This chapter applies generally to firms in relation to all financial promotions of qualifying credit,3 a home reversion plan or a regulated sale and rent back agreement.1 This wide application is however cut back by MCOB 3.2 (Application: what?) and MCOB 3.3 (Application: where?) which limit the application of this chapter for:

1. (1)

   financial promotions1which would fall within the scope of the exemptions in the Financial Promotion Order or the additional exemptions set out in MCOB 3.2.5 R (Applications: what? Exemptions); and

   1
2. (2)

   financial promotions1to persons outside the United Kingdom.

   1

MCOB 3.1.1 R means that:

1. (1)

   this chapter applies not only to financial promotions for regulated mortgage contracts, but also to promotions for qualifying credit; and

2. (2)

   this chapter applies to all aspects of a promotion by a firm of products which combine unsecured and secured lending.

In relation to MCOB 3.1.3 G(2), an example would be a promotion for a mortgage product, one feature of which was an unsecured lending facility or reserve.

Under section 39(3) of the Act, a firm is responsible for financial promotionscommunicated by its appointed representatives when acting as such.

A financial promotion may relate to other controlled investments in addition to qualifying credit,3home reversion plans and regulated sale and rent back agreements,31 for example a building society leaflet which describes the range of mortgage, savings and insurance products1 it provides. In such cases, the financial promotion rules in this and other sourcebooks will each apply as relevant.1

As a result of articles 90 and 91 of the Regulated Activities Order:

1. (1)

   a financial promotion of qualifying credit1 is not subject to the advertising provisions of the Consumer Credit Act 1974, unless it is an exempt generic promotion; and

   1
2. (2)

   where a firm makes a communication, which consists of a financial promotion of qualifying credit1 and information relating toa different form of lending that is not qualifying credit (for example an unsecured personal loan), the content of the latter will need to comply with the relevant advertising provisions of the Consumer Credit Act 1974.

   1

Authorised professional firms are reminded that in circumstances in which MCOB 3 does not apply to the firmMCOB 2.2.6 R (Clear fair and not misleading communication) may apply.

A national of an EEA State (other than the United Kingdom) wishing to take advantage of the exemption in article 36 of the Financial Promotion Order in respect of a financial promotion of qualifying credit,3 a home reversion plan or a regulated sale and rent back agreement31 should act in conformity with the rules in this chapter.

MCOB 3 Annex 1 gives examples of financial promotion of qualifying credit1 that would satisfy some of the provisions of MCOB 3.

2The rules in this chapter do not apply to the communication or approval of a financial promotion of a home purchase plan. However, the clear, fair and not misleading standard still applies as does certain relevant guidance from this chapter (see MCOB 2.2).

1. (1)

   The rules in this chapter adopt various concepts from the restriction on financial promotion by unauthorised persons in section 21(1) of the Act (Restrictions on financial promotion). Guidance on that restriction is contained in PERG 81 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:

   1
   1. (a)

      'communicate' is in PERG 8.61 (Communicate); and

      1
   2. (b)

      'invitation or inducement' and 'engage in investment activity' (two elements which, with 'communicate', make up the definition of 'financial promotion') is in PERG 8.41 (Invitation or inducement) and PERG 8.71 (Engage in investment activity).

      11
2. (2)

   Guidance on the approval of a financial promotion of qualifying credit2 is in MCOB 3.11.1 G (Approval of qualifying credit promotions).

   2

1. (1)

   There is no restriction on the media of communication to which this chapter applies. It applies to a financial promotion2communicated by any means, including by way of printed advertising, radio and television broadcasts, a personal visit, a telephone call, an e-mail, the Internet and electronic media such as digital and other forms of interactive television or media. Both solicited and unsolicited communications are covered.

