Who said financial institutions don’t need marketing? A decent promotional strategy with digital marketing and triggered direct mail can help banks continuously engage new customers and keep existing ones. It’s essential for growth and successful market expansion.
Yet before strategizing tailored campaigns, you should note one thing. The financial industry is regulated with dozens of state and federal laws. They determine the rules of bank marketing and advertising regulatory compliance. Most crucially, these regulations entail severe penalties in case someone fails to meet them.
If you don’t have a compliance team to validate your advertising compliance, make sure to do it yourself. By covering the main financial advertising regulations, you will market safely and enhance your customer service.
To find out more about bank marketing and advertising regulatory compliance and get expert tips on how to achieve it, read our article on:
- Key financial advertising regulations that may impact your marketing choices
- 5 tips on how to ensure bank marketing and advertising regulatory compliance
- Direct mail automation in bank marketing: How it works and why automated mail is good for compliance
Key Financial Advertising Regulations that Decide Your Marketing Choices
When it comes to financial services marketing, you need to act proactively. Once you know the limits and requirements for bank marketing and advertising regulatory compliance, it should be easier to design a promotional strategy that encourages customers to convert without violating their rights. To give you some guidelines, here’s a brief overview of the fundamental financial marketing regulations you should consider:
Federal Trade Commission Act
In 1914, this act established the Federal Trade Commission that became the main body to regulate unfair deceptive or abusive acts or practices (UDAAP) in the US. Later, it was expanded with additional financial advertising regulations and legislative norms for other businesses. Financial institutions should pay particular attention to Section 5 of the FTC Act which determines what practices are forbidden in the banking industry. Generally, according to the FTC Act:
- Advertising and marketing must be truthful and non-deceptive
- Advertisers must be able to back up their claims with evidence
- Advertising mustn’t mislead consumers or be irrelevant
- Advertisers mustn’t take advantage of consumer’s lack of understanding of the subject matter or inability to protect their interests
Truth in Savings Act (TISA) implemented under Regulation DD
This federal law was passed as a part of the Federal Deposit Insurance Corporation Improvement Act in 1991 and implemented by Regulation DD. Its key purpose is to ensure consumers receive reliable information on deposit products, interests, and fees. Banks should allow customers to make an informed choice by staying transparent in their marketing communications. For instance, if a financial institution promotes a 5% cashback in its social media post, it must link to detailed, accurate, and readable terms of service.
Equal Credit Opportunity Act (ECOA) and Fair Housing Act (FHA)
The two acts are quite similar since both fall under the category of financial advertising regulations and protect consumers against discriminatory practices. The FHA and the ECOA prohibit discrimination in real-estate and credit transactions based on race or color, national origin, religion, sex, marital status, and age. That’s why to ensure bank marketing and advertising regulatory compliance, financial services should select the message that suits a broad target audience.
Telephone Consumer Protection Act and Junk Fax Prevention Act
These financial advertising regulations relate to banks, credit unions, and other financial institutions that use telemarketing, including fax and phone. Whereas fax as a marketing channel has sunk into oblivion, phone calls remain a popular way to promote banking services. To stay compliant, make sure to contact only the customers with whom you have established business relationships, call between 8 a.m. and 9 p.m., keep internal do-not-call lists, and follow the National Do Not Call Registry.
Apart from the mentioned financial advertising regulations, there is also GDPR that regulates data processing and marketing practices of any organization that handles data of the EU citizens. You could be also subject to other compliance requirements depending on the type of financial services provided.