This page analyses the latest data, from January 2021 to 31 December 2021, resulting from action taken against authorised firms breaching financial promotion rules and referrals and investigations into unregulated activity.
In line with the Financial Conduct Authority (FCA) Consumer Investments Strategy, publishing this data allows the regulator to be transparent about the outcomes they’re seeking to achieve with financial promotions interventions and the results of FCA work. The strategy sets out the steps that they are taking to be more innovative, assertive and adaptive in tackling harm. This includes strengthening the financial promotions regime. However, it should be noted that this data relates to financial promotions across all sectors, not just consumer investments.
The data also means the FCA can monitor developments in the market, to get insights into particular sectors they have concerns about and act to prevent consumers from harm.
What’s included in the data
- key messages for regulated and unregulated financial promotion activity
- number of financial promotions reviewed during this period
- number of cases with promotions amended and withdrawn including split across sectors, this relates to closed cases and excludes cases which are still ongoing
- number of unauthorised reports received and alerts issued
- how the regulator acts
- In relation to authorised firms, last year saw an increase in approx. 300 amends/withdrawals of promotions, compared to around the same number of cases as 2020:
- retail investments and retail lending are the sectors with the highest amend/withdraw outcomes, amounting to 77% of our interventions with authorised firms
- some of the most common breaches were in the Retail Lending sector, in particular Claims Management Companies’ and Retail Finance promotions
- retail investments’ use of social media influencers on various platforms to market investments is becoming a concern for us. Firms should ensure they have taken appropriate legal advice to understand their responsibilities prior to using influencers.
- In relation to illegal financial promotions by unauthorised persons, last year saw an overall increase of 10% of total reports received compared with 2020:
- FCA issued 1410 alerts about unauthorised firms and individuals in 2021, an increase of 18% from 2020, with 30% of these related to clone scams
- FCA has seen a significant reduction in non-compliant paid for advertisements by unauthorised entities on Google since engagement and the implementation of their new financial services ad policy
Number of promotions reviewed in 2021. 1,686 financial promotions from multiple sources were reviewed.
- 46% from consumers
- 25% from different areas of the FCA
- 16% from UK Regulators
- 6% from firms
- 5% from our monitoring
Table 1: Number of cases with promotions amended and withdrawn including split across sectors
Figure 1 shows how the cases in 2021 which resulted in firms withdrawing or amending a promotion are spread across different sectors.
Figures rounded to the nearest percentage.
In 2021, 34,244 reports were received about potential unauthorised business.
The number of alerts issued about unauthorised firms and individuals totalled 1,410, an increase of 18% from 2020. Just under 30% of these alerts related to clone scams. Many of these involved breaches of the financial promotion restriction online. In exceptional cases, the FCA request that any linked websites and/or social media accounts identified as carrying illegal content are taken down.
Whilst they have seen a significant reduction in non-compliant paid for advertisements by unauthorised entities on Google since engagement and the implementation of their new financial services ad policy, the FCA is continuing engagement with other social media platforms and continuing to monitor the online market carefully and update FCA Warning List as appropriate.
How the regulator acts
For authorised firms, the FCA use a range of tools available, including agreeing to voluntary or imposing own initiative requirements, requiring the firm which has communicated or approved the advert to withdraw it or change it so that it complies with requirements. In the most serious circumstances, they will use powers under s137S FSMA to ban a promotion or advert. Where the FCA see repeated non-compliance with the rules, they expect these firms to conduct more detailed reviews and provide reports on these findings, particularly on their systems and controls in relation to their financial promotions. They may also ask firms to consider whether any customers may have acted on the non-compliant promotions and to take appropriate action to remedy any harm which consumers may have suffered as a result.
For firms acting outside of regulation, the FCA has a range of tools to take proportionate enforcement action including; inquiries, including challenging firms and individuals’ activities via technical correspondence or publishing consumer alerts, and escalating the most egregious matters to the Unauthorised Business Department’s investigation teams for investigation using powers under FSMA, with a view to commencing civil, criminal and/or insolvency proceedings.
How to report a misleading financial advert or potential scam
- Report a financial advert or promotion that you think is misleading, unfair or unclear.
- Report a scam, authorised firm or individual to the FCA.
FCA casework with will usually involve confidential information for the purposes of section 348 of the Financial Services and Markets Act 2000. They are therefore unlikely to be able to provide further information about particular cases. Find out more about the information they can share.
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