   2
2. (2)

   Financial promotions2 may be communicated for example, by means of:

   2
   1. (a)

      product brochures;

   2. (b)

      general advertising in magazines, newspapers, radio and television programmes and websites;

   3. (c)

      mailshots (whether distributed by post, facsimile, e-mail or other media);

   4. (d)

      telemarketing activities, such as telephone calls made by call centres;

   5. (e)

      written correspondence, telephone calls and face-to-face discussions with customers;

   6. (f)

      sales aids which themselves constitute a financial promotion2;

      2
   7. (g)

      presentations to groups of customers; and

   8. (h)

      other publications, which may contain non-personal recommendations as to obtaining qualifying credit or entering into a home reversion plan.2

Guidance on the use of the Internet for communicatingfinancial promotions2 is in MCOB 3.12 (The Internet and other electronic media) and 2PERG 8.221 (The Internet)

MCOB 3.2.5 R (2) exempts a financial promotion2 made by a firm or an appointed representative which refers to its activities only in general terms in image or brand advertising. The items identified in MCOB 3.2.5 R(2) do not enable detailed information to be given about the qualifying credit,4home reversion plan or regulated sale and rent back agreement42 available from the firm. Thus firms should avoid the use of names, logos or addresses, for example, which attempt to convey additional product2 or cost-related information.

Firms are reminded that financial promotion2 (including those which are exempt) may be subject to more general rules, including Principle 7 (Communications with clients), SYSC 3 to SYSC 103(Systems and controls) and MCOB 2.2.6 R (Clear, fair and not misleading communication).

Firms are reminded that if in the course of making a financial promotion2 of any kind an adviser gives specific advice on a home finance transaction2 to a customer about the suitability of a product for that individual, the adviser in giving the advice is subject to the rules, as appropriate, on advising and selling in MCOB 4 (Advising and selling standards) and MCOB 8 (Equity release:2 advising and selling standards).

1. (1)

   The application under MCOB 3.3.1 R is relevant both when a firmcommunicates a financial promotion3 itself and when a firmapproves a non-real time financial promotion3 for communication by others. But see also MCOB 3.3.3 R(Exceptions to territorial scope: rules without territorial limitation) for approval of financial promotions).3

   333
2. (2)

   The exemptions in MCOB 3.2.5 R (Application: what?; Exemptions) also incorporate some territorial elements. In particular, the exemption for financial promotions originating outside the United Kingdom (section 21(3) of the Act (Restrictions on financial promotion)) (see MCOB 3.2.5 R (4)),4 the exemptions for overseas communicators (see MCOB 3.2.5 R (4)),4 the exemption for electronic commerce communications made from an establishment in an EEA State other than the United Kingdom to an ECA recipient in the United Kingdom4(see PERG 8.12.38G1 (Incoming electronic commerce communication (article 20B)).

   4441
3. (3)

   [deleted]4

   4

There is no need for a financial promotion3 which is indicated in MCOB 3.3.1 R to be outside the territorial scope of the application of MCOB 3 to be approved before being communicated by an unauthorised person (because the restriction in section 21 of the Act (Restrictions on financial promotion) does not apply). If a firm nevertheless approves such a financial promotion,3 it must comply with the rules indicated. However, a firm must not approve a real time financial promotion3 (see MCOB 3.11.2 R (No approval of real time qualifying credit promotions) or MCOB 3.8A.6 R (No approval of real time financial promotions of a home reversion plan)).3

1. (1)

   Section 21(1) of the Act (Restriction on financial promotion) imposes a restriction on the communication of financial promotions by unauthorised persons. A person must not, in the course of business, communicate a financial promotion1 unless:

   11
   1. (a)

      he is an authorised person; or

   2. (b)

      the content of the financial promotion1 is approved by an authorised person.

      1
2. (2)

   However, the Financial Promotion Order exempts from the restriction created by section 21(1) of the Act certain types of financial promotions.

