Pitts: first exemption certificate
Financial magazines could face large fines and their editors and publishers risk going to prison if they continue to ignore guidelines laid down by the Financial Services Authority, it emerged this week.
The warning came as Money Observer magazine was granted the first certificate of exemption from the FSA’s powers under the Financial Services and Markets Act 2000.
Editor Andrew Pitts urged editors to do the same and clarify their position to avoid criminal proceedings.
He said every title aimed at investors could be at risk if a reader complained to the FSA because they felt they had been given misleading advice on investment.
"Publishers of financial magazines should assess whether the act is applicable to them. If it is, and the publisher has not applied to be either FSA authorised or certified as exempt, non-compliance with the act is a criminal offence punishable by an unlimited fine or a prison sentence of up to two years," he said.
"We are urging editors and publishers to ensure they are aware of the implications of publishing a title that could need to be authorised."
Pitts said he had been warned of the consequences by a senior figure from the authority. He suggested a number of publishers were not taking articles 53 and 54 of the act seriously, while others did not believe the FSA would go as far as to take action.
The two articles deal with how publications, broadcasters and news services can be excluded from regulations on giving investment advice.
The FSA took on its new powers under the act on 1 December.
"Obviously, the FSA has a lot to do since it took on new powers, and periodicals may not be top of its list of priorities, but at some time they will get round to them," he said.
Shares editor Ross Greenwood said most editors believed their magazines fell under the same exemption rules as newspapers. He said he had no intention of applying for exemption for Shares but said he would fall in step if the rest of the industry decided to act.
A spokeswoman for the Periodical Publishers Association said certification was not mandatory but admitted there was a grey area for magazines that do not fall into the Press Complaints Commission’s guidelines for financial reporting or those accepted by the FSA.
"We would certainly encourage any members who are in any doubt whether they are exempt to get this certificate," she said.
By Ruth Addicott