The Financial Conduct Authority (FCA) has proposed new measures to clamp down on illegal, unfair or misleading financial marketing.
The FCA has outlined new checks for those firms which want to approve financial promotions. The new measures will require firms to demonstrate they have the right expertise for the promotions they wish to approve.
Under current legislation, any FCA authorised firm is allowed to approve financial promotions on behalf of other firms who are not authorised by the regulator. Changes being introduced by Parliament will require authorised firms to undergo new screening checks before they are allowed to approve financial promotions, giving the FCA greater oversight to stop harm before it occurs.
Firms will also be required to regularly report back to the FCA on financial promotions they have approved, helping the FCA crack down on rogue adverts.
The proposed reforms will ensure the FCA can act quickly to put a stop to harmful financial promotions communicated by unauthorised firms, including in areas such as high-risk investments and Buy Now Pay Later.
Sarah Pritchard, Executive Director, Markets said: ‘Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision. It is, therefore, essential that they are equipped with the right information at the right time so that they can make good financial decisions. This is especially important as we face the rising cost of living. … ‘These proposals will ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off.’
The publication today builds on the FCA’s recent work on strengthening rules around advertising for high-risk investments and being more assertive in removing misleading adverts, with the FCA removing or amending over 5,000 financial promotions from authorised firms between January and October this year, compared to 564 in 2021.
The FCA is committed to setting and testing higher standards across financial services to give consumers the confidence to make good financial decisions based on accurate and relevant information.
Addressing concerns over the ease and speed with which people can make high-risk investments is a key element of the FCA’s Consumer Investment Strategy, which aims to give consumers the confidence to invest and reduce the number of people who are investing in high-risk products that are not aligned to their needs
- CP22/27: Introducing a gateway for firms who approve financial promotions.
- These changes are subject to legislation. The Financial Services and Markets Bill proposes to amend the Financial Services and Markets Act 2000 (FSMA) to create a new regulatory gateway for authorised firms approving financial promotions.
- The consultation is open until 7 February 2023.
- FCA clamps down on marketing of high-risk investments to consumers.
- FCA ramps up intervention on rogue financial promotions.
- The Treasury’s consultation response on a Regulatory Framework for Approval of Financial Promotions.
Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.
Download: Financial Promotion Guide
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