E, it’s not easy

E-commerce is a moving target and both domestic and international legislators and regulators are continually retraining their sights. It is essential therefore for compliance professionals to keep up to date with their thinking and the emergent laws and regulations in this area. This was the message at the recent SMi conference, “E compliance for financial services”. In a keynote address Jonathan Goodliffe, a legal adviser in the General Counsel of the Financial Services Authority, reviewed the Authority’s approach. He began by noting the advantages to business and the consumer of greater competition and choice, lower barriers to entry and a broader international market. Similarly, there are benefits for regulators, he said: it is easy to monitor the “front end” of dotcom businesses using browser software. US regulators are especially practised in this work and the FSA is starting to follow their lead, for example, by devoting whole man-days to browsing and review of financial service provider websites. He said that it was the FSA’s impression, gained from it inspection of insurance websites, that users are often unable to obtain the answers that they need without resorting to telephoning the provider directly. Since they may be disinclined to call about what, after all, purports to be an online service, there is a risk that many choices will be based on insufficient information, with the potential for subsequent litigation by consumers who feel that they have made a poor deal. Mr Goodliffe said that the FSA focuses closely on website design and structure when considering authorisation applications relating to the online provision of financial services. He added that while this assessment approach may not be covered fully in the current draft of the Handbook, this is likely to change. One of the most frequent mistakes that the FSA encounters on financial websites is a failure to distinguish between information and advice, the tendency to present information in such a way that the user is steered towards a course of action without specific advice to choose the option.