Slide 6 of 9
Internet regulation of advertising
As advertising is only effective when read by the potential customer, it is generally agreed that advertising takes place in the customer’s jurisdiction. Where that advertising relates to matters falling within the scope of regulation, such as the provision of investment advice or soliciting deposits, the normal rule is that it constitutes a criminal offence unless the advertiser is registered with the appropriate authority in that jurisdiction.
Regulators have already made some efforts to mitigate the severity of this principle:
- The US SEC’s draft policy statement of March 1998 suggests that enforcement action will not be taken unless the advertisement targets US citizens. Evidence to the contrary will be found from disclaimers coupled with reasonable efforts to prevent US citizens from contracting with the advertiser.
- By contrast, the UK FSA’s enforcement policy requires the advertiser to take reasonable steps to ensure that the customer cannot even see the advertisement, e.g. by requiring pre-registration before the website is accessible.
Ultimately, both these approaches must be rejected as unrealistic. Financial organisations marketing via the Internet will, or should, want to target customers globally. An alternative solution is required.