Expert says advertising can be a compliance minefield
Advisers have been given some ‘breathing space’ before the start of the new regime, but experts are urging them to get on top of preparation now - especially when it comes to their online channels, marketing materials and social media.
Karty Mayne, compliance consultant at Rosewill Consulting says that marketing and adverts are the areas where advisers can often trip up when it comes to compliance, and so they should be taking extra care to review their online activity. She says that of the websites she’s looked at so far, relatively few are in good shape for the start of the new regime, and although advisers have been given some extra time, they need to remember that they have to be ready to push that change button on day one.
“Advertising and disclosure is one of the key business risks for a financial adviser,” Mayne commented.
“If something has to go wrong, that’s one of my top picks for where it’s likely to go wrong - so it’s really important to get it right.”
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“It’s also a really good opportunity to have a look at modernising your website and how you communicate on social media, because the FMA will look at all of that,” she explained.
“Things like a Facebook page do count as advertising and disclosure, so when you start putting disclosure information in there, it may well need to go in a number of places. It’s a really good opportunity now to get your house in order.”
David Greenslade, executive director of Strategi Group says the new disclosure regime will allow advisers to get more “innovative” with how they convey information - but it will also mean that every piece of marketing material will need to be looked at, and potentially revised.
“As of day one, you’re out of the Financial Advisers Act - that no longer exists,” Greenslade reminded advisers.
“When it comes to disclosure, it’ll be a three-phase regime. We’ll be able to build that first disclosure phase into a number of existing or new advice documents, and so behind the scenes, you’ll need to start looking at your website and what needs to be added or removed.”
“You need to look at what you currently say and how you say it, how you describe yourself as advisers, the services you deliver and how you’re remunerated,” he added.
“Then on day one, you can flick a switch and all the new detail will come up. That also flows through to all of your marketing material, whatever you have on Facebook, LinkedIn, brochures, business cards, etc.
“For most of us, the terminology around AFA and RFA - that disappears. In the new regime, we’re all financial advisers. You need to have all that stuff worked through and signed off on by someone who knows what they’re doing before the new regime starts.”
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Karty Mayne says the easiest way to stay on top of compliance is to create a series of policies, and document their implementation as simply as possible. She noted that if not for COVID-19, we would all be operating within the new regime right now - and so she urges advisers to use this extra breathing space ‘wisely’ and not get left behind.
“This regime brings in a range of new obligations, and the best way to work your way through them is to create simple policies, procedures and controls that set out your internal business rules, and how they show that your team complies with them,” Mayne said.
“What are the actual actions you’re taking to meet that obligations, and finally, actions - how do you know it works? How are you self-managing, providing evidence and self-checking?”
“Looking at adviser websites, there are relatively few who are on top of this at the moment,” she added.
“We need to take this breathing space that we have, and use it very wisely. Start looking at these things now, crack into all these areas and make sure that you’re well prepared for day one.”
