Cold Calls And Other Non-Written Promotions

Question 1

What is a cold call?

Answer 1

1. A cold call is a type of financial promotion that happens during a personal visit, phone call, or interactive conversation where:

A. The recipient did not initiate the contact – person receiving the promotion did not start the conversation.
B. The recipient did not expressly request it – the call, visit, or discussion was not made in response to a clear request from the recipient.
C. The promotional content was not expected – Even if the recipient engaged in the conversation, it was not clear from the beginning that the discussion would involve the specific type of investments being promoted.

2. It is unsolicited financial promotion made through direct interaction where the recipient did not request or expect the specific investment-related discussion.

Question 2

A firm cannot make a cold call unless one of the three conditions are met.

What are these conditions?

Answer 2

1 The recipient is an existing client –
A. The person already has a relationship with the firm
B. They expect to receive calls as part of that relationship.

2. The cold call is about a generally marketable packaged product –
   A. The product being promoted is widely available and is not:
   I. A higher volatility fund (a fund with significant price fluctuations).
   II. A life policy linked to a higher volatility fund (a life insurance policy that is connected to/ could be connected to such a fund).
3. The cold call involves regulated investment business –
   A. The call must be made by an authorised firm or an exempt person and must involve:
   I. Regulated investments that are readily realisable securities (investments that can be easily bought or sold, but not including warrants).
   II. Generally marketable, non-geared packaged products (investment products that are widely available and do not involve leverage).

Question 3

What are the conditions for when a firm communicates to clients on non-written financial promotion?

Answer 3

1. Promotion should be done at an appropriate time of day
2. The purpose of the communication, and the firm represented, should be stated at the outset.
3. Should clarify whether the client would like to continue or terminate the communication, and should terminate the communication at any time the client requests.
4. Contact point should be given, so that any further appointment can be cancelled.

Question 4

What are the conditions around distance marketing communications?

Answer 4

1. The firm must provide a consumer with the distance marketing information in good time before the consumer is bound by a distance contract or offer.
2. Information contains details about the firm, financial service, contract and redress
3. Information must be presented in a clear and comprehensible manner.