What’s in a Name?
The FCA – doesn’t sound too scary – until you understand what it stands for, or what it doesn’t stand for!
In 2001, the Labour Government set up the Financial Services Authority (FSA) to regulate financial institutions and ensure that they were carrying out regulated activities within set guidelines. In April 2013, the Conservative Government split this into the Financial Conduct Authority and the PRA – Prudential Regulation Authority – due to perceived regulatory failure of the banks during the financial crisis of 2007–2008.
You may ask – “So what does this have to do with digital marketing?” Well, unfortunately for those institutions and marketers working within them – a lot!
For anyone that has ever worked in the marketing department of a Financial Services company, you will know what the rules surrounding financial promotions are; the dos and don’ts that go with them, and how far companies are willing to take them. No company is willing to get a slap on the wrist for the costly sum of somewhere in the millions of pounds, so they adhere to the guidelines.
Treating Customers Fairly
The FCA ensure that an integral part of customer marketing is ‘Treating Customers Fairly’ (TCF), and this remains central to their expectations of a firms’ conduct and that firms put the well-being of customers at the heart of how they run their businesses.
No one could have missed the hoo-ha in the news recently, or the continued irritating calls that one gets from companies about the mis-selling of PPI insurance – this is a prime example of not treating customers properly.
As part of regulation, companies must ensure that there is a rigorous sign off process in place for any communication that comes out of a Financial Services company, including compliance and legal for some promotions. It doesn’t matter what digital channel this is for, even something as reactive as Social Media is likely to need sign off.
For example, if you have a financial promotion which is for a banner ad let’s say, you must get this signed off in accordance to the company’s sign off process before you can even consider putting this banner in situ.
Dependent on said companies procedure, there will be a number of people that will have to sign off the banner before it is communicated externally. For a business like Insurance, for example, to get a financial promotion out in to the eye of the customer, this could be signed off by upto six people.
Where does this leave Digital Marketing?
For anyone that has worked in Digital Marketing in a regulated environment, you’ll understand. For something as fast paced as digital, this can hinder go-live of promotions and campaigns but, more so, being reactive to what is going on in the market or what your competitors are up to.
Affiliate Managers have had a bit of a bashing in certain Insurance companies from the legal compliance teams, by the fact that Affiliates could be carrying out regulated activities on the companies behalf…so what does this mean for affiliate programmes?
Generally, it means that:
· Companies will have to remove any affiliates from their programmes that aren’t one of these three things, or justify making them regulated
· The merchant programme is likely to have to be closed to new affiliates requesting to join
· Recruitment will be considerably more difficult to grow your programme
o There will be a smaller amount of affiliates to choose from as you will have to justify the cost of getting these new affiliates on board if they aren’t regulated.
Coming up against restrictions makes growing products and their programmes all the more difficult on an Affiliate Network. This is due to having to go through lengthy recruitment processes such as business cases, due diligence and registering them with the FSA. Not to mention the cost that could be involved in putting all of this in place.
There is a grey area surrounding which affiliates need to be regulated. Some companies may find that they are happy for Display affiliates, for example, to carry out their activity without being regulated, but this varies from business to business where there might be a less risk adverse appetite.
Well, there isn’t really one. Affiliate managers are likely to find that there are more hurdles, like this, that they will come up against. Patience is definitely a virtue when it comes to regulated affiliate activity, but there are compliance companies that may be able to get you through the AR/IAR hurdle. Always remember to ask experts like Stream:20, as chances are, we will have come up against these struggles before!
Kate Burston, Digital Marketing Consultant
24th October 2013