 August 2006 Valid from 1 October 2006

arketing in Finland of reign fund management companies or other foreign undertakings for


f rms or foreign credit institutions.

rkets

t

all companies omparable to consumers.

sued on 22 August 2006 Valid from 1 October 2006

nts, es or instruments is responsible for

APPLICATION

) This standard shall be applied ted to in section 5 of the Act on th2003):

• credit institutions • investment firms • fund management companies • pawnshops • Finnish branches of foreign credit institutions • Finnish branche

(2) The standard shall also be applied to cross-border mIs

fo collective investment. (3) The standard shall not be applied to cross-border marketing in Finland oforeign investment fi


(4) The standard's provisions on marketing of securities shall be applied to all issuers and providers of securities within the scope of the Securities MaAct (495/1989) as well as others marketing or acquiring securities in their business activities.


(5) The standard shall not be applied to marketing of securities or investmenservices to professional or qualified investors or to marketing of credit institution services or products to others than consumers or smc (6) If an agent is used in the marketing of financial services or instrumethe provider or issuer of the servic

Is


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ensuring that the agent acts in compliance with this standard.


tan rings and listing contains provisions on the(7) S dard 5.2a on securities offe mark g material prepared for offerietin ng of securities or application for admission of securities to listing.


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2 OBJECTIVES


(1) Teservicesoperatinmethods


(2) Th sales (m ts.


(3) The d aims to ensure that in a constantly changing operating nvironment the marketer of financial services and instruments

• recognises its own accountability in the marketing • furthers the quality of the marketing material and other

marketing information offered to the customers • supports development of appropriate marketing methods.


(4) It is also the purpose of the standard that the provided principles should be applicable to the marketing of new types of financial services and instruments.


(5) The increased post-marketing approach to supervision of marketing as performed by the Financial Supervision Authority (FIN-FSA) also emphasises the need for a concise presentation of recommended principles for such marketing.

chnical development, diversification of financial instruments and

, and internationalisation have brought about changes in the g environment of financial markets and the range of marketing .

e standard provides instructions for all operations aimed at promoting arketing) of financial services and instrumen

standare


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3 WORK


The the following international directives and

Council tive

Parliament EC (MiFID)

INTERNATIONAL FRAMEAND FINANCIAL SECTOR SELF-REGULATION

standard is based on(1)recommendations:

• Directive 2004/39/EC of the European Parliament and of therecon markets in financial instruments amending Council Di

an85/611/EEC and Directive 2000/12/EC of the Europeand of the Council and repealing Council Directive 93/22/E

• A European Regime of Investor Protection – The Harmonizati

direct maon of rketing Conduct of Business Rules CESR/01-014d (Personal

particularly by phone or from door to door) • The Finnish Bankers’ Association: Rules on good banking practice,

2004.


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4 LEGAL BASIS

t services in the securities

field (31993L0022; OJ L 141, 11.06.1993, p. 27)

375,

(1) National provisions on marketing take into account

• Council Directive 93/22/EEC on investmen


• Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (31985L0611; OJ L 31.12.1985, p. 3).

Issued on 22 August 2006

tober 2006 ) The regulation of the subject matter is based on the following legislation:

• section 46 of the Investment Firms Act (579/1996)

Issued on 22 August 2006 tober 2006

) One of the tasks of FIN-FSA is to guide financial market participants in

(2Valid from 1 Oc

• chapters 2 and 4 of the Securities Markets Act (495/1989) • chapter 10 of the Credit Institutions Act (1607/1993)

• chapters 13 and 20 of the Mutual Funds Act (48/1999) • chapters 2 and 7 of the Consumer Protection Act (38/1978) • section 34 of the Promissory Notes Act (622/1947).

(3

Valid from 1 Oc applying proper practice in their operations. FIN-FSA's general power to issue

guidelines is included in this obligation.


