How to avoid scaring off customers (without annoying the FCA)
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If you work at a fintech or traditional financial services company in any sort of marketing capacitym, you probably have this discussion regularly.
I know I have. More times than I care to count.
You put in a huge amount of thought and invest a lot of money into your company's branding, positioning, and marketing assets.
And then, compliance step in, and they undo all that hard work in one fell swoop, by insisting on adding something like this:
Trading in leveraged financial derivatives such as Options carries a high level of risk and may not be suitable for everyone. Using such financial products may run the risk of substantial capital losses which may exceed your initial deposit. You should carefully consider your financial situation and needs and seek independent advice from a duly authorised financial adviser.
In case you're still wondering what I'm on about, it's compliance warnings. AKA: those ominous chunks of text, usually written in 10pt font or smaller, at the bottom of regulated financial services firms' marketing assets.
Here's why they're costing you sales, and how to fix the issue without getting on regulators' radars for all the wrong reasons.
What financial services regulations say about compliance warnings (and what they absolutely don't)
Your compliance people are right.
In the UK, the Financial Conduct Authority specifically requires regulated firms to include prominent warnings in their customer-facing communications. These warnings must be:
Accurate
Fair
Not masked by marketing messages, or be misleading in other ways
Regulators in other countries take a similar approach. But, pointedly, there's something the FCA — and other regulators — DO NOT say.
Specifically, the rules about compliance warnings don't require you to insert a large block of impenetrable text that completely undermines all the benefits your copy has just highlighted, and makes the prospect of using your product sound positively terrifying.
Bottom line: you CAN include warnings that are 100% compliant, and still:
Sound human
Not give the impression that using your product will most likely lead to certain and inevitable financial ruin
Keeping it real: Complying without catastrophising
The problem with compliance warnings isn't the content itself. It's the way you present that content presented.
Nine times out of ten — and the example I shared up top is a case in point — compliance warnings have one or (usually) more of the following issues:
They use exceedingly formal language
They're overly wordy and have complex sentence structures
The phrasing is deliberately broad
They're in the passive voice, which creates a sense of cold detachment
Of course, compliance people are just doing their job, which is to protect the business by making sure you don't come under regulatory scrutiny or get sued for misrepresenting what you do.
But, the unintended consequence of this approach is that it becomes all about you. Worse than that, by making it all about you — specifically about protecting your firm from potential legal trouble — it undermines your messaging and scares customers off.
The good news? Every single one of the four problems I've just listed is inherently fixable. And, fixing them will make you instantly sound more human and approachable (and less liable to send prospects running for the hills) without falling foul of compliance rules.
From 'Hell, no!' to 'OK, sure. Fair enough'
So how do you make sure your compliance warnings don't make it sound like prospects will live to rue the day if they buy your product, while staying well within both the letter and the spirit of regulatory rules?
You follow these four principles:
Clarity: If there's something specific you want to say, come right out and say it
Ownership: Don't hide behind the passive voice. Decide who is responsible for what, and phrase accordingly
Keep it simple: Don't use multiple words no person in their right mind would say in actual conversation, when one plain English word will get the same message across
Make it easy: break things up for readability, and don't get needlessly technical, especially if your audience are lay people
Worked example
'This is all well and good. But what does it actually look like in practice?'
Glad you asked.
Here's how I'd rework the compliance warning I shared above.
Before
Trading in leveraged financial derivatives such as Options carries a high level of risk and may not be suitable for everyone. Using such financial products may run the risk of substantial capital losses which may exceed your initial deposit. You should carefully consider your financial situation and needs and seek independent advice from a duly authorised financial adviser.
After
Financial derivatives like options aren't right for everyone.
Make sure you understand and are comfortable with the risks before you trade.
A qualified financial adviser can help you.
The second version uses plain language ('right' instead of 'suitable' / 'make sure you understand' instead of 'you should carefully consider your financial situation and risks' / 'qualified' instead of 'duly authorised'.
It's also clearer and more approachable. And, most importantly, it conveys the exact same message as the original — that you should make sure you understand the risks and get advice — despite being only 26 words long to the original's 64 words.
Empathy always wins
So there you have it. Compliance warnings aren't a zero-sum game. You can meet regulatory obligations, protect your firm, AND not sound like a quote from a Stephen King novel, if lawyers and compliance professionals ghostwrote Stephen King's novels.
Need help figuring out the right approach?