   1

1. (1)

   The purpose of this chapter is to provide rules and guidance for a firm which wishes to communicate or approve a financial promotion of qualifying credit,2 a home reversion plan or a regulated sale and rent back agreement2.1

   11
2. (2)

   This chapter amplifies, for activities within its scope Principle 6 (Customers' interests) and Principle 7 (Communications with clients).1

   1

[deleted - see application tables in MCOB 3.2]2

A firmcommunicating a financial promotion2 may also be subject to other regulations and guidelines, outside the remit of the FSA, such as:

1. (1)

   the codes issued from time to time by the Advertising Standards Authority, the Independent Television Commission and the Radio Authority;

2. (2)

   regulations of any overseas regulator (where relevant) if the firm intends to market from the United Kingdom into any other country;

3. (3)

   the Privacy and Electronic Communications (EC Directive) Regulations 2003

4. (4)

   the Timeshare Act 1992, as amended by the Timeshare Regulations 1997 (SI 1997/1081); and

5. (5)

   the Consumer Protection Act 1987, or Consumer Protection (Northern Ireland) Order 1987 (SI 1987/2049 (N.I 20)).

This chapter draws a distinction between real time and non-real time financial promotions2. Guidance on the meaning of those expressions, which are based upon article 7 of the Financial Promotion Order, is contained in PERG 8.10.2G1 (Real time v. non-real time promotions).

1. (1)

   For the purposes of MCOB 3.6.1 R, the name may be a trading name or shortened version of the legal name of the firm (although other legislation, for example, the Companies Act 20066, may require a firm to include information not required by this rule).

   6
2. (2)

   The type of contact point envisaged for a firm by MCOB 3.6.1 R is an e-mail address or telephone or facsimile number, where a customer can contact the firm for its address.

3. (3)

   A firm is not required in a financial promotion5 which it communicates or approves to name the FSA as its regulator. However, to ensure the financial promotion is5 clear, fair and not misleading, if the firm chooses to name the FSA as its regulator and the financial promotion5 refers to matters not regulated by the FSA, it should also make clear that those matters are not regulated by the FSA. This might arise, for example, where the communication included both a financial promotion of qualifying credit5 and a promotion for unsecured lending.

   55555

In relation to MCOB 3.6.3 R:

1. (1)

   firms should avoid the use of small print to qualify prominent claims;

2. (2)

   if a non-real time financial promotion5 includes information on the performance of the firm, on conditions in the market, interest rates, APRs or other price information this information should be relevant and recent. Firms should therefore avoid including this information in financial promotions5 which have a long shelf-life without a clear and prominent warning that the information can become outdated; and3

   553
3. (3)

   firms must ensure that an adequate description of mortgage products is given. For example, firms should take care to ensure that where a rate is variable at any time during the term of the mortgage, the content of the financial promotion5 does not imply the rate may be fixed.

   5

The effect of MCOB 3.6.4 E(1)(b) will depend upon the content of the promotion. A non-exhaustive list of examples satisfying MCOB 3.6.4 E(1)(b) follows:

1. (1)

   a promotion which, when describing any cashback offered to the customer, also clearly refers to any relevant conditions, such as a requirement to pay back some or all of the cashback on early repayment of the mortgage;

2. (2)

   a promotion which, when describing any fixed or discount rate, also clearly states the duration of any early repayment charges;

3. (3)

   a promotion which, when describing any reduction in regular payments following from the re-arrangement of existing loans, also clearly indicates any increase in the total cost and any extension to the repayment period for the customer;

4. (4)

   a promotion which, when describing any possible monetary saving, also clearly states how this could be achieved;

5. (5)

   a promotion which, when including references to non-standard services or facilities, also clearly states that an additional fee may be payable for these; and

6. (6)

   a promotion which, when it includes an indication of an initial payment holiday (for example, 'pay nothing for 3 months'), also makes clear whether or not interest will be charged during this period.

The requirement in MCOB 3.6.4 E(1)(l) that certain information must be given in proximity means, for example, in relation to printed qualifying credit promotions, that this information is all visible at the same time.

1. (1)

   It cannot be assumed that customers necessarily have an understanding of the qualifying credit being promoted. If a non-real time financial promotion5 is specially designed for a targeted collection of customers who are reasonably believed to have particular knowledge of the qualifying credit being promoted, this fact should be made clear.

   5
2. (2)

   In relation to quotations of opinion:

   1. (a)

      where only part of an opinion is quoted, it should nevertheless be a fair representation; and

   2. (b)

      any connection between the holder of the opinion and the firm should be made clear.

