Received an ASA notice yesterday? What to do now.
Written by Tiana Whitehouse, Founder & Managing Director of SWOT Team Consulting.
Yesterday, the UK’s independent advertising regulator (the Advertising Standards Authority or ASA) issued an Enforcement Notice to over 50 companies whose promotional materials include cryptocurrencies and are targeted at UK consumers or targeted globally on behalf of UK-based advertisers.
The notice includes reference to existing advertising rules and new guidance drafted by the Committee of Advertising Practice (CAP) and requires recipient companies to immediately review their advertisements and confirm they comply with consumer protection rules. Crypto firms that received the notice only have until the 2nd of May to complete this compliance review.
The ASA notes that it will actively monitor firms for compliance and continue to use enforcement procedures such as sanctions and outright bans on advertisements if measurable improvements are not seen. The agency will also work closely with the Financial Conduct Authority (FCA) to identify and address non-compliance and will continue to act as the enforcement arm until the remit of the FCA is formally expanded to include oversight of crypto promotions.¹
What to do if your firm received the ASA’s Enforcement Notice
We recommend that crypto compliance officers take the following steps as soon as possible:
> Create an Advertising Compliance Review Project Plan and obtain formal sign-off from the Board or other responsible oversight body.
> Ensure that your compliance team has the resources and expertise to complete the review. If necessary, you may need to engage outside expertise.
> Immediately contact your external marketing providers to discuss next steps.
> Draft a written report to the Board detailing the findings of the Advertising Compliance Review and any required remediations.
> Provide tailored crypto promotions compliance training to senior leaders and other key personnel involved in marketing and compliance oversight of marketing activities.
> Implement your Remediation Plan (if necessary) and ensure that progress is detailed in management reporting to the Board.
> Proactively engage with the regulators to keep them informed of your progress and receive feedback.
What is likely to be in an Advertising Compliance Remediation Plan?
In our experience, the most common areas to be addressed by an Advertising Compliance Remediation Plan are:
Updating the company’s Advertising and Disclosure Policy and related procedures. If your existing policy does not have corresponding risk and compliance controls, it is not fit-for-purpose. Controls should include a requirement for legal and compliance reviews of proposed marketing campaign strategies and materials, as well as formal review and sign-off by the Board or delegated authority.
Banning the use of certain advertising methods or channels, such as directly engaging social media ‘Finfluencers’ to promote crypto products.
Including compliance KPIs in role descriptions and performance plans for members of the in-house marketing team.
Conducting a formal compliance review of any outsourced providers who are responsible for marketing activities. The results and recommendations should be put into a written report and provided to the Board. In some cases, this may require increased monitoring or even termination of an existing contractual relationship due to non-compliance.
Updating recordkeeping policies and data retention procedures to ensure that all crypto promotional activities are recorded and retained. This is particularly important for any ‘non-static’ advertising methodologies such as live events, as well as promotional activities conducted on third-party platforms.
Delivering targeted training and development to ensure that in-house marketing and compliance teams are aware of the regulatory requirements and how to comply with them.
Immediate removal of any non-compliant crypto advertising content and public acknowledgment that previously published advertisements did not comply with applicable rules.
Lessons for all crypto firms
Even if you are not one of the ‘unlucky 50’, it is only a matter of time before your firm will face similar crypto advertising rules in your jurisdiction. We encourage senior leaders and compliance officers to actively prepare for more stringent requirements in this area and consider how any regulatory changes will impact the company’s business plan and marketing strategy.
Finally, it is important to note that many agencies billing themselves as ‘crypto marketing specialists’ are unfamiliar with consumer protection principles for financial products or how to comply with financial promotions regimes. Crypto firms should ensure that they carefully consider a potential marketing agency’s familiarity with regulatory requirements as part of their outsourced provider due diligence.
If you are a crypto firm or crypto marketing agency in need of immediate assistance with an advertising compliance review, contact our team here.
¹ The expansion of the FCA’s remit to include crypto promotions within its regulation of other financial advertising was announced by HM Treasury on 18 January 2022. Following this change, the FCA will oversee the financial disclosure requirements for cryptocurrencies and utility tokens while the ASA will continue to be responsible for general compliance with advertising rules.