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5 CRUCIAL MARKETING PRINCIPLES

5.1 Justifications Issued on 22 August 2006 Valid from 1 October 2006

(1) Th t legislatio g have in some respects been resented differently depending on whether they concern the service provider

Justifications Issued on 22 August 2006 Valid from 1 October 2006 also contains provisions on matters subject to

the obligation to provide information. Through the rules on good banking practice, the credit institutions have also themselves regulated the marketing

dit

,

Justifications gust 2006

) A general provision on marketing of securities is included in the Securities f

General

e concept of marketing is not altogether uniform in the financial marken. The provisions on marketin

por the financial services or instruments provided. (2) The Credit Institutions Act (section 82) regulates the marketing by credit institutions and its contents. It

of cre institution services.

Justifications Issued on 22 August 2006 Valid from 1 October 2006

(3) Section 46 of the Investment Firms Act and section 82a of the Credit Institutions Act contain special provisions on marketing of investor protectionoffered by the investor compensation fund, and deposit protection. (4

Issued on 22 AuValid from 1 October 2006 Markets Act (chapter 2, section 1). The Securities Markets Act also states that

the marketing material for offering of securities or application for admission o securities to listing shall be submitted to FIN-FSA (chapter 2, section 4c).

Justifications gust 2006

) Marketing of mutual funds is regulated not only by the Securities Markets .

Issued on 22 August 2006 Valid from 1 October 2006 ct, chapter 2 of which contains general marketing

rovisions, chapter 6a provisions on remote sales of financial services and instruments and chapter 7 provisions on marketing of consumer credits.

(5Issued on 22 AuValid from 1 October 2006 Act but also by provisions in chapters 13 and 20 of the Mutual Funds Act

(6) Marketing of financial instruments and services is also regulated by the Consumer Protection A

Justifications

p


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(7) Marketing of insurance contracts (eg investment-linked life insurance) iregulated by the insurance legislation and the Consumer Protection Act.


s

Recommendation Issued on 22 August 2006 Valid from 1 October 2006 confidence in and

Recommendation Issued on 22 August 2006 Valid from 1 October 2006

uses on essential and crucial characteristics of the financial service

ial

Recommendation 2006

rable

5.2 Good marketing practice

(8) Marketing of financial services and instruments should comply with proper ractice. Proper practice maintains and furthers p

transparency and impartiality of the financial market as well as equal treatment of the market participants. (9) Good marketing practice means that the marketer

• acts honestly and professionally • foc

or instrument • aims to ensure appropriate marketing material and see to it • that the disclosed information is clear, understandable and impart• clearly indicates the commercial purpose of the marketing and does

not try to mix commercial arguments and facts • does not rush or pressure the customer to make decisions • does not try to conceal or understate the direct or indirect risks

connected with financial services and instruments • refers to legally required prospectuses and provides information on

where they can be obtained. (10) The standard is not applicable to image marketing, where no certainfinancial service or instrument is promoted but the aim is to create a desi

Issued on 22 AugustValid from 1 October 2006

image of the service provider or issuer. However, good practice should also be followed in image marketing.

5.3 Justifications Issued on 22 August 2006 Valid from 1 October 2006

(11) Tinstru e the sprom


(12) Tor bro edit institution services (eg payment transfers) or nancial fund units, housing loans or consumer

General code of conduct for the marketing

he goal of the marketing measures is to make financial services and otments appealing to potential customers or investors and thus prom

prises all sorts of sales ales of them. As a result marketing comotion.

he marketing can concern investment services (eg asset management kerage services), cr

instruments (eg shares,ficredits, bank accounts or credit cards).


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eristics of the marketing

hannels, among other things, limit and form the quantity and quality of the


general

(13) The marketing measures can vary considerably in terms of scope,implementation and target group. The charactcrelevant information. (14) It is possible via Internet both to quickly gain the attention of the public and to provide detailed information in the same way as in personal ommunication. In newspaper, radio or TV advertisements, however, the

ation is limited and the same contents are conveyed to all.c

scope of the inform

Recommendation o

d


r in TV) does not need contain all the information required to make a decision.

Valid from 1 October 2006

nformation, the disclosure obligation, has been laborated on separately in standard 5.2a on securities offerings and listing

ode of conduct for the provision of financial services.


