1. (1)

   ICOB 3.2.1 R states that this chapter applies generally to firms in relation to all non-investment financial promotions. But, this wide application is cut back by ICOB 3.3(Application: what?) and ICOB 3.4(Application: where?) which limit the application of this chapter for:

   1. (a)

      non-investment financial promotions which fall within the scope of the exemptions in the Financial Promotion Order or the additional exemptions set out in ICOB 3.3.6 R; and

   2. (b)

      non-investment financial promotions to persons outside the United Kingdom.

2. (2)

   ICOB 3.1.2 G contains a table summarising some of the exemptions in the Financial Promotion Order that are likely to be of particular interest to firms. A firm which communicates or approves only financial promotions that fall within an exemption need not concern itself with ICOB 3.

A communication may contain both a non-investment financial promotion and one or more of a financial promotion and a qualifying credit promotion, for example, a leaflet from a firm which describes the range of insurance, savings and mortgage products it provides. In such cases,ICOB 3, COB 3 and MCOB 3 will all be relevant.

Under section 39(3) of the Act, a firm is responsible for financial promotionscommunicated by its appointed representatives when acting as such (see ICOB 1.6 (Appointed representatives)).

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 relation to any controlled activity lawfully carried on by him in that State, should act in conformity with the rules in this chapter.

Authorised professional firms are reminded that, in circumstances in which ICOB 3 does not apply to the firm,ICOB 2.2.3 R(Clear, fair and not misleading communication) may apply.

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 AUTH App 1 (Financial promotion and related activities) and that guidance will be relevant to interpreting these rules. In particular, guidance on the meaning of:

1. (1)

   "communicate" is in AUTH App 1.6 (Communicate);

2. (2)

   "invitation or inducement" and "engage in investment activity" (two elements which, with "communicate", make up the definition of "financial promotion") are in AUTH App 1.4 (Invitation and inducement) and AUTH App 1.7 (Engage in investment activity).

The rules in this chapter apply to non-investment financial promotions only. These are financial promotions which relate to non-investment insurance contracts. A non-investment financial promotion is, by definition, not a real time financial promotion.

1. (1)

   There is no restriction on the media of communication to which this chapter applies. It applies to a non-investment financial promotion communicated by any means, including by way of printed advertising, radio and television broadcast, e-mail, the Internet and electronic media such as digital and other forms of interactive television and media. Both solicited and unsolicited communications are covered.

2. (2)

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

   1. (a)

      product brochures;

   2. (b)

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

   3. (c)

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

   4. (d)

      written correspondence;

   5. (e)

      sales aids which themselves constitute a financial promotion; and

   6. (f)

      other publications, which may contain non-personal recommendations as to the acquisition, retention or disposal of non-investment insurance contracts.

Guidance on the use of the Internet for communicating non-investment financial promotions is in ICOB 3.9 (The Internet and other electronic media) and AUTH App 1.22 (The Internet).

1. (1)

   Under ICOB 3.3.6 R(1), a non-investment financial promotion which is communicated only to a commercial customer is exempt. See ICOB 3.6.3 R and ICOB 3.6.4 R which amplify this exemption. A firm will need to take particular note of the conditions in ICOB 3.6.4 R when designing non-investment financial promotions for trade publications that may also be available to a retail customer.

2. (2)

   ICOB 3.3.6 R(4) reflects the exemption in article 28 of the Financial Promotion Order (one-off non-real time communications and solicited real time communications) but goes further, exempting all such non-investment financial promotions. It exempts, among other things, correspondence which is specifically written for a recipient, whether hard copy or e-mail. A firm should note, however, that such correspondence will, if personal recommendations are made, be subject to other obligations such as ICOB 4.3 and ICOB 4.4. It does not exempt non-investment financial promotionscommunicated in the form of mass mailshots, which may appear to be items of personalised correspondence but which in fact comprise the same, or virtually the same, material sent to a number of recipients, without tailoring the material to the circumstances of each recipient. Such mailshots must meet the requirements of ICOB 3. AUTH App 1.14.3 G (One-off financial promotions (articles 28 and 28A)) provides further guidance on the scope of the exemption in article 28.

