Between July and September of 2022, the Financial Conduct Authority (FCA), intervened to amend or withdraw 4,151 financial promotions, the highest amount since it began publishing data. According to the FCA, retail lending, investments and banking are the sectors which have the highest rate of amends or withdrawal of adverts and amount to around 95% of all interventions concerning financial promotions.
The FCA highlighted that many of the cases involved unauthorised firms, and individuals seeking to take advantage of the cost-of-living crisis. The most recent data also details various action taken by the regulator to curb misleading and unfair behaviors by firms, along with tackling scammers. For example, as a result of FCA intervention, 66 Buy-Now-Pay-Later (BNPL) promotions from a single firm were removed or amended due to the promotions not giving fair, or prominent risk warning and being misleading about fees.
Mark Steward, Executive Director of Enforcement and Oversight at the FCA commented:
“As consumers feel the financial squeeze, they could be tempted by high risk, unregulated products and services or they could become a target for scammers preying on moments of vulnerability”
The FCA have released a consultation paper (CP22/27) proposing new measures to clamp down on illegal, unfair and misleading promotions within financial marketing. The consultation launched on 6th December and will run until 7th February 2023. It will affect authorised persons who approve, or intend to approve, financial promotions for unauthorised persons. The FCA does not expect the proposals in the consultation to be relevant to authorised persons approving financial promotions for their appointed representatives (ARs).
Under current legislation, any FCA authorised firm is allowed to approve financial promotions on behalf of firms who are not authorised. However, changes being introduced by Parliament will require authorised firms to undergo new screening checks before being allowed to approve financial promotions, allowing the FCA greater oversight to prevent harm from occurring.
Firms will further be required to regularly report to the regulator on financial promotions they have approved.
Sarah Pritchard, Executive Director at the FCA commented:
“Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision. It is therefore essential that they are equipped with the right information, at the right time, so that they can make good financial decisions. This is especially important as we face the rising cost of living”
The consultation will look at how the regulator should assess applicants at the gateway, its basis for granting or refusing approval of applicants, and assess bi-annual reporting requirements for firms that are given permissions to approve financial promotions. It will further consult on the requirements for firms that are granted permission to approve financial promotions to notify the regulator when they approve, amend, or withdraw approval of a financial promotions within seven days of doing so.