EDITORIAL: Writing the rules on financial PR

The debate on how to improve the regulation of financial PR is a chestnut so ancient that it grew into a tree which was chopped down long ago and turned into handsome desks to adorn consultancy offices in the Square Mile.

The debate on how to improve the regulation of financial PR is a

chestnut so ancient that it grew into a tree which was chopped down long

ago and turned into handsome desks to adorn consultancy offices in the

Square Mile.



The new draft code of market conduct by the Financial Services Authority

has therefore been welcomed by the IPR’s City and Financial group as a

step towards better regulation of financial PR. But before we all throw

our hats in the air in jubilation, let us consider what such a code

means.



Sceptical City PR types previously scoffed at calls for greater

regulation, saying that PR firms are already bound by the rules and

sanctions of the appropriate City authority. But the Stock Exchange does

not have the power to regulate the activities of PR firms, and even the

Takeover Panel can only issue a reprimand. Even if implicated in

wrongdoing, consultancies do not face removal from a register of those

entitled to practise, and, while individuals have sometimes found

themselves enjoying an unexpected career break, the slap on the wrist to

the agency amounts to no more than mild embarrassment. The only other

option available to the pre-FSA authorities is a criminal prosecution

against the PR practitioner, which has never happened.



However the FSA code is eventually framed it seems clear that it will

introduce real financial penalties for those that break its rules -

including, for the first time, PR consultancies. The FSA will have

teeth, but PR people will have no say in how it regulates their

business.



This will be a blow to those who previously argued for self-regulation

as the way forward. But self-regulation has one obvious drawback. Unless

membership of industry bodies becomes a prerequisite of practising

financial PR, their codes of conduct and the sanctions available to them

mean very little.



In an interview with PR Week two years ago, International PR chairman

Lord Chadlington, a leading advocate for the registration of financial

PR practitioners, summed up the slim chances of the PR business

introducing such a register: ’It involves the one thing you don’t have

in public relations. It involves co-operation.’



’The things have gone well in the industry have been driven by external

events,’ he said. ’The things that have gone badly are the things that

we should have done ourselves.’



It looks like he is about to proved right. After decades in which it

could have put its own house in order, the PR industry may now find the

regulation of financial public relations taken out of its hands

altogether.



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