(15) The marketer of the financial services or instruments should aim tensure such a structure of the Internet pages that all the information and risk warnings concerning the financial services and instruments can be presenteclearly and in as uniform a manner as possible.


(16) The standard should always be applied with attention paid to the specialcharacteristics of the relevant marketing measure. However, the picture provided of the financial services or instruments may not be misleading dueto, for instance, the special characteristics or limitations of the media selected. (17) An individual advertisement (eg in a newspaper oto (18) The obligation to provide iBinding

Issued on 22 August 2006 e

and standard 2.1 on the c

Recommendation

ent or service in question and its most portant characteristics.

Valid from 1 October 2006 ments.


(21) Among other things, the following factors may significantly affect the

• on the yield of the financial services or instruments and

• sanctions against premature termination of a financial service or instrument


(19) From the marketing material the customer or investor should be able to conclude the type of financial instrumim (20) The marketing should be focused on crucial aspects of the financial services or instru

Recommendation Issued on 22 August 2006

decisions made by the customer or investor:

expectationsthe basis for its calculation

• essential/real risks related to the financial services or instruments • fees charged to the customer and the basis for their calculation • liquidity of the financial instrument


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• possible guarantees, joint liabilities or other arrangements protethe investment.

cting

Recommendation gust 2006

2) The marketing of financial services and instruments should be clear and e

rovider.

ion

n the form of an nbiased study or objective information.

(2Issued on 22 AuValid from 1 October 2006 appropriate. The marketing may not, through images or otherwise, creat

groundless expectations of yield, price competitiveness of products or services, or reliability of the service p

RecommendatIssued on 22 August 2006 Valid from 1 October 2006

(23) The commercial purpose of the marketing of financial services or instruments may not be concealed or obscured by, for instance, publishing Internet pages or an article in a customer magazine iu Direct marketing (24) Direct marketing utilises the sJustifications

Issued on 22 August 2006 r 2006

trength of personal communication lthough it can be directed at a broad audience. Traditional direct marketing is aValid from 1 Octobe

performed as door-to-door, in-home, or mail order sales. Direct marketing can also be carried out using SMS messages, e-mail or faxes.


(25) At the beginning of all personal direct marketing, such as marketing by e, the till

intereste the service or acting


phon he service provider should introduce himself and his business and ask the ot r party if he may continue the discussion. If the other party is s

d, it is then time to present the main features ofproduct being marketed. The service provider should refrain from contthe customer at inappropriate times of the day, such as late at night or early in the morning, on Sundays or other public holidays. (26) In personal direct marketing, the marketing character of the situation should always be made clear. Lotteries and giveaways (27) As a rule, the use of lotteries and giveaways is allowed in the marketing of financial services or instruments. (28) However, the lotteries or giveaways may not dominate the marketing sothat they obscure the significance of factors essential to the financial servicer instruments.



s

o


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5.4 False and misleading marketing and the correction required

(29) Financial services or instrumentBinding Issued on 22 August 2006 Valid from 1 October 2006

s must not be marketed by providing false or misleading information, using a procedure contrary to good marketing practice, or a procedure that is otherwise unfair.1


o e financia nancial service, service provider or financial market is


Justifications Issued on 22 August 2006

ober 2006

ways be assessed objectively.

Binding Issued on 22 August 2006 Valid from 1 October 2006

leading or false character of which is perceived after the disclosure and which may be of material importance to the investor, shall be corrected or supplemented in a

en

e

(30) T provide false information means that some fact concerning th

l instrument, fidescribed in an incorrect or distorting way. (31) Misleading information can as such be truthful, but it may give the receiver the wrong impression because it is incomplete or because of the method or form of the presentation.

2) The truthfulness of the information shall al

Justifications

(3Whether some information is misleading shall in turn be assessed from the viewpoint of the party targeted in the marketing. (33) Information disclosed in the marketing of securities, the mis

Valid from 1 Oct

suffici t manner without delay.2


(34) FIN-FSA recommends application of the procedure described in the abov paragraph to the marketing of other financial instruments or services as well.

