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In October last year, I signed up to be chief executive of the Standards for Promotions Inspectorate (SPi), due to begin operations in January 2003.

But early in December I withdrew from my contract. Like Dame Stella Rimington, Elizabeth Filkin, Lord Faulkner and others, I disassociated myself from the SPi.

Mission still crucial

The future of SPi is now in the hands of the Department of Trade and Industry and the Official Receiver. A writ issued against me remains outstanding, so I will not comment about the company. But though I never became a director or an employee of SPi, I have good reason to believe that the mission to create a separate industry regulator for promotions remains crucial, despite the demise of the corporate vehicle.

The organisation that polices promotions should have its own funding, its own specialist competence and its own sanctions to make its rulings effective. It might be seen as part of the Advertising Standards Authority, and it should certainly co-ordinate with the ASA, the Independent Television Commission (ITC) and the Broadcast Advertising Clearance Centre (BACC) to minimise public confusion. But it cannot be one and the same as the ASA because promotions are different from advertising.

Funding ASA

For a start, the funding should be different. Any advertiser that places an ad in a print medium pays a fraction of one per cent into the Advertising Standards Board of Finance (ASBOF) levy. This money goes to fund the ASA, which is a fair, practical and effective situation.

It is fair because advertisers pay for the policing of advertising in direct proportion to the amount they spend. Each advertiser benefits from the public's general expectation that print advertising is legal, decent, honest and truthful in direct proportion to the amount of print advertising that they buy.

It is practical because, through the co-operation of advertisers, agencies and media, the collection of the levy has gone on for decades. The nature of advertising is easy to define, which makes the money easy to collect. Advertisers buy space and sites, and the ASBOF levy is collected on invoices.

Promotions are not so simple. Some promotions arrive directly from marketing companies, some go through agencies and some arrive through a paid-for medium such as the mail. But some arrive through the newspaper that organises them, or on-pack or on a mobile phone. Some are impossible to value - a celebrity night out, for example, or a visit to a chocolate factory.

There might be an Association of British Travel Agents-style formula (members pay a fee based on turnover), or a levy on promotions budgets, but there is no simple equivalent to the ASBOF levy.

In short, the fair funding of a promotions regulator is an unresolved issue. Why should print advertisers pay for the policing of all promotions?

Companies that advertise often promote as well and have an interest in ensuring that both activities are policed. But there is no reason why an advertiser, which might spend nothing on promotions, should pay to police them. For this reason the promotions regulator should have its own separate funding.

Case law

The ASA works because it has experience in what can go wrong in advertising, based on "case law" of past instances. Despite convergence within marcoms, the promotions regulator would need to police different activities. There are the traditional scams, such as the prize draws in which nobody wins a prize or the widgets that are not as illustrated. But new technologies bring new scams, such as the text messages that trick the lucky winner into dialling a high tariff number with no real prize at the end of a rambling voice message. Policing these activities is a competence different from interpreting the rules on advertising. It should generate a new and different body of "case law".

Sanctions for the promotions regulator will also have to be different and the outfit will have to act hard and fast when public sentiment demands, as the ASA can do above the line.

Remember the era of deliberately outrageous Benetton advertising: the man dying of Aids, the newly born baby? The most offensive images were removed within hours because the ASA has the media working with it. There is no equivalent sanction within promotions and, worse, there's public confusion surrounding the difference between promotions and advertising.

This confusion was sustained by an article in the Independent on Sunday on 20 April, which said that the SPi was "styling itself an independent advertising standards body". In fact, it never claimed to have anything to do with advertising.

Who should care about this? If promotions are not rigorously policed by the industry's own dedicated body, reputable marketing companies, SP agencies, carriers such as the Royal Mail and telecoms companies, and consumers will all lose out.

The advertising industry has asserted the principle of self-regulation because the present system run by the ASA so patently works.

The promotions industry should create its own effective regulatory body to enforce a code, or it can expect to encounter the heavy hand of government intervention.