October 19, 2020

The CNMV may require the withdrawal of advertisements for financial products within three days | Markets



The CNMV circular so that the advertising of investment products is adequate is almost ready. With it, the supervisor will be able to oblige entities to correct or eliminate the advertisements if they omit relevant information, it is biased, it is contradictory or it leads to confusion. The period from when the security guard requests that they be withdrawn or changed in order for their request to be executed will be three days.

The advertising regulation for investment products dates from 2010. But that rule was never developed. Until now. In the coming weeks, a circular will be in force that was submitted for public consultation until September 11. This specifies specific and strict criteria on the announcements of financial articles that the CNMV monitors. That is, advice, investment funds, structured deposits, equities, fixed income, derivatives, such as contracts for differences (CFDs), futures or warrants, among others.

Classic deposits, mortgages, consumer loans and other purely banking products fall under the supervisory umbrella of the Bank of Spain. It has already launched its own circular on this issue, which will come into effect on October 15.

The CNMV explains in its draft that its draft is subject to similar criteria and requirements. It also clarifies that it is now launching the regulations due to “the increase that has occurred in recent times in advertising activity related to complex financial products”

Expedited process

Until now, the CNMV’s advertising control activity has been limited almost exclusively to collective financing platforms (crowfunding) and entities that offer investment services without the required authorization. With the new regulations once published in the BOE, the situation will change.

The process will be expeditious. The CNMV may require entities to provide specific information on advertising campaigns or pieces. The bank or investment services company must respond within a maximum of three days. If the supervisor considers that it is necessary to correct something or even delete the advertisement, it will be requested from the affected firm. The deadline for it to comply with the requirement, or for it to argue that it complies with the regulations, is set in the draft at three days. In the event that there are objections by the entity and they are rejected by the CNMV, they must be met. And again the counter of a maximum of three days is started for the advertising to be rectified or changed.

The demands are numerous and concrete. “Advertising (…) must be clear, balanced, impartial and not misleading. To this end, a simple and easy-to-understand language will be used in it and the inclusion of ambiguous, biased, incomplete or contradictory information that could lead to confusion will be avoided, ”the document states. “The messages (…) will avoid creating disproportionate or false impressions or expectations that act as an incentive for hiring,” he adds.

In addition, the warnings must be included without being relegated to an asterisk –the font size will be the same as the rest of the advertisement–, the term “gift” will be avoided and it must be clarified if the eventual tax advantages are general or only apply if they are meet conditions. Entities must also ensure, when not evident from the context, that their advertising activity is clearly identified. For example, in a communication medium.

The circular also prohibits advertising to the general public of products that are prohibited from sale to retail customers. On this issue, the Spanish Banking Association considers that “this new unprecedented obligation does not apply to entities and it is proposed to eliminate it or, ultimately, to clarify and clarify it.”

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