S t a n d a r d 2. 2 M a r k e t i n g o f f i n a n c i a l s e r v i c e s a n d f i n a n c i a l i n s t r u m e n t s Regulations and guidelines
H o w t o r e a d a s t a n d a r d A standard is a collection of subject-specific regulations and guidelines which both obliges and guides supervised entities and other financial market participants, indicates the quality level expected by the supervisor, sets out the supervisor s key principles of good practice and provides justification for regulation. Each paragraph in a standard is furnished with a particular margin note: Norm: A reference to a current legal or regulatory provision. Binding: A FIN-FSA regulation that is legally binding on supervised entities or other financial market participants, issued by the FIN-FSA by virtue of its regulatory power based in Finnish law. : FIN-FSA recommendatory guidance to supervised entities or other financial market participants. Application guideline/example: A practical application guideline or example related to a norm, binding regulation or recommendation. A reference to a FIN-FSA standard or a particular point in the standard. See the attached example. : An explanation of the background, purpose and objectives of a regulation or standard. Sample standard only FIN-FSA standards may be accessed from www.fin-fsa.fi/eng
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 3 (28) TABLE OF CONTENTS 1 Application 5 2 Objectives 7 3 International framework and financial sector self-regulation 8 4 Legal basis 9 5 Key marketing principles 11 5.1 General 11 5.2 Proper practice in marketing 12 5.3 Proper marketing conduct in general 12 5.4 False and misleading marketing and its correction 14 5.5 Fair description of financial services and and disclosure of risks 15 5.6 Who provides the service or product marketed 16 5.7 Assertions and comparisons 16 5.8 Information on past performance 17 5.9 Information on future performance 19 5.10 Terminology and product names 19 6 Special characteristics in the marketing of certain financial services and 20 6.1 Marketing of loans 20 6.2 Offering of competing financial services or in a payment transfer situation 20
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 4 (28) 6.3 Reference to legally required prospectuses 21 6.4 Combined financial 21 6.5 Marketing of bonds 22 6.6 Mutual funds 23 7 Definitions 25 8 Further information 27 9 Revision history 28
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 5 (28) 1 APPLICATION Issued on 31 December 2008 Valid from 1 January 2009 (1) This standard shall apply to the following supervised entities referred to in section 5 of the Act on the Financial Supervision Authority (587/2003): credit institutions investment firms fund management companies Finnish branches of foreign credit and financial institutions Finnish branches of foreign investment firms Finnish branches of foreign fund management companies. (2) The standard shall apply to cross-border marketing in Finland of units in collective investment undertakings by foreign fund management companies or other foreign collective investment undertakings. (3) The standard shall apply to cross-border marketing of investment and ancillary services and financial from Finland to another country by Finnish supervised entities that provide investment services. (4) The standard's provisions on marketing of securities shall apply to all issuers and providers of securities within the scope of the Securities Markets Act (495/1989) as well as to others marketing securities or acquiring them in their business activities. (5) The standard does not apply to the marketing of financial or investment or ancillary services to professional customers or eligible counterparties as referred to in the Securities Markets Act. Neither is the standard applicable to marketing of securities to qualified investors as referred to in the Securities Markets Act nor to securities with a minimum face value of at least EUR 50,000. (6) The standard shall apply to the marketing of credit institution services to consumers and small companies comparable to consumers.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 6 (28) (7) If an agent is used for marketing financial services or, the provider of financial services or or the issuer of financial is responsible for ensuring that the agent acts in compliance with this standard. (8) Marketing of investment and ancillary services is dealt with not only in this standard but also in section 7.2.1 of standard 2.1 on code of conduct for the provision of financial services. (9) Standard 5.2a on securities offerings and listing contains provisions on the marketing material prepared for offering securities or applying for admission of securities to listing.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 7 (28) 2 OBJECTIVES (1) Technical developments, diversification of financial services and, and internationalisation have brought changes in the operating environment of financial markets and in the variety of marketing methods. (2) The standard provides instructions for all activities aimed at promoting sales (marketing) of financial services and. (3) The standard aims to ensure that in a constantly changing operating environment the marketer of financial services and recognises its own accountability in regard to marketing furthers the quality of the marketing material and other marketing information provided to customers supports development of appropriate marketing methods. (4) It is also the purpose of the standard that the prescribed principles should be applicable to the marketing of new types of financial services and. (5) The increased post-marketing approach to supervision of marketing as performed by the Financial Supervision Authority (FIN-FSA) also emphasises the need for a concise presentation of recommended principles for marketing.