The Financial Conduct Authority (FCA) has acknowledged that the current Privacy and Electronic Communications Regulations (PECR) may hinder firms from proactively offering targeted support to consumers. PECR governs how organisations can communicate electronically with individuals, particularly concerning direct marketing activities.
The FCA believes there is a case for exempting firms with specific FCA-regulated permissions from certain aspects of PECR. This exemption would enable these firms to provide timely and relevant assistance to consumers without breaching communication regulations.
In November 2024, the FCA, in collaboration with The Pensions Regulator and the Information Commissioner’s Office, issued a joint statement to assist firms in understanding how they can communicate effectively with their customers while adhering to data protection and privacy laws. This guidance aims to clarify the boundaries between providing helpful information and breaching regulations, ensuring that consumers receive the support they need without compromising their privacy rights.
The FCA is also reviewing the advice-guidance boundary to improve access to financial support for consumers. This review includes considerations on how regulations like PECR impact firms’ ability to offer guidance and support to their clients. The goal is to strike a balance between protecting consumer privacy and enabling firms to assist consumers in making informed financial decisions.
These initiatives reflect the FCA’s commitment to adapting regulatory frameworks to better serve consumers’ interests while maintaining robust protections for personal data.
The Privacy and Electronic Communications Regulations (PECR) impose strict controls on how businesses can communicate electronically with individuals, particularly in relation to direct marketing. These regulations are designed to protect consumers from unwanted or intrusive communications, such as unsolicited phone calls, emails, and text messages. However, they also restrict how firms, including those regulated by the Financial Conduct Authority (FCA), can proactively reach out to customers—even when the intention is to provide support rather than marketing.
How PECR Limits FCA-Regulated Firms
- Consent Requirements
- Under PECR, firms must generally obtain prior consent before sending direct marketing messages to individuals via email, SMS, or automated calls.
- This means that even if a firm identifies a customer who may be struggling financially or at risk of making poor financial decisions, they cannot legally contact them with targeted support unless the customer has explicitly opted in.
- Distinguishing Support from Marketing
- PECR defines marketing broadly, which can include communications that a firm considers to be “supportive” or “educational” but might still be interpreted as promotional under the law.
- For example, a firm that wants to proactively offer debt advice or alternative repayment options may be restricted from doing so if it could be seen as marketing a financial product or service.
- Impact on Vulnerable Customers
- Firms may have data or insights indicating that a customer is at risk of financial harm (e.g., missing payments, over-borrowing, or struggling with investments). However, PECR prevents them from reaching out directly unless certain conditions are met, such as prior consent or an exemption.
- This can result in a missed opportunity to intervene early and provide assistance.
Example Scenario: Mortgage Lender & Financial Difficulty
Imagine a mortgage lender regulated by the FCA that notices a pattern of missed payments from one of its customers. The firm wants to proactively contact the customer to:
- Offer tailored repayment solutions (e.g., extending the loan term or adjusting payments).
- Provide guidance on free financial advice services that could help them manage their situation.
- Warn them of potential negative credit impacts and offer preventive measures.
However, under PECR, if the lender has not obtained prior consent for direct electronic communications, they may not be allowed to email or text the customer about these options—even though the communication is meant to help rather than sell a product.
Instead, the firm might have to:
- Wait for the customer to reach out first (reactive rather than proactive approach).
- Send generic communications (e.g., letters) that may not be timely or personalised.
- Direct customers to a website or app where they must self-discover their options.
Why the FCA Is Considering Exemptions
The FCA recognises that these restrictions could prevent firms from providing timely, targeted support, particularly for vulnerable consumers. By exempting firms with certain FCA-regulated permissions from PECR’s restrictions, they would be able to:
- Proactively contact at-risk customers when there is a clear justification.
- Provide essential financial guidance without concerns about breaching marketing rules.
- Improve consumer outcomes by addressing issues before they escalate.
This would be a significant shift in regulatory approach, balancing consumer protection against the need for timely financial interventions. However, the exemption would likely come with safeguards to prevent firms from exploiting it for commercial marketing purposes.
Academy of Life Planning 