Misleading financial promotions land firm with FCA fine

Jan 12th '20

At the end of last year, claims management firm Professional Personal Claims Limited was hit with a £70,000 fine from the Financial Conduct Authority (FCA).


What was the fine for, and are there lessons other regulated firms – not just claims management companies – can learn to avoid the same fate?


Regulator clamps down on misleading promotions

The fine was a result of the company misleading consumers through its websites and printed materials.


The decision was published by the FCA on 17 December 2019. It’s the first claims management company case closed by the regulator since it took over responsibility for CMCs on 1 April last year.


What has changed for CMCs since the FCA took over regulation?

Since 1 April last year, CMCs have had to comply with a raft of new rules under FCA regulation. We looked in a previous blog at how claims management Marketers can comply with the new rules they face.


Since assuming responsibility for CMCs, the FCA has taken a tough stance. In June last year, the Authority sent a ‘Dear CEO’ letter to firms, flagging areas where it had found ethical practices falling short.


On 23 August, it told companies they must raise standards on their advertising.


What was this fine for – and how can you avoid a similar one?

Essentially, PPC gave the wrong impression to consumers by using banks’ logos on its website. This had the potential to mislead readers into thinking that they were submitting claims direct to their banks, rather than to a claims management company.


There were also issues around the way that PPC presented complaints to banks on behalf of different consumers. The questionnaires in part contained identical factual allegations where evidence specific to each client should have been presented.


Speaking about the fine, Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said that: ‘PPC’s misleading website and marketing material suggested PPC was associated with the five banks when this was not the case. Claims management firms must ensure their advertising is accurate. Not only in terms of what they say about themselves and their services but also in terms of what is represented.


How can you ensure your promotions don’t fail the ‘misleading’ test?

The FCA isn’t shy when it comes to tackling unfair and misleading promotions.


It has clear rules about financial promotions compliance – many of which are focused around fairness and clarity, two things that PPC’s website and marketing materials fell down on.


The regulator is particularly keen to ensure that customers are treated fairly. Any marketing, advertising or sales material has to be clear, fair and not misleading.


If your firm wants to avoid catching the FCA’s eye for all the wrong reasons, you need to make sure you comply with its requirements.


This means ensuring that:


  • Your firm’s advice and financial promotions are suitable for your audience.
  • Your financial promotions – whether they’re adverts, brochures, webpages, emails or other digital marketing – comply with the regulator’s financial promotions rules.
  • Any promotions or client communications feature the correct disclaimers, displayed with the required prominence.
  • Pricing is fair and clear.
  • Data included in any promotion, including on performance and fees, is completely accurate.
  • Your adverts meet the requirements, not just of the FCA, but of the ASA and CAP, who regulate all advertising in the UK. Read our blog on how to avoid producing misleading adverts for more on this.
  • Financial promotions copy meets FCA requirements around clarity and substantiating claims.
  • Your Compliance team reviews and provides the requisite sign off for client communications and financial promotions. An element of automation can help here.


Get to grips with the realities of FCA regulation

FCA regulation is new for CMCs, and firms need to get up to speed quickly with the regulator’s requirements and expectations.


How can we help!

LS Consultancy has wealth of experience in reviewing financial promotions and can do so on a one-off or on an on-going basis.


We are also skilled in reviewing and assessing your financial promotion procedures and can assist you to establish the necessary framework to help future compliance with regulatory requirements.


Remember: Not everything is black and white when it comes to Financial Promotions, and many of the rules are open to interpretation. If you are unsure how your activities fit within the rules, please contact us.


Explore our full range today.


Contact us