3. (3)

   ICOB 3.3.6 R(5)(e), (f ) and (g) exempt a non-investment financial promotion made by a firm which refers only to its activities in general terms in image advertising. Acceptable examples include 'general insurance' or 'life and general insurance business'. In addition a firm or its appointed representative may include its name, address and telephone number in accordance with ICOB 3.3.6 R(5)(a) and (d). AUTH App 1.4.20 G (Image advertising) provides guidance on when image advertising may involve a financial promotion.

4. (4)

   A non-investment financial promotion included in a newspaper, magazine or periodical which is printed and published overseas, but which may be brought into the United Kingdom and made available to persons in the United Kingdom, will be exempt provided that the non-investment financial promotion is not communicated to persons inside the United Kingdom (see ICOB 3.4 and AUTH App 1.12.2 G (Financial promotions to overseas recipients (article 12)).

1. (1)

   A firm is reminded that non-investment financial promotions (including those which are exempt) may be subject to more general rules including Principle 7 (Communications with clients), SYSC 3 (Systems and controls) ICOB 2.2.3 R (Clear, fair and not misleading communication) and ICOB 5 (Product disclosure).

2. (2)

   A firm is reminded that, although ICOB 3 makes no specific rules relating to the content of a non-investment financial promotion, the disclosure requirements in ICOB 4 and ICOB 5 may apply.

3. (3)

   A firm is reminded that if, in the course of making a non-investment financial promotion of any kind, it gives a personal recommendation to a customer about the suitability of a non-investment insurance contract for that individual, the firm is subject to the relevant rules on advising and selling in ICOB 4 (Advising and selling standards).

1. (1)

   The application under ICOB 3.4.1 R is relevant both when a firm communicates a non-investment financial promotion itself and when a firmapproves a non-investment financial promotion for communication by others. But see also ICOB 3.4.3 R.

2. (2)

   The exemptions in ICOB 3.3.6 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 ICOB 3.3.6 R(2)) and AUTH App 1.12.2 G (Financial promotions to overseas recipients (article 12)), the exemptions for overseas communicators (see ICOB 3.3.6 R(3)) and the exemption for incoming electronic commerce communications (see AUTH App 1.12.38 G article 20B)).

3. (3)

   In the context of the provision of an electronic commerce activity to an EEA ECA recipient, the scope of ICOB 3 is extended by ECO 2.2.3 R (Financial promotion). This means that ICOB 3 will apply for communications to EEA ECA recipients.

1. (1)

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

   1. (a)

      he is an authorised person; or

   2. (b)

      the content of the non-investment financial promotion is approved by an authorised person.

2. (2)

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

1. (1)

   The purpose of this chapter is to provide rules and guidance for a firm that wishes to communicate or approve a non-investment financial promotion. AUTH App 1 (Financial promotion and related activities) provides further detailed guidance on the financial promotion regime under section 21 of the Act (Financial promotion) which will be relevant in interpreting these rules.

2. (2)

   This chapter amplifies, for activities within its scope:

   1. (a)

      Principle 6 (Customers' interests) which requires a firm to pay due regard to the interests of its customers and treat them fairly; and

   2. (b)

      Principle 7 (Communications with clients) which requires a firm to pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.

A firm communicating a non-investment financial promotion 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;

2. (2)

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

3. (3)

   the Privacy and Electronic Communication (EC Directive) Regulations 2003 (SI 2003/2426).

1. (1)

   In ICOB 3.7.1 R(2) 'appropriate expertise' will vary depending on the complexity of the financial promotion and the non-investment insurance contract to which it relates. The individuals engaged by a firm to confirm the compliance of its financial promotions with this chapter may have different levels of expertise and therefore a different level of authority for confirmation depending on the type of financial promotion and the non-investment insurance contract involved.