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 8 (28) 3 INTERNATIONAL FRAMEWORK AND FINANCIAL SECTOR SELF- REGULATION (1) The standard takes account of the following international recommendations and financial sector self-regulation: A European Regime of Investor Protection - The Harmonization of Conduct of Business Rules CESR/01-014d (Personal direct marketing particularly by phone or from door to door) The Finnish Bankers Association: Rules on good banking practice, 2004.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 9 (28) 4 LEGAL BASIS (1) The standard takes account of the following Directives: Directive 2004/39/EC of the European Parliament and of the Council on markets in financial amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (32004L0039; OJ L 145, 30.04.2004, p. 1) Commission Directive 2006/73/EC implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (32006L0073; OJ L 241, p. 26) Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (31985L0611; OJ L 375, 31.12.1985, p. 3). (2) The national regulation of the subject matter of the standard is based on the following legislation: Securities Markets Act (495/1989) Credit Institutions Act (121/2007) Mutual Funds Act (48/1999) Investment Firms Act (922/2007) Act on Foreign Investment Firms' Right to Provide Investment Services in Finland (580/1996) Act on Foreign Fund Management Companies in Finland (225/2004) Act on Foreign Credit and Financial Institutions in Finland (1608/1993) Consumer Protection Act (38/1978) Promissory Notes Act (622/1947) Ministry of Finance Decree on Fund Prospectuses and Simplified Fund Prospectuses (821/2007).
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 10 (28) (3) FIN-FSA's power to issue binding regulations on the subject is based on chapter 4, section 1, subsection 3 and chapter 10, sections 1, 1 a and 1 b of the Securities Markets Act. (4) One of the tasks of FIN-FSA is to guide financial market participants as regards proper practice in their operations. FIN-FSA's general power to provide guidance is included in this obligation.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 11 (28) 5 KEY MARKETING PRINCIPLES 5.1 General Norm (1) The concept of marketing is not altogether uniform in the financial market legislation. Provisions on marketing have in some respects been presented differently depending on whether they concern the service provider or the financial services or provided. (2) The Credit Institutions Act (section 125) regulates marketing activities of credit institutions and their contents. (3) By means of the rules on good banking practice, the credit institutions have also themselves regulated the marketing of credit institution services. Norm Norm Norm (4) The Investment Firms Act (section 66) and the Credit Institutions Act (section 133) contain special provisions on marketing of investor protection provided by the investor compensation fund and of deposit guarantee. (5) A general provision on marketing of financial is included in the Securities Markets Act (chapter 2, section 1 and chapter 10). The Act also regulates the marketing of investment and ancillary services (chapter 4, section 1). In addition, the Securities Markets Act states that marketing material for offering securities or applications for admission of securities to listing shall be submitted to FIN-FSA (chapter 2, section 4 c). (6) Marketing of mutual funds is regulated not only by the Securities Markets Act but also by provisions in chapters 13 and 20 of the Mutual Funds Act. Norm (7) Marketing of financial services and is also regulated by the Consumer Protection Act, chapter 2 of which contains general marketing
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 12 (28) provisions, chapter 6 a provisions on distance selling of financial services and and chapter 7 provisions on marketing of consumer credits. 5.2 Proper practice in marketing (8) Marketing of financial services and should comply with proper practice. (9) Proper practice maintains and furthers confidence in the financial market as well as the functioning, transparency and impartiality of the financial market. (10) Proper practice in marketing means that the marketer acts honestly and professionally focuses on material and essential characteristics of the financial service or instrument aims to ensure that marketing material is appropriate and that the disclosed information is clear, understandable and impartial clearly indicates the commercial purpose of the marketing and does not try to mix commercial arguments and facts does not rush or pressure the customer to make decisions does not try to conceal or understate the direct or indirect risks of financial services and. (11) The standard does not apply to image marketing, where no specific financial service or instrument is promoted but where the aim is to create a desirable image of the service provider or issuer. However, proper practice should also be followed in image marketing. 5.3 Proper marketing conduct in general (12) The aim of the marketing is to make financial services and appeal to potential customers or investors and thus promote their sales. As a result, marketing comprises all types of sales promotion. (13) Marketing may spotlight investment services (eg portfolio management, securities intermediation services or investment advice services), credit institution services (eg payment transfers, housing loans, consumer credits, bank accounts or credit cards) or certain financial (eg shares or fund units).
