At the end of May the European regulator, ESMA, published its Final Guide to Marketing Communications. This is the new regulation that will govern the advertising of UCITS and AIF products. And, consequently, also the general communications about said vehicles. From EY Luxembourg they have summarized in a simple table the main requirements for distinguish when it is and when it is not a marketing communication.
The main change in the regulation is that the guidelines significantly limit any deviation from the information contained in marketing communications of that contained in the legal and regulatory documentation and clarify acceptable practices.
An important point is that managers have a duty to ensure that all marketing communications used to promote the products, even when they delegate the marketing function to a third party, comply with the guidelines.
Key points in Marketing communication in funds
As can be seen in the graph, the regulations have some clear objectives.
- Clearly identify a marketing communication. Thus, any reference to a product should be published only after it receives authorization from the regulator.
- Alert risks and benefits in an equally prominent way. In other words, the benefits of the product cannot be discussed without referring to the risks in the same document. Both should stand out at the same level. For instance, risks cannot be footer or even smaller print than the one used to talk about benefits.
- Make sure that marketing communication does not lead to misunderstandings. Even in short communications, as in social networks, these should include a link to a web page where the fund information documents are available. Biased language should also be avoided.
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