“We recommend reviewing compliance with local marketing material rules.”, Pierre-Thibault Aveline de Rossignol said.
EACH COUNTRY HAS ITS SPECIFIC LOCAL REQUIREMENTS ON MARKETING MATERIAL – BOTH EU AND NON-EU JURISDICTIONS1. FUNDS ARE REQUIRED TO COMPLY WITH THE NATIONAL MARKETING MATERIAL RULES OF EACH CROSS-BORDER JURISDICTION WHERE THEY ARE DISTRIBUTED.
For asset managers, complying with local marketing material rules of each jurisdiction means:
- A significant regulatory and compliance risk for asset managers
- Potentially significant costs of compliance
What’s in scope?
Any marketing material used by the fund, the asset manager, a distributor or a third party must comply with the specific local requirements. Marketing material includes, for example, factsheets, advertisements, websites and may include materials provided to investors and potential investors at events. The local rules apply independently of the marketing medium used – paper, email, radio, TV, billboard, etc.
Marketing material made available to retail investors is always in scope and for many jurisdictions, marketing material for professional investors is also in scope.
Key challenges to male factsheets compliant
Local marketing material rules applicable to fund factsheets cover for example:
- Minimum content to be disclosed
- Past performance disclosure
- Simulated and future performance disclosure, where permitted
- Risk indicators and risk disclosures
- Warnings statements
- Layout of text and graphs
- The website
Specific rules apply to marketing material of specific types of funds such as high volatility funds, feeder funds and structured funds.
What should you do in practice?
The local consumer protection regime, the financial promotion regime and the specific rules for investment products taken together typically range from 20 to 100 pages. The texts are written in the local language and often not translated into English. Furthermore, local regulations are subject to change, so asset managers need to ensure that they are kept up to date.
To implement these rules, asset managers need to understand the local marketing material rules and distinguish the common requirements from specific local requirements. Many texts need to be interpreted. Marketing material must then be tailored to meet the specific local rules. This could mean, for instance, that past performance, risk or cost information must be presented in different manners in different distribution markets. We recommend to review compliance with local marketing material rules.
The local competent authorities of certain Member States, such as Belgium, required factsheets to be submitted for approval prior being made available to investors while others required marketing material to be submitted but do not approve them.
Finally, marketing material must be kept up-to-date. Factsheets must therefore be reviewed on a regular basis.