The Financial Conduct Authority (FCA) is set to roll out screening checks for firms which approve financial adverts.
The new rules will apply from 7 February 2024.
It said that the reason for the checks is “to help people make informed decisions to save, invest and borrow with confidence”.
The regulator reported that firms approving financial marketing for unregulated firms will have to demonstrate that they have the necessary skills and expertise to approve adverts.
They “must understand the product, to ensure the promotion is accurate and that it fairly balances risk and reward,” the FCA added.
Previously, any firm authorised by the FCA could approve promotions on behalf of firms unregulated by the FCA.
The regulator said that this has caused harm, with firms approving adverts for products that they don’t understand, as well as adverts that are unclear, unfair or misleading.
Firms will need to apply to the FCA between 6 November this year and 6 February 2024 to continue approving adverts ahead of the new rules coming into force. Firms who have submitted an application can continue to approve adverts after this ‘window’ until they receive a decision on their application.
The watchdog also said that firms approving financial promotions will be required to report regularly on what they sign off and on any “concerning” adverts that they cancel approval for. The FCA added that this would help it move faster to “crack down on rogue adverts”.
Sarah Pritchard, executive director of markets for the FCA, said: “By introducing these new checks, we will ensure that people approving adverts have the right skills and the understanding that they need to do so.
“Firms need to make sure that people are equipped with the right information at the right time, so that they can make properly informed decisions. As we face the rising cost of living, consumers are having to make difficult decisions about their finances and how they pay for things, so this is more important than ever.”