Sixty Seconds On Regulation and Marketing Effectiveness

Mention regulation and the immediate response is a big groan and a whinge about the costs of compliance. There is still plenty to be done in the area of regulation but how has it impacted on marketing effectiveness? Is it a help or hindrance when it comes to marketing financial products and services?
Regulatory Conflicts
MCOB3 introduced much needed change to the mortgage advertising rules. For example, dispensing with the requirement to include a typical example was a real plus as this was largely only read by anoraks. Furthermore, for brokers this information was sometimes difficult to obtain from certain lenders.
For FSA regulated mortgages there is no reason why making all financial promotions ‘clear, fair and not misleading’ and ‘balanced’ should impact on marketing effectiveness for most mortgage products – unless a firm’s marketing strategy is to produce misleading material, even if only to get the phone ringing to sell a different product.
As there is no restriction on how to display the prescribed information which must be included in all financial promotions, subject to meeting certain conditions on matters such as prominence, marketing departments continue to have plenty of scope for creativity.
However, a number of problems persist. It is impossible to produce a compliant product specific advertisement except for lifetime trackers, discounts or fixed rates for the mortgage term. For all other products the requirement to quote an APR and the requirement for the financial promotion to be ‘clear, fair and not misleading’ are mutually exclusive.
The average life of a mortgage today is about three and a half years and the average life of a mortgage deal even shorter as many borrowers who don’t move home or remortgage effect a product switch with their lender.
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