MCOB 3.6.11 R is concerned with ensuring that customers are adequately informed, at an early stage, as to the existence of any tied products or services. However, it does not introduce equivalent disclosure requirements for services or products that must be obtained as a condition for the making of the loan, but where the customer has a free choice as to the supplier.

1. (1)

   Prominence of relevant information can play a key role in ensuring that a communication is clear, fair and not misleading. As a consequence, a number of requirements in MCOB relate to prominence. Where this is the case, the FSA will assess prominence in the context of the promotion as a whole. Use can be made of the positioning of text, background and text colour and typesize to ensure that prescribed information meets the requirements of MCOB. The surrounding of required statements with other information should be avoided where this might detract from the prominence which it is obligatory to afford to the statements.

2. (2)

   Firms may if they wish include a foreign language version of any required warning, in addition to the English language version required by these rules. If foreign language versions of warnings are included, firms are reminded of prominence requirements in MCOB 3.6.13 R and MCOB 3.6.14 G (1). Information should not be included which detracts from the required prominence of warning statements.

1. (1)

   MCOB 3.6.15 R (1) is intended to distinguish between promotions in breaks between 'normal' commercial broadcast programming (where the text prescribed in MCOB 3.6.13 R(Required risk statements) is not required) and promotions in breaks which are in or around programming intended to promote lending where MCOB 3.6.13 R (Required risk statements) applies.

2. (2)

   In relation to promotions on dedicated interactive television services, if the promotion is not contained within programming but instead forms a separate feature, the exemption offered by MCOB 3.6.15 R (1) would not be available.

MCOB 3.6.17 R does not require a firm to explain the basis on which the APR is calculated, or to provide a figure for the total charge for credit, in the non-real time financial promotion5.

For the purposes of MCOB 3.6.17 R(1), references to the availability of credit for customers who might otherwise consider their access restricted include references to:

1. (1)

   credit history; or

2. (2)

   credit rating; or

3. (3)

   county court judgments; or

4. (4)

   employment; or

5. (5)

   housing circumstances (for example, council tenants).

1. (1)

   In relation to MCOB 3.6.17 R(1)(c), the intention is that the APR should follow on, but be readily identifiable as different, from the indicated rate or rates of charge.

2. (2)

   For multi-rate products this should mean that the APR is presented, in sequence, after the different rates of charge that apply.

3. (3)

   The APR may be distinguished from other rates of charge by techniques such as using a contrasting (and legible) colour for text. However, the requirement of MCOB 3.6.17 R(1)(c) will not be satisfied by text devices such as the use of brackets which tend to diminish the impact of the APR.

If a financial promotion5 contains price information for more than one qualifying credit product, MCOB 3.6.17 R requires an APR to be provided for each product. Where more than one APR is required to be given, each APR will need to be no less prominent than:

1. (1)

   any price information relating to the particular product;

2. (2)

   any reference (either explicitly or implicitly) to the availability of credit for customers who might otherwise consider their access to credit restricted; and

3. (3)

   any other APR in the financial promotion5.

   5

1. (1)

   The FSA would not regard an APR described as 'from X%' as satisfying MCOB 3.6.22 R.

2. (2)

   In MCOB 3.6.22 R, when determining the representative APR, account should be taken of the business that has arisen from similar qualifying credit promotion in the previous 12 months. Where the financial promotion5 is for a new product or business, reference should instead be had to the relevant business plans.

   5

MCOB 3.6.27 R seeks to ensure that customers are given early notice of the existence of any fees charged by intermediaries in connection with the provision of qualifying credit. Where the fee is known at the outset, this must be indicated. The indication could be either as a cash value or as a percentage. If the charging of a fee, and the level of this, are dependent upon the circumstances of the customer, the indication must be based upon the business that is expected to result from the promotion.

MCOB 3.6.14 G (1) provides further guidance in relation to prominence.