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 13 (28) (14) Marketing activities can vary considerably in terms of scope, implementation and target group. The characteristics of marketing channels, among other things, limit and shape the quantity and quality of the information presented. (15) Internet, for example, can be used to quickly gain the attention of the general public as well as to provide detailed information as in personal communication. In newspaper, radio or TV advertisements, by contrast, the scope of the information is limited and the same contents are conveyed to everyone. (16) The marketer of financial services or should aim to ensure that the Internet pages provide all the information and risk warnings concerning the financial services and clearly and as uniformly as possible. Application guideline/ -example (17) The standard should always be applied with attention paid to the special characteristics of the relevant marketing measure. However, the picture provided of the financial services or should not be misleading due to eg special characteristics of the media used or the brevity of the material. Application guideline (18) A single advertisement (eg in a newspaper or on TV) need not contain all information required to make a decision. Binding (19) The obligation to provide information has been elaborated on separately in standard 5.2a on securities offerings and listing and standard 2.1 on code of conduct for the provision of financial services. (20) From the marketing material the customer or investor should be able to identify the type of financial service or instrument in question and its most important characteristics. (21) Marketing should preferably focus on important aspects of the financial services or. Application guideline/ -example (22) Among other things, the following factors may significantly affect decisions made by the customer or investor: expectations of the performance of the financial services or and the basis for its calculation material/actual risks related to the financial services or fees charged to the customer and the basis for their calculation liquidity of the financial instrument sanctions against premature termination of a financial service or instrument possible guarantees, joint liabilities or other arrangements protecting
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 14 (28) the investment. (23) The marketing of financial services and should be clear and fair. The marketing should not, via images or otherwise, create groundless expectations of returns or of price competitiveness of products or services or reliability of the service provider. (24) The commercial purpose of marketing financial services or should not be concealed or obscured by, for example, publishing Internet pages or an article in a customer magazine guised as an unbiased study or objective information. Direct marketing (25) Direct marketing utilises the strength of personal communication although it can be directed at a broad audience. Traditional direct marketing is performed as door-to-door, in-home, or mail order sales. Direct marketing can also be carried out using SMS messages, e-mails or faxes. (26) At the beginning of all personal direct marketing, such as marketing by phone, the service provider should introduce himself and his business and ask the other party if he may continue the discussion. If the other party is still interested, it is then appropriate to present the main features of the service or product being marketed. The service provider should refrain from contacting the customer at inappropriate times of the day, such as late evening or early morning, or on Sundays or other public holidays. (27) In personal direct marketing, the marketing character of the situation should always be made clear. Lotteries and giveaways (28) As a rule, the use of lotteries and giveaways is allowed in the marketing of financial services or. (29) However, lotteries or giveaways should not dominate the marketing so that they obscure the significance of factors essential to the financial services or. 5.4 False and misleading marketing and its correction Norm (30) Financial services or must not be marketed by means of false or misleading information or improper or otherwise inappropriate
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 15 (28) practices. 1 Application guideline Application guideline Norm (31) To provide false information means that some fact concerning the financial instrument, financial service, service provider or financial market is presented in an erroneous or distorting manner. The falsity of the information is assessed objectively. (32) Misleading information may be truthful but still prone to give the wrong impression because of incompleteness or the particular method or form of the presentation. Whether information is misleading is to be assessed on whether it is likely to mislead the persons or group of persons targeted in the marketing. (33) Such information distributed in the context of marketing financial which is later found to be misleading or false and which may be of material importance to the investor shall be corrected or sufficiently supplemented without delay. 