Any marketers using overblown language will be feeling the heat from the FCA, with the regulator drawing a clearer line between disclosures and promotional talk.
The FCA recently published its Primary Market Bulletin 65, clarifying a warning message that Regulatory Information Service (RIS) announcements are utilising words the regulator considers exaggerated, promotional or sensationalist.
Within the bulletin are three noteworthy patterns of behaviour:
- Frequent updates featuring limited informational value.
- Announcements being misclassified as inside information.
- Releases being timed to go out during abnormal share price volatility, perhaps designed to change investor sentiment than simply relay market information.
This is highly important given that RIS provides the official channel for issuers to publish inside information or other regulated disclosures under Disclosure Guidance and Transparency Rules (DTR 6.3.3R). The FCA’s legal basis is also covered by the UK Market Abuse Regulation and the UK Listing Rules.
It also acts as another example of the FCA’s stricter guardianship over financial promotions in the UK market. The rising hype of ‘finfluencers’ has seen the regulator impose a public campaign of scrutiny against the way financial products are marketed.
In the finfluencing space, marketing language can certainly be seen as ‘optimised for attention’ rather than any statement being accurate. Accuracy is still very beating heart of listed-company disclosure , hence the bulletin’s stress on balanced, clear communications that do not mislead investors.
So, what does this mean for fund marketers?
Regulatory retaliation is at stake, in a time where publicly listed asset managers, investment trusts and closed-end funds’ that issue RIS announcements can be tangled up with potentially unregulated investment spokespeople online.
In which case, the house style used in RIS releases must be reviewed by IR teams. Any superlatives, unverified projections and claims, and “good news” updates without disclosure requirements may effectively look shifty in the FCA’s eyes.
It’s recommended practice to separate any regulatory and marketing communications generally. Without any sign-off process, an IR-drafted thought leadership piece repurposed to be a RIS filing (or vice versa) risks non-compliance.
Promotional-looking draft announcements will likely be deemed suspicious by sponsors and legal advisers too, making any disclosure review a necessary operation for any fund marketing team today in the age of confusing, sensationalist financial content.
Source
FCA, Primary Market Bulletin 65
