The new regulator for the industry, the Financial Conduct Authority (FCA), supersedes the old Financial Services Authority (FSA) next year, and will have the power to restrict or ban certain marketing tactics for particular products.
The FCA looks set to have the power temporarily to make sure certain products are only marketed to quite specific customer segments and demand the removal of or changes to certain product features.
Triggers that might lead to such demands, according to the FSA, include where a product is in serious danger of being sold to the wrong customers or when a non-essential feature of a product seems to be causing serious problems for consumers.
Now any marketer worth their salt would want to target tightly the right customer segment for their products or service – but might not want that enforced by law or under threat of penalty.
Of course, one of the reasons behind this move is doubtless the mis-selling of PPI products and the huge amount of claims that have resulted (a whole industry in itself), so it is also in the interests of financial companies not to mis-sell and it’s not just about protection for the customer.
But still, there’s a fundamental principle that if a product is legal, then it should in theory be able to be marketed widely (age restrictions taken into consideration). There’s an apparent majority consensus on banning tobacco industry marketing but lots of questions remain about some of the restrictions beginning to impact on the alcohol and food industries.
The creation of the FCA and its associated powers is also happening against a background of financial institutions, including banks, loosening up a little on their use of digital channels and social media to engage with customers. They are beginning to explore the potential of digital for one to one conversations and the excitement of exploring the digital possibilities with their associated huge reach will need to be tempered by awareness of the new rules.
The FSA is consulting on these powers until February 4 and if you are working in the sector it may well be worth digging a little deeper and researching the potential repercussions.
And now adieu for the Christmas break. The next DM Focus will appear on 9 January and we wish you all a happy new year in advance.