2 (34) FIN-FSA recommends application of the procedure described in the previous paragraph to the marketing of financial services as well. 5.5 Fair description of financial services and and disclosure of risks Application example (35) In the information on the financial services and, the characteristics, main contents, typical risks and possible expenses of the marketed service or instrument should be described as fairly as possible. The risks should clearly be disclosed. Required information should not be hidden or concealed by, for example, means of format or expressions. (36) For example, marketing material that presents the advantages of the product in headings or otherwise strikingly while presenting the risks unobtrusively in small print is contrary to the principle of fair description. In the same way, it can be misleading to emphasise the total return without providing the basis for its calculation. (37) The marketing material should not imply that use of financial services or is risk-free. Groundless arguments or expressions implying that customers or investors are not at risk are misleading. It is also misleading to refer to the security of the financial instrument without disclosing the explicit 1 See chapter 2, section 1, chapter 4, section 1 and chapter 10 of the Securities Markets Act and section 125 of the Credit Institutions Act. 2 See chapter 2, section 1 and chapter 10 of the Securities Markets Act.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 16 (28) risks related to the product being marketed. Assertions about the security of the product must be justified. If the marketing emphasises the capital protection of the product, the marketer should at the same time disclose the repayment-related risks. 5.6 Who provides the service or product marketed (38) The marketing of financial services or should always clearly disclose the provider of the service or issuer of the instrument, for example which fund management company's mutual fund or which credit institution's services are being marketed. This should be kept in mind particularly when the marketing involves agents that market products of companies within the same group. (39) Marketers must take into account that financial market legislation contains specific provisions on the use of certain words, for example in the company name of a provider of financial services or. 5.7 Assertions and comparisons (40) Often assertions or comparisons vis-à-vis similar products or services are used as tools in marketing of financial services and. Such assertions and comparisons must be verifiable. Interviews and personal opinions and comments, for example, can be included in marketing material, but they also are subject to verification. Binding Application guideline/ -example (41) If a securities intermediary 3 in its marketing compares investment or ancillary services, financial or intermediaries providing investment or ancillary services, the following conditions shall be satisfied: the comparison must be meaningful and presented in a fair and balanced way the sources of information used in comparisons must be specified the key facts and assumptions used to make the comparison must be included. (42) If the marketing includes comparison with a share price index, or other financial indices, the object of comparison should as a rule be commonly known and for the most part comparable with the marketed product or service. Should the object of comparison and essential aspects of the comparison not be commonly known, the marketing shall provide information 3 In this standard, securities intermediaries refer to investment firms, credit institutions and fund management companies providing investment services as well as Finnish branches of corresponding foreign companies.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 17 (28) on the composition of the object of comparison. Application guideline (43) The period of comparison should be long enough, ie at least one year. The period can be indicated as one or several calendar years or a number of years from the present backwards. In percentage comparisons, complete years should, for the sake of clarity, be used for calculating the annual return. Application guideline (44) The sources, facts and assumptions forming the basis of comparison should be presented in a balanced and fair manner. At the same time the aim should be to ensure that no essential comparative information is left out. (45) FIN-FSA recommends that entities other than securities intermediaries within the scope of the standard follow the provisions in this chapter in their marketing of financial services and. 5.8 Information on past performance (46) The marketing of financial services and may include references to past performance eg of products, services or financial indices. Simulated performance can also be used. (47) The information on past performance should be material to the product or service provided. Binding (48) If a securities intermediary in its marketing refers to the past performance of a financial instrument, a financial index or an investment service, the following conditions shall be satisfied: that reference must not be the most prominent feature of the communication the information must include appropriate performance information covering: the immediately preceding 5 years, or a total period longer than 5 years as determined by the securities intermediary and based on complete 12-month periods, or the whole period for which the financial instrument has been offered, the financial index calculated or the investment service provided, if less than 5 years the reference period and the source of information must be clearly stated the information must contain a prominent warning that the figures refer to the past and that past performance is not a reliable indicator of future results