.5 Impartial description of financial services and


oncealed through, for example, the formulation of the information or the


nobtrusively in small print is contrary to the principle of impartial description.

5instruments and disclosure of risks

(35) In the information on the financial services and instruments, the characteristics, main contents, risks and possible expenses of the marketed service or instrument should be described as impartially as possible. The risksshould clearly be disclosed. The required information may not be hidden or

Recommendation

cexpressions used. (36) For example, marketing material that presents the advantages of the product in headings or otherwise strikingly while presenting the risks

Justifications

uMarketing can also be misleading if a quick glance at the marketing ma

terial

1 See chapter 2, section 1 of the Securities Markets Act and section 82 of the Credit Institutions Acr. 2 See chapter 2, section 1 of the Securities Markets Act.


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gives a quite different picture than a thorough examination of the entire material. In the same way it can be misleading to emphasise the total yield without providing the basis for its calculation.


he mark that

(37) T eting material may not imply that use of the financial servicesor instruments is risk-free. Groundless assertions or expressions implying customers or investors are not at risk are misleading. It is also misleading trefer to the security of the financial instrument without disclosing the explicitrisks related to the product being marketed. Assertions stating the security othe product must be justified. If the marketing emphasises the capital rotection of the product, the ma

o f

rketer must also at the same time disclose


be kept in mind when gents are used in the marketing, for example when an agent is marketing


ns and comparisons

2006

ble

n of the object of comparison.

pthe risks related to the repayment.

5.6 Who is the provider of the service or product marketed

(38) The marketing of financial services or instruments should always clearly disclose the provider or issuer of the service or instrument, such as which fund management company's mutual fund or which credit institution's services are being marketed. Particularly this should aproducts of a company within the same group. (39) Marketers must take into account that the financial market legislationcontains particular provisions on the use of certain terms, for example in the company name of providers of financial services or instruments.

.7 Assertio5


(40) Often assertions or comparisons with other corresponding products are used as effects in the marketing. The assertions and comparisons must be verifiable. Interviews as well as personal opinions and comments can also be included the marketing material and in that case they are also subject to therequirement of verification.

Recommendation Issued on 22 AugustValid from 1 October 2006

(41) If comparisons are used in the marketing of financial services and instruments, such as comparison with a share price index, the object of comparison should as a rule be commonly known and principally comparawith the marketed product or service. Should the object of comparison and essential aspects of the comparison not be commonly known, the marketing hould provide information on the compositios


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Recommendation

d.

Recommendation 2006

3) The comparisons should be based on named sources or indicated

on is

in yield


(44) Historical developments in the yield of financial instruments are often nte alysis. The information provided should be al nancial instruments offered. The source of the



evelopments in the alue of an underlying for a certain period, if the yield of, for example, an

lation. In such cases it is important to


(42) The period of comparison should be long enough, at least one year. The period can be indicated as one or several calendar years or the number of years from the present backwards. In percentage comparisons, complete years should, for the sake of clarity, be used for calculating the annual yiel (4

Issued on 22 AugustValid from 1 October 2006 assumptions. They should be presented in a balanced and impartial way. The

marketer should aim to ensure that no material comparative informatiomitted.

5.8 Information on historical developments

prese d as a time series anmateri with regard to the fiinformation should be indicated. (45) When providing information on historical developments, it is important that the effect of yield-limiting conditions can be assessed. (46) It is not sufficient to analyse only the historical d

Recommendation

vindex-linked bond is determined on the basis of monthly or quarterly yield periods and consideration of the value development for the underlying has in some way been limited in the yield calcu also inform on monthly and quarterly changes in the value, so that the significance of the yield limitations can be assessed.


me other relative

uld,

(47) In the analysis of the value development or in so

Valid from 1 October 2006 ("value has been doubled") or percentage description, the period should be long enough to give the investor or customer a clear picture of the value development for the financial instrument. However, the period should in anyase be at least one year. In a percentage description, complete years sho c

for the sake of clarity, be used for calculating the annual yield. The period canbe one or several calendar years or the number of years from the present backwards.

