With new rules for distance sales of financial services to consumers coming into force 31st October 2004, the DMA has published guidance for its members on issues such as caller identification and lifestyle/financial data collection and sharing.
Topic: Distance Marketing of Financial Services
Who: Direct Marketing Association
Where: London
When: October 2004
What happened:
The Direct Marketing Association ("DMA") informed its members of a debate it had been conducting with the Financial Services Authority in respect of the disclosure obligations that apply in a telemarketing context under UK rules implementing the EU Distance Marketing of Financial Services Directive.
The principal rule that applies here is that there can be no cold calls promoting mortgages and calls may only be made to consumers who have either expressed a request for such calls or envisage receiving such calls. The DMA offers in relation to the customer "envisaging" a call that they must have been made aware of the intentions of the company to make these calls and agreed to them on an opt out basis.
Collecting consumer details to pass to third parties
The DMA advises that where data is shared within a group of companies offering different financial products and services, the company with whom the customer has the existing relationship must obtain the express consent of that customer before they can pass on his details to other group members for telemarketing purposes.
If financial services companies want to make their lists available to third parties outside the group they will have to design their application forms in such a way as to obtain an opt-in for calls relating to mortgage promotions.
Fact finds
Marketing organisations obtaining information from consumers on their financial circumstances and borrowing needs in order to pass them on to authorised providers must take care. This is because they may very well end up becoming involved in the regulated activity of "mortgage arranging". If this is the case then the marketing company itself will need to be authorised unless there is a relevant exclusion, which involves disclosing its financial interest in the process.
Lifestyle questionnaires
Where a consumer's details are collected, for example through lifestyle questionnaires for marketing purposes by a third party, then before that third party can make contact by telephone, the intended recipient of the call must have expressed a request to be contacted by that named company. The relevant tick box should be close, the DMA advises, to where the lifestyle questionnaire is signed by the consumer and have reasonable prominence.
Disclosure of caller identity
Assuming that all the above rules have been complied with, on making the call, the Distance Marketing of Consumer Financial Services Directive ("DMD") suggests that the caller must reveal at the beginning of the call who they are. The question here is whether, if an outsourced contact centre ("Centre") is used by the mortgage provider ("Supplier") for the purposes of making these calls, is it the name of the Centre that should be given or the name of the Supplier?
Under the DMD and the FSA and HM Treasury Rules implementing it, it appears that it is the name of the Centre that must be given, not that of the Supplier.
The DMA on the other hand has been lobbying hard for an amendment of that rule so that only the Supplier has to be named. The argument is that otherwise confusion could arise with the consumer seeking to know the nature of the Centre's role etc.
The FSA has now decided to consult on some changes to the rules that would mean that outsourced firms would not have to disclose their own identity. In the interim the FSA has said it will modify the relevant MCOB and ICOB rules to make it clear that where any outsourced firm is carrying out regulated activities on behalf of another authorised firm, any rule that requires a firm to disclose his identity to a customer must be read as applying to the firm for which it is doing the job.
Why this matters:
The DMA note covers a number of areas of concern to those marketing financial services to consumers. It must be remembered, however, that if there is any face to face contact between mortgage provider and consumer at any time up to the point of conclusion of the contract, none of these distance marketing rules apply.