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 18 (28) if the reference relies on figures denominated in a currency other than that of the targeted non-professional customer's country of residence, the currency must be clearly stated, with a warning that the return may increase or decrease because of exchange rate fluctuations if the reference is based on gross performance, the effect of commissions, fees or other charges must be disclosed. Binding (49) If a securities intermediary in its marketing refers to simulated past performance, the information must relate to a financial instrument or financial index, and the following conditions shall be satisfied: the simulated past performance must be based on the actual past performance of one or more financial or financial indices which are the same as, or underlie, the financial instrument or index concerned in respect of the actual past performance of a financial instrument or financial index used as a reference, the conditions set out in paragraph 48 must be satisfied the information must contain a prominent warning that the figures refer to simulated past performance, which is not a reliable indicator of future results. (50) When providing information on past performance, it is also important that the effect of conditions limiting the performance can be assessed. Application example Application guideline/ -example Norm (51) If the performance for example of an index-linked bond is determined on the basis of monthly or quarterly periods and the performance effects of the underlying are somehow restricted in the performance calculation, it is not sufficient to merely describe the performance of the underlying over a certain period. In such cases it is essential to present monthly or quarterly changes in past performance, so that one can assess the significance of the restriction. (52) As to the performance of a new product or service, a since launch analysis can be presented. If the time since launch is less than one year, the performance should not be stated on a per annum basis. (53) FIN-FSA recommends that entities other than securities intermediaries within the scope of the standard also observe the provisions in this chapter in marketing financial services and. (54) A simplified fund prospectus shall briefly describe the mutual fund's past performance and issue a related warning that the value of an investment in the mutual fund may increase or decrease and that the investor may, when
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 19 (28) redeeming his investment, get less than his original investment. 4 5.9 Information on future performance Binding (55) Information on future performance may be used in the marketing of financial services and. (56) If a securities intermediary uses information on future performance in its marketing, the following conditions shall be satisfied: the information must not be based on or refer to simulated past performance the information must be based on reasonable assumptions supported by objective data if the information is based on gross performance, the effect of commissions, fees or other charges must be disclosed the information must contain a prominent warning that such forecasts are not a reliable indicator of future performance. (57) FIN-FSA recommends that entities other than securities intermediaries within the scope of the standard also observe the provisions in this chapter in their marketing of financial services and. 5.10 Terminology and product names Application example (58) Terms defined in the legislation or terms with an established meaning should not be used misleadingly in the marketing material. Important terms without established meanings should be defined. (59) If, for example, capital guarantee, share-linked deposit or reverse indexlinked bonds are used, the meanings of such terms shall be explained in the marketing material. On the other hand, the Finnish word tallettaa (to deposit) may only be used in connection with bank deposits. 4 See chapter 2, section 2, paragraph 2 of the Ministry of Finance Decree on Fund Prospectuses and Simplified Fund Prospectuses.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 20 (28) 6 SPECIAL CHARACTERISTICS IN THE MARKETING OF CERTAIN FINANCIAL SERVICES AND INSTRUMENTS 6.1 Marketing of loans (1) The rules on good banking practice also apply to marketing. The customer shall be provided with sufficient information on loan alternatives, key loan terms and loan-related expenses. (2) Credit institutions should market loans in a responsible way so as to avoid, if possible, excessive indebtedness of customers. (3) It is proper practice that the service provider focuses its marketing on essential and key characteristics of the product. This is particularly important in the marketing of different charge cards or credit cards, because the uses and characteristics of cards are now highly diversified. 6.2 Offering of competing financial services or in a payment transfer situation (4) Such marketing should be avoided where banks inappropriately try to influence the decisions of customers making payments over the counter. Application guideline/ -example (5) One example of this is when a bank introduces the customer to corresponding products offered by a company in the bank's group or conglomerate or its business partner when the customer is about to pay an