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 non-investment financial promotion remains with the firm.

1. (1)

   ICOB 3.7.3 R is of particular importance to a non-investment financial promotion, such as a product brochure, that a firm uses over a period of time. It has little application to a non-investment financial promotion which is of its nature ephemeral, for example, a mobile phone text message. Further, a non-investment financial promotion 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.

2. (2)

   For compliance with ICOB 3.7.3 R the FSA will expect a firm to monitor its relevant non-investment financial promotions as part of the firm's routine compliance monitoring procedures. A firm may find it helpful to designate a relevant non-investment financial promotion with a 'review date', a date at which the non-investment financial promotion should be checked once more against the rules of this chapter. If it is found no longer to meet these requirements it should be withdrawn as soon as reasonably practicable.

3. (3)

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

1. (1)

   It cannot be assumed that recipients necessarily have an understanding of the contract being promoted. If a non-investment financial promotion is specially designed for a targeted collection of recipients who are reasonably believed to have particular knowledge of the contract being promoted, this fact should be made clear.

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.

3. (3)

   Firms should avoid the use of small print to qualify prominent claims.

4. (4)

   If a firm communicates a non-investment financial promotion which contains a quotation of premium and it is unable to give the retail customer a precise quotation it should ensure that the premium quoted is representative of the premium that would be charged for a person in a similar position to the retail customer.

5. (5)

   Unless the firm is prepared to give a precise quotation, the non-investment financial promotion should be accompanied by a prominent statement making clear that the premium quoted is an estimate only and that the actual premium will depend on individual circumstances.

6. (6)

   Where a non-investment financial promotion indicates or implies that a firm can:

   1. (a)

      reduce the premium; or

   2. (b)

      provide the cheapest premium; or

   3. (c)

      reduce a retail customer's costs;

   it should include, with equal prominence, a statement of the basis on which the reduction is to be achieved. The FSA will assess prominence in the context of the non-investment financial promotion as a whole. Use can be made of the positioning of text, background and text colour and type size to ensure that ICOB 3.8.1 R(1) is satisfied.

7. (7)

   Where (6) applies, and there are significant limitations on any savings, these should be given equal prominence in the non-investment financial promotion to the claimed savings. For example, if the non-investment financial promotion states that a firm can achieve a premium reduction in the form of either a percentage or monetary amount, but the saving is only available if the retail customer meets certain specific criteria, the criteria should be given equal prominence and not placed in small print.

8. (8)

   A firm which offers general insurance contracts, providing benefits for the customer's care in the event of the customer's disability or incapacity, should avoid using terms which state expressly or imply that the policy will be available for the customer to claim on in the long-term, that is, for any period beyond the expiry of the policy. So a general insurance contract should not be promoted as being capable of providing long-term care insurance for the customer in the long-term, and expressions such as "long-term care" and "lifetime care" should generally be avoided in relation to general insurance contracts. If a general insurance contract provides benefits over the long-term in the event of a claim being made, a firm should make clear that the long-term aspect relates only to the availability of benefits in the event of a claim, not to the duration of the policy itself.1

This section contains guidance on the use of the Internet and other electronic media to communicatefinancial promotions. Firms are also referred to the guidance in ICOB 2.6 (Application to electronic media).

Any material which meets the definition of a non-investment financial promotion, including any video or moving image material incorporated in any website containing a non-investment financial promotion, should comply with the rules in this chapter. See AUTH App 1.22 (The Internet) for further guidance on non-investment financial promotions on the Internet, including the treatment of hyperlinks and banners.

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)

   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 non-investment financial promotion communicated by the Internet, digital or other forms of interactive television is subject to the requirements set out in ICOB 3.8 as applicable.

The FSA's 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 website; this will not, however, replace any requirements of ICOB 3.