If a financial promotion or advert is misleading, the UK financial regulator has the legal power under s137S of the Financial Services and Markets Act 2000 (FSMA) to:

  • get it withdrawn, or
  • prevent it from being used in the first place

In deciding whether to act, the Financial Conduct Authority (FCA) consider how a financial promotion or advert could lead to people suffering harm − either:

  • directly (e.g. taking out a loan for which the real interest you pay is higher than what is advertised), or
  • indirectly (e.g. you take out home insurance that was advertised as providing cover against theft, you then get burgled and end up spending money because theft was not actually covered)

How are decisions made on whether a promotion should be banned?

In considering whether to use s137S FSMA powers, the FCA will:

  • assess the extent to which the financial promotion is unclear, unfair and/or misleading
  • assess which types of consumers the financial promotion is targeted towards
  • usually inform the firm of any concerns and give them an opportunity to respond to those concerns (it may on occasion be necessary to use powers without informing the firm of the regulators concerns beforehand)

If the regulator is not satisfied with the response from the firm, they will consider whether it would be appropriate to ban the advert.

When they do decide to use these powers they will issue a notice of direction to the relevant firm explaining what action it must take (which will normally be to withdraw the advert from circulation with immediate effect).

If a firm doesn’t agree with the decision, it can make representations to the FCA and ultimately refer our decision to the Upper Tribunal.

Publishing decisions

It is important to note that the FCA has the power to publish such information about a direction as they consider appropriate. This may mean that they publish the action under s137S on FCA website with:

  • a copy of the promotion or advert
  • the reasons behind the decision

The FCA may also put out a press release.

They may not publish information about the direction if the regulator thinks this would be:

  • unfair to the firm in question, or
  • may harm the interests of consumers

On request, they will review published information and decide if it should be taken down.

The FCA do not approve advertising and it is up to firms to ensure that financial promotions are compliant.

Read: Financial Promotion – topics

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