Professional firms deserve specialist marketing support

3rd February 2020

FCA, rules, marketing

Last December, the Solicitors Regulation Authority was prompted to confirm that a new rule issued the previous month did not amount to a blanket ban on advertising by law firms. Paragraph 8.9 of the updated Code for Solicitors, the SRA explained, did prohibit ‘unsolicited approaches to members of the public… to advertise legal services’, but only if aimed at selected non-clients individually.

There was a time when firms of solicitors were not permitted to advertise their services at all. They had to rely on local awareness, word of mouth, a standard entry in the telephone directory and a brass plate at the entrance to their offices. The Law Society of England and Wales changed all that in 1986, by removing the ban on advertising. There have been similar relaxations in Scotland.

The pre-1986 restriction on legal advertising had its roots in the shadowy history of advertising itself. Until the launch of commercial TV in 1955, there had been no general regulation of advertising and false claims were rife. In 1961, the imposition of standards was extended to non-broadcast media through the Committee of Advertising Practice and then the Advertising Standards Authority.

Law Society stance changed

In the ensuing 25 years, the reputation of advertising improved and its importance for product and service providers increased. Stuffiness within the legal profession was also fading, so by the 1980s the Law Society’s stance on advertising was overdue for review. As a result, advertising became permissible, but only within strict guidelines, which have since been revised from time to time.

Within its 16 December 2019 clarification, the SRA confirmed: “Advertising to the public is permitted, subject to certain conditions. You must also consider your wider obligations under applicable law. Paragraphs 8.9 and 7.1(c) of the Standards and Regulations prohibit unsolicited approaches to members of the public which, even if permitted by law, may feel unwelcome or intrusive.”

For one law-related area, claims management, the Financial Conduct Authority is the regulator. In April last year, the Ministry of Justice passed to FCA its role in the regulation of claims management companies, whether handling employment, benefit or  injury (personal, criminal or industrial) claims or financial services claims such as for alleged mis-selling. FCA soon pounced on CMC advertising.

FCA role widened

On 23 August 2019, it issued this statement: “Since FCA took over regulation of CMCs it has reviewed over 200 CMC adverts in various media and found widespread poor practice. FCA has introduced a number of new rules in relation to financial promotions to ensure that CMCs provide information to consumers that is fair, clear and not misleading.”

So, FCA has ever-increasing powers over advertising of financial and closely related services. Before the Financial Services Act 1986, which brought in regulation of investment business, activities were regulated by government departments, self-regulated or unregulated. Initially under the aegis of the Securities and Investments Board, wide conduct of business regulation is now in the hands of FCA.

Conduct of business naturally includes advertising and marketing, so FCA rules reflect this. ASA reinforces the message with this summary: “Marketers must have regard to the financial promotion restriction in Section 21 of the Financial Services and Markets Act 2000 (as amended), as reflected in the rules and guidance issued and enforced by the FCA.

“The scope of that legislation, rules and guidance extends to marketing communications for: investments and investment advice; deposit taking (for example, banking); home finance transactions (regulated mortgages, home purchase plans and home finance plans); general insurance and pure protection policies (for example, term assurance).”

Code of Ethics for accountants

As for the marketing of accountancy services, the Institute of Chartered Accountants in England and Wales lays down regulations and guidance that aim to ensure that firms do not promote themselves in a way that could bring the profession into disrepute. The Institute of Chartered Accountants of Scotland upholds wide-ranging standards through a system of practice monitoring.

Section 250 of the ICAEW Code of Ethics covers marketing; sub-Section 250.2 states: “A professional accountant in public practice shall not bring the profession into disrepute when marketing professional services. The professional accountant in public practice shall be honest and truthful and not: make exaggerated claims for services offered, qualifications possessed, or experience gained; or make disparaging references or unsubstantiated comparisons to the work of another.”

All of the above serves to highlight that regulators and professional bodies including those mentioned are of one mind in their quest to ensure high standards of business conduct. There are, however, differences in the way rules and regulations are drafted and applied, often because specific legislation applies to solicitors, financial services companies and accountants, respectively.

A task for specialists

When it comes to the marketing and advertising of professional firms, knowledge of the relevant legislative and regulatory environment is a crucial quality required of any marketing business engaged by such firms to support and advise them. Which is probably why so many networks, service providers, wealth managers and solicitors use our services and our content!

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