MCOB 3.6.27 R (2) does not require the promotion to set out the characteristics of the representative business (loan amount etc) on which the indicated fee is based. For example, where the fee charged by a firm relates to circumstances of the customer such as their previous credit history, it would be sufficient to state that 'There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be X'.

MCOB 3.7.1 R is based on article 8 of the Financial Promotion Order1. Guidance on whether a real time financial promotion2 is solicited is contained in PERG 8.10.8G1 (Solicited v unsolicited real-time promotions). PERG 8.10.11G1 to PERG 8.10.14G1 also gives guidance on who will be considered the 'recipient' of a communication.

1. (1)

   Firms are reminded of the exemptions in MCOB 3.2.5 R (Application: what? exemptions). MCOB 3.7.3 R does not prohibit an exempt real time financial promotion2.

   2
2. (2)

   MCOB 3.2.5 R(2) creates an exemption for financial promotions2 that contain only very limited information about the firm (such as its name or contact details). The limited nature of this exemption means that a firm is unlikely to be able to use it to induce a customer to approach the firm and turn any subsequent communication by the firm into a solicited real time financial promotion2.

   22

A firm should note that MCOB 3.7.3 R (Prohibition on unsolicited real time promotions to customers) prevents a firm from communicating to a customer an unsolicited real time financial promotion of qualifying credit1 other than an exempt promotion (which is outside the scope of this chapter) or where MCOB 3.7.3 R applies. Many solicited real time financial promotion1 will be exempt promotions (and, therefore, outside the scope of this chapter). Accordingly, MCOB 3.8.2 R and MCOB 3.8.3 G apply only to solicited real time financial promotions1 which are not exempt financial promotions1 and to unsolicited real time financial promotion of qualifying credit1 within MCOB 3.7.3 R.

In MCOB 3.8.2 R(6)(a) an unsocial hour usually means on a Sunday or before 9am or after 9pm on any other day. It could also mean other days of the week or other times if the firm knows that a particular customer would not wish to be called on that day or at that time for reasons of, for example, religious faith or night shift working.

The requirements of MCOB 3.8.2 R and MCOB 3.8.3 G:

1. (1)

   apply in respect of all individuals who initiate the communication, including advisers and call centre operators;

2. (2)

   apply to all forms of real time financial promotion of qualifying credit1 with customers, including face-to-face and telephone financial promotion1;

   11
3. (3)

   but do not prevent, for example, a telephone call centre which has received a call from a customer at an hour generally regarded as unsocial, either responding to that call or asking during the call if the customer would like details of other qualifying credit

SYSC 3.2.20 R (Records) requires a firm to take reasonable care to make and retain certain records. For a telemarketing campaign to which MCOB 3.8.2 R and MCOB 3.8.3 G apply, those records should include copies of any scripts used.

Firms should note the additional disclosure requirements in MCOB 4.4.7 R (Disclosure where initial contact is by telephone) and MCOB 4.5 (Additional disclosure for distance mortgage mediation contracts and distance home purchase mediation contracts1 with retail customers) in relation to telephone calls that may fall within the definition of a financial promotion.

The guidance on the clear, fair and not misleading standard at MCOB 3.6.5 G, MCOB 3.6.10 G and MCOB 3.6.14 G may be relevant.

The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend upon the content of the promotion. The following non-exhaustive examples would satisfy the requirement:

1. (1)

   a promotion which, when describing any possible monetary saving, also clearly states how this could be achieved; and

2. (2)

   a promotion which, when including references to non-standard services or facilities, also clearly states that an additional fee may be payable for these.

The guidance on referring to the FSA in a financial promotion may be relevant (see MCOB 3.6.2 G (3)).

The guidance on the clear, fair and not misleading standard at MCOB 3.6.5 G, MCOB 3.6.10 G and MCOB 3.6.14 G may be relevant.

[Note: A comparative financial promotion will need to comply with regulation 4A of the Business Protection from Misleading Marketing Regulations 2008.]