8) The shorter the period, the easier a short time seri


es analysis in the form(4 of a percentage comparison can be considered as misleading marketing. Whendescribing the development of a new product, also a short time series analysis can be used, if the time elapsed since the introduction is less than one year (so-called since launch analysis). A development during less than one year expressed per annum is misleading.


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(49) If the marketing material contains information on the historical value development of a financial instrument or its underlying, it should also be mentioned that this does not guarantee anything as to the future value

ning utu


(50) A syield deinvestm crease or decrease and that the investor nt, get less than he originally invested therein.3


1) As a rule, historical yields should be based on net amounts. However, if they are based on gross amounts, information should be provided on commissions, fees and other charges.


ober 2006

f y rovided, they should either be translated

.9 Yield forecasts

Valid from 1 October 2006

lopment for nancial instruments should be objective and based on realistic yield

st or


(54) Each estimate, forecast or promise included in the marketing material for

development for them. Neither may groundless promises be given concerthe f re value of the financial instrument.

implified fund prospectus shall briefly state the mutual fund's earlier velopment and the related warning to the effect that the value of an ent made in the mutual fund may in may, when redeeming his investme

(5

(52) I ields of several years are pinto annual yield or be presented as separate annual yields. Valid from 1 Oct

5


(53) Published forecasts or estimates of the future value devefiexpectations. Essential factors required for the realisation of the forecaestimate must be taken into account in the calculation and the way in which it is presented. Forecasts and estimates of future yields should always containthe information that they are forecasts or estimates.

a financial instrument should be justified and clearly presented. They may not

Issued on 22 August 2006 ober 2006

Justifications Issued on 22 August 2006 Valid from 1 October 2006 shall be explained in the

give the customer a misleading picture.

5.10 Terminology and product names

(55) Terms defined in the legislation or terms with an established meaning Recommendation

Valid from 1 Oct may not be used misleadingly in the marketing material. Important terms without an established meaning should be defined. (56) If, for example, capital guarantee, share-linked saving or reverse index-linked bonds are used, the meaning of the term

3 See chapter 2, paragraph 2 of the Ministry of Finance Decree on the fund prospectus and the simplified fund prospectus (233/2.4.2004).


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marke g material. On the other hand, the Finnish word tallettaa (tin to deposit) may only be used in connection with bank saving.


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6 CERTAIN FINANCIAL INSTRUMENTS WITH IMPACT ON

ng of loans


(1) The rules on good banking practice are also applicable to marketing. The bank shall provide the customer with sufficient information on various loan

at n-related expenses.

SPECIAL CHARACTERISTICS OF

THE MARKETING

6.1 Marketi

altern ives, key loan terms and loa


(2) The credit institutions should market loans in a responsible way in order to avoid, if possible, excessive indebtedness of the customers. (3) It is good marketing practice that the service provider focuses its marketing on essential and crucial characteristics of the product. The practice is emphasised particularly in the marketing of different charge cards/credicards, because the various usages and characteristics of the cards have become so diversified.


t

.2 Offering competing financial instruments in a


where banks inappropriately try to fluence the decisions of customers making payments over the counter.

le of this is a bank starting to present corresponding products rovided by a company within the same group or conglomerate as the bank or

6payment situation

(4) Such marketing should be avoided in (5) One exampJustifications

Issued on 22 August 2006 p


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Valid from 1 October 2006 by a company operating as a partner, when the customer is about to pay an insurance premium or invest in a mutual fund.

6.3 Reference to legally required prospectuses

(6) If a prospectus, tender document, simplified fund prospectus or fund prospectus concerning a security has been published as legally required, thmarketing material shall disclos

Binding Issued on 22 August 2006 Valid from 1 October 2006 e

e where it can be obtained.4

so

Recommendation Issued on 22 August 2006 Valid from 1 October 2006 keting that is inappropriate in the marketing of

issues is not acting in compliance with good practice, if the purpose can be considered to be to circumvent the rules or instructions on marketing of

.

on


nce are typical combined investment struments.


