Savings products in France: what are the requirements for digital marketing?

France's financial and banking authorities' joint division in April published the results of a joint study, "Digital subscription paths for financial savings products", which looked at the purchase of savings and financial products through digital channels. The joint division of the Autorité de contrôle prudentiel et de résolution (ACPR) and the Autorité des marchés financiers (AMF) aims to verify the presence of informed consent at each stage of the digital pathway in order to enhance consumer protection amid the discussions on the recasting of the EU directive concerning the distance marketing of consumer financial services.

As the digitalisation of the marketing of financial savings products increases, the study continued the ACPR-AMF joint division's work on distance selling in 2017. The study was conducted in two phases: a consultation with financial institutions – including five network and five online banks, as well as seven fintechs – consumer associations and ombudsmen, and a practical evaluation phase during which consumer tests were carried out. 

Information adequacy

The main objective was to assess, from the consumer's point of view, whether the information provided by the institutions was adequate to inform his or her investment decision and whether it concerned financial instruments and services or life insurance. 

Institutions are required to comply with the provisions set by the Markets in Financial Instruments Directive and the Insurance Distribution Directive supplemented by provisions introduced by France's PACTE (action plan for business growth and transformation) law. 

Recommendations have been put forward to enable professionals to promote informed customer consent, and the division has identified areas for operational improvement for online subscription processes. 

The study showed that there are overall problems of understanding, accessibility and transparency with the information provided to clients. The recommendations concern various stages of the subscription process from professional communications through to the precontractual information, the client questionnaire (knowledge and investment objectives) and customer support throughout the subscription process.

Rebalancing content? 

The division highlighted that there was an imbalance in the advertisements it studied between the presentation of the advantages and the risks inherent in the subscription of a product or service. A large amount of space in these advertisements was found to be devoted to the presentation of the benefits rather than the risks that were difficult to access, unclear, in small print or included via hyperlinks. The study also highlighted unclear practices regarding pricing offers, particularly in the case of welcome offers.  

In view of this, the division recommended:

• to highlight any relevant risks, in a font size at least equal to that of the benefits; and
• to visibly and clearly indicate the effect of commissions, fees and other charges on the past performance of a product or fund. 

Pre-contractual information

The division also identified a need to improve the clarity and accessibility of pre-contractual information for savers. It noted that pre-contractual information provided was often difficult for customers to access, because of its fragmentation (on different media or links) and its quality and technical nature (it was sometimes dense, technical and outlined consequences that were difficult for a non-expert to understand). The study also highlighted risks or findings that are specific to certain types of products or services, such as investment services and life insurance advice.

Furthermore, it highlighted that the information provided on investment advice and reception and transmission of orders (RTO) services and their consequences was not always clear. Similarly, it observed a lack of understanding of the levels of advice for life insurance and advice being considered by policyholders as "too technical". 

In addition, the division paid attention to information on customer rights (including complaints, mediation and withdrawal). It also appeared that the required information on the fees and costs of life insurance products was not included in the analysed customer paths. 

The division recommended that attention is paid to the formatting of the pre-contractual information, in order to encourage the internet user to take note of the information, and to the highlighting of information about the risks and guarantees of the products and services. It recommended providing the policyholder with the essential information and the pre-contractual documents in which the information is referenced. 

More specifically, it recommended, with regard to the information provided on the investment service, that the concepts of RTO and investment advice are explained in advance to subscribers. In terms of the level of advice provided, it recommended using clear, non-deceptive vocabulary about the possibility of accessing a service, or explaining the overall levels of advice in clear, non-technical language. 

Questionnaires and warning messages

The study highlighted a lack of clarity in the customer questionnaire, in terms of its purpose, the questions asked, and the generation of alerts during data inputting. For example, it noted the inadequacy of some questionnaires on the composition of the policyholder's assets, their financial knowledge and their tolerance of risk or loss.

The division recommended that the stages of the questionnaire are indicated, the investor is clearly informed of the importance of providing sincere and complete information and the information is updated if necessary. 

The questionnaire should also be able to collect the customer's requirements and needs in a complete and consistent way (for example, to identify incompatible products or services). It should also be sufficiently comprehensive to capture the customer's knowledge and experience.

The same applies to warning messages. Whether in the area of distribution of financial instruments and services or in the area of life insurance, the division noted the heterogeneous and complex content of warnings, as well as a wide variation in the quality and form of these messages.
 
It recommended improving the content of messages and systematically deploying sufficiently clear and visible warning messages in the event of inconsistencies in the collection of customer information. 

Better support for digital subscription 

The division identified areas of improvement of the support of policyholders during the various stages of their digital journey, including the availability and adaptation of communication resources and in training actions on financial savings. This support is implemented using various tools, such as telephone advisors, online chat and frequently asked questions.

The joint ACPR-AMF division insisted on the need to : 

• Offer additional support and/or via another communication channel at any time during the process (particularly in the event of unavailability of telephone advisors or difficulties in accessing the platform);
• Ensure that telephone advisor are properly trained to answer questions from internet users;
• Check the availability of the means of communication set up (such as chat, hotlines etc.); and 
• To set up an online help system for key information documents.

Main recommendations 

The recommendations concern four stages of the underwriting process: advertising, pre-contractual information, the customer questionnaire and support during the underwriting process.

• Advertising. Check the presentation of the risks of the products and services and the proposed pricing conditions.
• Pre-contractual information. Indicate the essential information, improve the presentation (including consumer rights), and make the information provided more accessible to the general public. Offer specific recommendations for marketed products or services.
• Client questionnaire. Present the questionnaire in a comprehensive way; expand the collection of information on the subscriber's objectives, asset situation and financial knowledge; and improve the content and presentation of alert messages.
• Support during registration. Ensure availability of support solutions (such as chat and advisors), ensure appropriate training of teleconsultants, check availability of telecommunication facilities, and provide assistance with Key Information Documents.

Osborne Clarke comment

It is recommended that entities offering digital underwriting of financial and insurance products review their marketing procedures and customer paths in the light of the recommendations made by the joint division's study.