The effect of giving no less prominence to the possible disadvantages than to the benefits associated with a feature will depend on the context of the promotion. The costs, restrictions or conditions relating to a feature such as any option available should be detailed for the following non-exhaustive examples:

1. (1)

   where any part of the discount on the market value of the property is to be repaid to the consumer after a qualifying period; and

2. (2)

   where a consumer is to benefit from shared appreciation in the value of the property.

The guidance on referring to the FSA in a financial promotion may be relevant (see MCOB 3.6.2 G (3)).

1. (1)

   'Appropriate1 expertise' will vary depending on the complexity of the financial promotion1 and the qualifying credit,2home reversion plan or regulated sale and rent back agreement21 to which it relates. The individuals engaged by a firm to confirm the compliance of its financial promotions1 with this chapter may themselves have different levels of expertise and therefore a different level of authority for confirmation depending on the type of promotion and the qualifying credit, home reversion plan or regulated sale and rent back agreement21 involved.

   1112
2. (2)

   A firm may arrange for a third party with appropriate expertise to carry out the confirmation exercise on the firm's behalf, but the responsibility for the financial promotion1 remains with the firm.

   1

1. (1)

   MCOB 3.9.3 R is of particular importance to a financial promotion1, such as a product brochure, that a firm uses over a period of time. It has little application to a financial promotion1 which is of its nature ephemeral, for example a mobile phone text message. Further, a financial promotion1 which clearly speaks as at a particular date will not cease to comply with the rules in this chapter merely because the passage of time has rendered it out-of-date. This does not mean, however, that a financial promotion1 can include information (such as price information) which is likely to become outdated during the currency of the financial promotion1 without the firm having regard to the need for any financial promotion1 to be clear, fair and not misleading. See further MCOB 3.6.5 G (2).

   111111
2. (2)

   For compliance with MCOB 3.9.3 R, the FSA will expect a firm to monitor its relevant financial promotions1 as part of the firm's routine compliance monitoring procedures. A firm may find it helpful to designate a relevant financial promotion1 with a 'review date', a date at which the financial promotion1 should be checked once more against the rules in this chapter. If it is found no longer to meet these requirements it should be withdrawn as soon as is reasonably practicable.

   111
3. (3)

   If at any time a firm becomes aware that customers may have been misled by a financial promotion1 it should consider whether customers who have responded to the financial promotion1 should be contacted with a view to explaining the position and offering any appropriate form of redress to those who have suffered financial loss.

   11

In deciding what is an adequate record, a firm should consider including, or providing reference to, where appropriate, such matters as:

1. (1)

   the name of the individual or individuals who confirmed that the financial promotion1 complied with the rules in this chapter;

   1
2. (2)

   the date of confirmation and (where appropriate) approval;

3. (3)

   details of the medium for which the financial promotion1 was authorised;

   1
4. (4)

   the evidence supporting any material factual statement about qualifying credit,2 a home reversion plan or a regulated sale and rent back agreement2in the financial promotion.1 For example, for any testimonial they use, advertisers should hold signed and dated proof, including a contact address. Unless they are genuine opinions taken from a published source, testimonials should only be used with the written permission of those giving them; and

   1
5. (5)

   where the promotion contains a typical APR, evidence to show that the APR was representative of the business expected to arise from the promotion (see MCOB 3.6.22 R).

1. (1)

   A firm should also retain a copy of the financial promotion1 as finally published or, if this is not practicable, monitor the published version to verify that it is in substantially the same format as the version which the firm confirmed complied with the rules in this chapter.

   1
2. (2)

   Records which should be retained include:

   1. (a)

      any written financial promotion1 used by an adviser; and

      1
   2. (b)

      any written material which is used in an organised marketing campaign (including, for example, written mailshots whether sent by e-mail, post, facsimile or other media).

3. (3)

   If the financial promotion1 is not in written form, the record should represent the actual financial promotion1 as accurately as possible.

   11

MCOB 2.8 (Record keeping) applies to the form in which records required in accordance with this chapter must be kept.

1. (1)

   Section 21(1) of the Act (Restrictions on financial promotion) prohibits an unauthorised person from communicating a financial promotion, in the course of business, unless an exemption applies or the financial promotion1 is approved by a firm.