(11) In the marketing of combined investment instruments it is particularly important to describe the instrument in an impartial way. The different elements of the instrument should be presented clearly. Deposits with the yield tied to the developments of the underlying

(7) Other documents than the above-mentioned legally required ones must not be named in the same way. The marketing material must be prepared that its contents or form of presentation cannot be confused with the mentioned legally required prospectuses. (8) An issuer who, during an ongoing issue, uses such marketing material simultaneously in other mar


issues


(9) Marketing of offered securities has also been treated in standard 5.2a securities offerings and listing.

6.4 Combined investment instruments

(10) Typical of combined investment instruments is that they, from the viewpoint of the investor, include characteristics of two or more financial instruments, but that the instrument is marketed under the name of one certain type of financial instruments. Structured bonds, share-linked saving nd investment-linked life insuraa

in


(12) So-called share-linked saving or other deposits where the yield has been tied to the development of a certain underlying (eg a share index or share basket) can with respect to yield structure be compared with both traditional 4 See chapter 2, section 4c of the Securities Markets Act and sections 92-93 of the Mutual Funds Act.


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fixed deposits and structured bonds.

(13) The deposit yield should be described with the aim to clearly indicatefactors affecting the


the final yield and facilitate comparison with structured bonds

of corresponding type and maturity and/or fixed deposits of corresponding


maturity. (14) Information on the underlying and possible yield limits should be provided in the same way as for structured bonds. Structured bonds


(15) The factors affecting the yield development should be stated clearly inthe marketing of structured bonds, eg the effect of different yield limits

.

Investment-linked life insurance

Recommendation gust 2006

6) If an entity supervised by FIN-FSA acts as agent for an insurance ers, it

dard.


dicated her the issue price is floating or fixed. In bonds with a floating issue

price, the nominal price should not be emphasised but indicated in the same way as the other bond terms. The marketing should clearly state the effective yield or its range at a certain time and the fact that the yield can change. The significance of the floating issue price for the investor's yield on invested capital should be clearly disclosed together with the nominal price. In the places of subscription, the investor should be informed of the effective yield according to the issue price at the time in question. If the issue price is affected by the size of the investment, this fact should be disclosed in the marketing.


(18) According to section 34 of the Promissory Notes Act, bonds can be issued

(1Issued on 22 AuValid from 1 October 2006 company and markets investment-linked life insurances to its custom

should in its marketing comply not only with the insurance legislation and Consumer Protection Act but also with the general provisions of this stanParticularly all direct and indirect expenses and commissions payable by thecustomer should be stated clearly in the marketing. The customer should alsobe clearly informed of the insurance company with which the investment-linked life insurance contract is entered into (ie who the customer's counterparty is).

6.5 Marketing of bonds

7) In the marketing of fixed rate bond issues it should always be in(1whet

by public entities and accounting entities. Bonds recognised as subordinated


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liabilities shall be named debentures.


The icate that the debentures are


(20) The marketing should always reveal whether the bond is collateralised or ot. It should also indicate which part of the bond is secured by possible

ided for the bond, this collateral should also be


bond terms include indicative terms for the calculation of yield, for e, an

(19) marketing should always indsubordinated.

ncollateral. If collateral is provspecified in the marketing. (21) If theexample, this should always be disclosed in the marketing. If, for exampl indicative subscription rate or yield factor is stated, its range or minimum level should also be provided.


f so-called capital loans as referred to in the Companies mains

erms. The subordination of capital loans at the time of company

al funds


utual funds, the investment policy of the fund


4) Market studies and premarketing are often used in the marketing of rules have not yet been approved, this should be

er ed

ules

(22) The marketing oAct should contain information on applicable procedure if interest renpaid some year or principal cannot be repaid according to possible u

repayment tdissolution should also be stated. In addition, the marketing should provide information on the treatment of capital loans in connection with merger or division of the company.