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 21 (28) insurance premium or invest in a mutual fund. 6.3 Reference to legally required prospectuses Norm (6) If a prospectus, tender offer document, simplified fund prospectus or fund prospectus concerning a security has been published as legally required, the marketing material shall disclose where it can be obtained. 5 Application guideline (7) Documents other than the above-mentioned legally required ones should not be named in the same way. The marketing material must be prepared so that its contents or form of presentation cannot be confused with the said legally required prospectuses. (8) An issuer who, during an ongoing issue, uses such marketing material simultaneously in other marketing that is inappropriate for marketing issues, is not acting in compliance with proper practice, if the purpose can be considered to be circumvention of rules or instructions on marketing of issues. Binding (9) Marketing of securities offerings is also covered in standard 5.2a on securities offerings and listing. 6.4 Combined financial (10) Typical of combined financial, from the viewpoint of the investor, is that they include characteristics of two or more financial services or but are marketed under the name of a single instrument. Examples include structured bonds and share-linked deposit. (11) In marketing combined financial it is particularly important to give an impartial description of the instrument. The different elements of the instrument should be presented clearly. Deposits with return tied to the underlying (12) So-called share-linked deposit or other deposits, where the return is tied to an underlying (eg a share index or share basket), can in terms of return structure be compared to traditional fixed deposits and structured bonds. (13) The deposit return should be described so as to clearly indicate the factors affecting the final return and facilitate comparison with structured 5 See chapter 2, section 4 c of the Securities Markets Act and sections 92 93 of the Mutual Funds Act.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 22 (28) bonds of corresponding type and maturity and/or fixed deposits of corresponding maturity. (14) Information on the underlying and possible limits on returns should be provided in the same way as for structured bonds. Structured bonds (15) Factors affecting returns, such as return effects of limits, should be stated clearly in the marketing of structured bonds. 6.5 Marketing of bonds (16) In the marketing of fixed rate bond issues it should always be indicated whether the issue price is floating or fixed. In bonds with a floating issue price, the nominal interest rate should not be emphasised but indicated in the same way as the other bond terms. The marketing should clearly state the effective return or its range at a certain time and the fact that it can vary. The significance of the floating issue price for the investor's return on investment should clearly be disclosed along with the nominal interest rate. On the subscription venues, the investor should be informed of the effective return based on the issue price at the time in question. If the size of the investment affects the issue price, this should also be disclosed in the marketing. Norm (17) According to section 34 of the Promissory Notes Act, bonds can be issued by public entities and accounting entities. Bonds classified as subordinated liabilities shall be designated as debentures. (18) The marketing should always indicate that debentures are subordinated. (19) The marketing should always indicate whether the bond is collateralised. It should also indicate what part of the bond, if any, is secured by collateral. Any collateral involved should also be specified in the marketing. (20) If the bond terms include indicative terms, such as terms for determining the return, this should always be disclosed in the marketing. If, for example, an indicative subscription rate or return factor is given, its range or minimum level should be provided in the same context. (21) The marketing of so-called capital loans as referred to in the Companies Act should include information on the appropriate procedure in case interest for some year is not paid or principal cannot be repaid according to the