   11
2. (2)

   Most of the rules in this chapter apply when a firmapproves a financial promotion of qualifying credit1 in the same way as when a firmcommunicates a financial promotion of qualifying credit1 itself. A firm therefore has a similar responsibility for a financial promotion of qualifying credit1 that it approves as for one that it communicates. For example, a firm which approves a non-real time financial promotion1 must:

   1111
   1. (a)

      confirm that the financial promotion1 complies with the rules in this chapter; and

      11
   2. (b)

      be able to show that it has taken reasonable steps to ensure that the financial promotion1 is clear, fair and not misleading.

      11
3. (3)

   A firm may also wish to approve a financial promotion of qualifying credit1 that it communicates itself. This would ensure that an unauthorised person who then also communicates it1 to another person will not contravene the restriction in section 21(1) of the Act (Restrictions on financial promotion).

   11
4. (4)

   A firm which approves a promotion that is exempt under MCOB 3.2.5 R (Application: what?; exemptions) or MCOB 3.3.1 R (Application: where?) must still comply with certain rules in this chapter (see MCOB 3.2.4 R (Application: what? exemptions) and MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation)).

If an approval is limited in accordance with MCOB 3.11.3 R, and an unauthorised personcommunicates the financial promotion1 to persons not covered by the approval, the unauthorised person may commit an offence under section 21(1) of the Act (Restrictions on financial promotion). A firm giving a limited approval may wish to advise the unauthorised person accordingly.

This section contains guidance on the use of the Internet and other electronic media to communicatefinancial promotions2. Firms are also referred to the guidance in MCOB 2.7 (Application to electronic media and distance communications).

Any material, which meets the definition of a financial promotion of qualifying credit,3 a home reversion plan or a regulated sale and rent back agreement3,2 including any video or moving image material incorporated in any website containing such a financial promotion,2 should comply with the rules in this chapter. See PERG 81 (The Internet) for further guidance on financial promotions on the Internet, including the treatment of hyperlinks and banners.

As indicated in MCOB 3.3 (Application: where?), for the purposes of the financial promotion rules2 there are two types of approach to financial promotion2communicated via the Internet and other electronic media:3

1. (1)

   real time financial promotions2where the communication is in the form, for example, of a telephone conversation, or other form of interactive dialogue; and

   2
2. (2)

   non-real time financial promotions2 where the customer may, for example, choose from reading a description of the qualifying credit,3home reversion plan or regulated sale and rent back agreement,32 through to the completion of a contract in a similar way to browsing through a leaflet rack. The rules in this chapter relating to hard copy financial promotions2 such as advertisements in magazines or newspapers apply equally to such promotions. E-mails, material displayed on a website and sound and television broadcasts are non-real time financial promotions2 (see MCOB 3.5.5 R(2)).

   222

1. (1)

   Before using the Internet, digital or any other form of interactive television or other electronic media to promote its services, a firm should refer to legislation such as the Data Protection Act 1998 and the Computer Misuse Act 1990, as well as to this chapter.

2. (2)

   In relation to financial promotions2 communicated by way of television, firms will want to have regard to Guidance Note 3 of the ITC Code of Advertising Standards and Practice on the use and appearance of superimposed text.

   2
3. (3)

   When designing websites and other electronic media, firms should be aware of the difficulties that can arise when reproducing certain colours and printing certain types of text. These difficulties could cause problems with the presentation and retrieval of required information. Any financial promotion of qualifying credit,3a home reversion plan or a regulated sale and rent back agreement32communicated by the Internet, digital or other forms of interactive television is subject to the requirements on form and content in this chapter.2

   22

The FSA website http://www.fsa.gov.uk contains a wide range of information including pages of specific relevance to customers. Firms may, if they wish, include a reference or hyperlink to the FSA's site; this will not, however, replace any requirements of the financial promotion rules2.

This annex consists only of one or more forms. Forms are to be found through the following address:

Examples of qualifying credit promotions - mcob3_annex1.pdf