Rules will not tell you if it’s the right thing to do

The words principles-based regulation are enough to send shivers up the spine of politicians of a certain vintage.

Russell Parsons

In the halcyon days of the late nineties and early noughties the UK financial services regulator, the FSA, was lauded throughout the world for its principles-based approach to banking regulation.

It was heralded as one of the reasons the UK was the global financial powerhouse it was and why our industry was such a success story generating billions and contributing a huge chunk of the money taken by the Exchequer.

Then, in 2008, it all began to unravel when banks fell under the weight of previously unseen debt and many of those that remained did so because politicians in the lands they resided in deemed the consequences of their failure too catastrophic.

As the dust settled the sound of commentators and politicians changing their tune on principles-based regulation was deafening.

Anyway, fast-forward six years and another industry is about to replace rules with principles. The DMA has just replaced 170 pages of prescriptive rules with five principles: ‘Put your customer first’, ‘Respect privacy’, ‘Be honest and fair’, ‘Be diligent with data’ and ‘Take responsibility’.

Underpinning each principle are three outcomes that colour each. For example, for the principle ‘Be honest and fair’ the outcomes are: ‘Companies are clear, open and transparent about all costs and processes’, ’companies must not mislead customers through omission or exaggeration’ and ‘companies deliver what they promise’.

With the benefit of hindsight having fewer rules governing the financial services industry is questionable, in direct marketing it is preferable.

Despite the DMA’s move there are the same number of rules direct marketers need to adhere to – the Information Commissioner’s Office, Ofcom, the Advertising Standards Authority, the Committee of Advertising Practice and many other statutory and self-regulatory bodies make sure of that.

But rules will only tell you so much. You can be compliant with every code that you need to be as direct marketer but you might still fail to answer this question positively: “is it the right thing to do?”

Whether it is gaining explicit and meaningful consent to use data rather than taking failure to untick a box as a green light to spam or writing T&Cs that are so prosaic and full of legalese they do nothing but confuse and erode trust, a direct marketer needs to ensure they are treating their customers fairly.

It could be argued that the DMA’s code is full of elementary stuff that its members should be doing as a matter of course. Fine, it remains more useful than 170-pages of rules that compliance with would only satisfy the legal team.