6.6 Mutu

(23) In the marketing of mshould be described using expressions understandable also to an inexperienced investor after a reasonable examination. (2mutual funds. If the fundstated clearly in premarketing performed by phone or through some othcommunication channel. Such information or material should not be disclosthat can be regarded as future rules or preliminary information on future r of the mutual fund. Otherwise the general provisions of the standard are applicable to the premarketing.


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Marketing units of foreign collective investment undertakings (25) Marketing units of open-ended foreign collective investment undertakBinding


ings in Finland requires notification or marketing permission according to the

utual Funds Act.5


(26) Collective investment undertakings as referred to in the UCITS directive are open to all investors. As the rules of such undertakings cannot restrict the range of unit holders, uniform information must be kept available to all investors. Collective investment undertakings as referred in the directive always collect funds from the public and thus easily fulfil the criteria of marketing to the public.


(27) If other open-ended foreign collective investment undertakings than those referred to in the UCITS directive only direct their marketing to professional investors, the Mutual Funds Act is not applicable to the marketing

M

of their collective investment undertaking units in Finland and no marketing permission is needed.


(28) The fact that an asset manager under a discretionary portfolio management agreement subscribes to collective investment undertaking units on the account of a customer without consulting the customer or that a brokerage firm subscribes to collective investment undertaking units on its customer's explicit initiative is not considered by FIN-FSA as marketing units of foreign collective investment undertakings in Finland. In these situations the collective investment undertaking in question does not need to be notified in Finland or apply for marketing permission according to the Mutual Funds Act.


(29) If the collective investment undertaking is not open-ended (closed fund), the Securities Markets Act and its requirements on prospectuses shall be applied to the marketing of units instead of the Mutual Funds Act.

5 See sections 128-129 of the Mutual Funds Act.


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7 ofessional investor ofessional investor is here defined as in the Securities Markets Act.

ecurity Security refers to securities regulated by the Securities Markets Act and foreign securities comparable with them. Such securities include, for example, shares, warrants, bonds, covered warrants and fund units. Qualified investor Qualified investor is here defined as in the Securities Markets Act. Marketing Marketing refers to all activities aiming to promote sales of financial services or instruments. Sales promotion here refers to, for example, advertising in different media, direct advertising or the presentation of issuers in connection with marketing of securities. Marketing can also take the form of promoting directed to the marketer's own clients, individual customers or a certain target group. Financial services Financial services refer to services subject to authorisation according to the Credit Institutions Act, Investment Firms Act or Mutual Funds Act, ie services that can be provided only by authorised service providers. Financial instruments Financial instruments here refer to securities and derivatives as well as products provided by credit institutions, such as bank cards, credit cards, bank accounts, housing loans and consumer credits. In the case of credit institutions, instruments thus refer to so-called banking services, also loans.

DEFINITIONS

PrPr S


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Investment-linked life insurance Investment-linked life insurance refers to insurance contracts where the insurance benefits according to the insurance contract are tied to the

StructuStructur le, such bonds where the yield or repayment of principal is tied to the value development of some underlying specified in the bond terms. The underlying can be an individual share, a hare basket, an index or some other basis for the yield.

development of certain investments.

red bonds ed bonds refer to, for examp

s


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8 FURTHER DETAILS

Please find the necessary contact information in the list of UPersons responsibleU for standards provided on the FSA website. For further information, please contact:

• Conduct of business, tel. +358 10 831 5336

http://www.rahoitustarkastus.fi/Eng/Regulation/FSA_standards/Persons_in_charge/etusivu.htm

http://www.rahoitustarkastus.fi/Eng/Regulation/FSA_standards/Persons_in_charge/etusivu.htm





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9 OBSOLETE GUIDELINES AND STATEMENTS

This standard renders the following FIN-FSA guidelines and statements obsolete:

• Guideline 201.2 on procedures to be observed in the marketing of securities (16 March 1999)

• Statement K/25/99/PMO on marketing by credit institutions.

marketing of financial services and financial … from 1 october 2006 markets act (chapter 2,...

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