Last October the FSA took over responsibility for mortgage regulation and produced new rules, the Mortgage Conduct of Business Rules (MCOB).
In January this year its responsibility extended to insurance regulation with the publication of the Insurance Conduct of Business Rules (ICOB).
One of the most significant changes is that for the first time, contact centres that conduct campaigns on behalf of financial services clients fall under the regulations (page 6, Direct Response, January 2005). It is now illegal for firms to sell insurance or mortgage products unless they are authorised by the FSA or are acting as an appointed representative of an authorised principal. Companies that are in any doubt about whether this applies to them should contact the DMA's Legal Department.
The overall thrust of the new rules is to give the consumer more information prior to the conclusion of the contact, explains Angela Traynor, DMA legal co-ordinator. "Communications must be clear, fair and not misleading.
Companies are now duty bound to prepare promotional material in such a way that highlights the dis-advantages as well as the advantages. The focus is on total transparency."
For example, a car company selling motor insurance might previously have buried the details about who was underwriting the insurance in the small print. Now, this sort of information must be much more prominent.
Similarly a contact centre agent must give the caller more detailed information about the product they are selling over the phone, before following it up with additional information which can be mailed to the customer. Going one step further still, there is now a total ban on unsolicited cold-calling for mortgage promotions.
The new Conduct of Business Rules also include detailed guidance about the form and content of marketing materials, including the font size and where information is positioned. This will inevitably lead to much greater creative challenges when it comes to achieving cut-through in the competitive world of financial services.
Full details are on the FSA website, www.fsa.gov.uk, under the FSA Handbook section.
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