Consumers are being inundated with fewer misleading financial product advertisements after figures from the UK’s Financial Conduct Authority showed a sustained drop in the number of times it has had to intervene.
Under the Financial Services and Markets Act 2000, the FCA has the power to ban financial promotions or adverts that it deems to be “unclear, unfair, or misleading”.
A freedom of information request by global financial services regulatory consultant Bovill revealed that there was a 10% drop in requests for firms to change or withdraw adverts promoting financial products in 2018, down from 251 the previous year.
Over the past five years, however, that number has dramatically improved with the number of interventions down by 31% from 328 requests in the 12 months to June 2014.
Positiveness
Mark Spiers, partner at Bovill, said: “It is a positive sign that there has been a long-term fall in the number of FCA interventions with firms regarding financial promotions.
“However, while firms may be getting better at ensuring their adverts are clear, fair and accurate to begin with and not infringing the regulations, there are still on average about four a week.
“For many consumers, promotions and adverts are crucial in helping them come to a decision over whether a financial product is one they are happy to choose.”
Powers
In its response to the freedom of information request, the FCA said its powers “do appear to be an effective deterrent, in that many firms usually address our concerns before we need to use them”.
Spiers added: “Regulations play an important role, not only in protecting consumers and their ability to make informed decisions, but in ensuring companies aren’t at risk of reputational damage from being seen to have misled them.
“The best protection for a company – either before issuing a promotion, or after receiving an FCA request to amend one – is to take regulatory guidance, to avoid falling foul of the watchdog.”
