The Financial Conduct Authority (FCA) has released its data on financial promotion regulatory action taken throughout 2021.
Last year saw an increase in approximately 300 amendments and/or withdrawals of promotions compared to 2020, the FCA said.
Retail investments were the most targeted, amounting to 77% of all regulatory interventions against authorised firms.
One of the biggest weapons in the regulator’s arsenal seems to be consumers themselves, as they were responsible for 46% of 1,686 reviews that the FCA underwent in 2022.
A quarter came from different areas of the FCA, followed by 16% from UK regulators; 6% from firms; and 5% from the watchdog’s own monitoring.
As part of its work on financial promotion, the FCA warned financial services business who use social media influencers to advertise their services and products.
It said: “Retail investments’ use of social media influencers on various platforms to market investments is becoming a concern for us. Firms should ensure they have taken appropriate legal advice to understand their responsibilities prior to using influencers.”
Unauthorised firms
In 2021, 34,244 reports were received about potential unauthorised business.
The number of alerts issued about unauthorised firms and individuals totalled 1,410, an increase of 18% from 2020.
Just under 30% of the alerts were related to clone scams, and many of these involved breaches of financial promotion restrictions online.
In exceptional cases, the UK regulator requested that any linked websites and/or social media accounts identified as carrying illegal content were taken down.
The FCA said: “Whilst we have seen a significant reduction in non-compliant paid for advertisements by unauthorised entities on Google since our engagement and the implementation of their new financial services ad policy, we are continuing engagement with other social media platforms and continuing to monitor the online market carefully and update our warning list as appropriate.”
Tools
The UK regulator added: “For authorised firms, we use a range of tools available, including agreeing to voluntary or imposing own initiative requirements, requiring the firm which has communicated or approved the advert to withdraw it or change it so that it complies with our requirements.
“In the most serious circumstances, we will use our powers under s137S FSMA to ban a promotion or advert. Where we see repeated non-compliance with our rules, we expect these firms to conduct more detailed reviews and provide reports on these findings, particularly on their systems and controls in relation to their financial promotions.
“We may also ask firms to consider whether any customers may have acted on the non-compliant promotions and to take appropriate action to remedy any harm which consumers may have suffered as a result.
“For firms acting outside of regulation, we have a range of tools to take proportionate enforcement action including inquiries, challenging firms and individuals’ activities via technical correspondence or publishing consumer alerts, and escalating the most egregious matters to the unauthorised business department’s investigation teams for investigation using powers under FSMA, with a view to commencing civil, criminal and/or insolvency proceedings.”