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 23 (28) repayment terms. The subordination of capital loans in case of company dissolution should also be made clear. In addition, the marketing should provide information on the treatment of capital loans in case of merger or demerger of the company. 6.6 Mutual funds (22) In marketing mutual funds, the fund's investment policy should be described in language that even inexperienced investors can, with reasonable effort, understand. (23) Market studies and premarketing are often elements in the marketing of mutual funds. If the fund rules have not yet been approved, this should be stated clearly in premarketing by phone or other communication channel. Information or material that can be regarded as future rules or preliminary information on future rules of the mutual fund should not be disclosed. In other respects, the general provisions of the standard apply to premarketing. Marketing units of foreign collective investment undertakings Norm Application guideline Application guideline (24) According to the Mutual Funds Act, marketing units of open-ended foreign collective investment undertakings in Finland requires notification or marketing permission. 6 (25) Collective investment undertakings as referred to in the UCITS directive are open to all investors. As the rules of such undertakings cannot restrict the range of unit holders, uniform information must be made available to all investors. Collective investment undertakings as referred to in the directive always collect funds from the public. Thus the criteria of marketing to the public are quite easily fulfilled. (26) Open-ended foreign collective investment undertakings other than those referred to in the UCITS directive that aim their marketing solely at professional investors, are not subject to the Mutual Funds Act as regards the marketing of their collective investment undertaking units in Finland and do not need permission for such marketing. (27) The fact that a portfolio manager under a discretionary portfolio management agreement subscribes to collective investment undertaking units on the account of a customer without consulting the customer or that a securities intermediary subscribes to collective investment undertaking units on its customer's explicit initiative is not considered by FIN-FSA as marketing 6 See sections 128 129 of the Mutual Funds Act.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 24 (28) of units of foreign collective investment undertakings in Finland. In such cases the collective investment undertaking in question need not be notified in Finland or apply for marketing permission, according to the Mutual Funds Act. Norm (28) If the collective investment undertaking is not open-ended (closed fund), the Securities Markets Act and its requirements on prospectuses shall apply to the marketing of the units, and the Mutual Funds Act does not apply.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 25 (28) 7 DEFINITIONS Securities Securities refer to securities regulated by the Securities Markets Act and comparable foreign securities. Such securities include, for example, shares, warrants, bonds, covered warrants and fund units. Securities intermediaries Securities intermediaries refer to investment firms, credit institutions and fund management companies providing investment services, Finnish branches of foreign investment firms, Finnish branches of foreign credit and financial institutions providing investment services, and Finnish branches of foreign fund management companies providing investment services. Marketing Marketing refers to all activities aimed at promoting sales of financial services or. Sales promotion is eg advertising in different media, direct advertising or introducing issuers in connection with marketing of securities. Marketing can also take the form of promotion directed at the marketer's own customers, individual customers or a certain target group. Financial services Financial services refer to credit institution services and investment and ancillary services. Credit institution services Credit institution services refer to products offered by credit institutions and services other than investment and ancillary services (eg loans, deposits and payment transfers).
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 26 (28) Investment and ancillary services Investment services refer to the services mentioned in section 5 of the Investment Firms Act and ancillary services to the services mentioned in section 15 of the same Act. Financial Financial refer to the mentioned in section 4 of the Investment Firms Act (such as securities and derivatives).
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 27 (28) 8 FURTHER INFORMATION Please find the necessary contact information in the list of Persons in charge provided on the FSA website. For further information, please contact: Conduct of Business, tel. +358 10 831 5336.
THE FINANCIAL SUPERVISION AUTHORITY 2 Code of conduct until further notice J. No. 7/120/2006 28 (28) 9 REVISION HISTORY When the standard entered into force, it repealed the following FIN-FSA guidelines and statements: Guideline 201.2 on procedures to be observed in the marketing of securities (16 March 1999) Statement K/25/99/PMO on marketing by credit institutions. The standard has been revised as follows: Revision date 31 December 2008, valid from 1 January 2009: As from 1 January 2009, pawnbroking institutions are no longer supervised by FIN-FSA. As a result, the standard is not applicable to pawnbroking institutions from 2009 onwards. Revision date 26 October 2007: Updating of the standard according to the amendments in chapters 4 and 10 of the Securities Markets Act and introduction of new margin texts. All versions of the standard have been gathered under Regulation/FSA standards on FIN-FSA's website.