People who have been scammed and mis-sold products by investment companies are bypassing the Financial Conduct Authority and calling on the UK government to intervene.
Scandals have put pressure on the FCA to step up its oversight, including London Capital & Finance (LCF) where over 11,600 investors lost around £237m ($308.1m, €277.8m) through the promotion of speculative mini-bonds.
International Adviser reported in December that the UK regulator was in talks with US tech giant Google to create a more comprehensive framework on what kind of firms and/or products should be allowed to advertise on its search engine.
But the FCA admitted that there are limitations to what it is able to do.
One of the LCF bondholders told IA: “This has now become critical with investment companies blatantly lying about [Financial Services Compensation Scheme (FSCS)] protection.
“The time has come for HM Treasury; [economic secretary to the Treasury] John Glen and [chancellor] Sajid Javid to act urgently to clear up the law on liability for publishing online ads, to stop Google from publishing scam ads from criminals.
“They are causing massive consumer harm and financial loss,” the LCF victim added.
A spokesperson for the FCA told IA the regulator is working with Google, but action has to come from the tech firm.
“We want Google to do more to ensure that unlawful financial promotions and services are not advertised on its service.
“For example, Google could use our register, which is available online, to check whether a firm is authorised by us before allowing them to advertise financial products through Google Ads.
“As well, Google could refer to our list of known unauthorised firms and scams which is publicly available, to determine what advertising to take down and refuse. We are discussing with Google what they can do.”
According to reports by UK newspaper The Times, FCA chief executive Andrew Bailey admitted in internal emails that companies using Google Ads can get around rules put in place to stop mis-selling scams.
The FCA spokesperson added: “We have banned authorised firms from approving or communicating financial promotions of ‘speculative mini-bonds’ to retail consumers, unless the customers are considered to be ‘sophisticated’ or have a high net worth.
“Our rules on the financial products caught by the ban are clear.”