Financial promotions quarterly data 2022 Q1


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Published
Apr 27th '22
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This page analyses the latest data, from 1 January 2022 to 31 March 2022, from Financial Conduct Authority (FCA) action taken against authorised firms breaching financial promotion rules and referrals and investigations into unregulated activity.

 

The data gather means the FCA can monitor developments in the market, get insights into 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  • number of closed cases where promotions have been amended and withdrawn including split across sectors, and excluding cases which are still ongoing
  • number of unauthorised reports received and alerts issued
  • how the FCA act

 

Key messages

 

  • In Q1 2022, the FCA reviewed 379 promotions.
  • FCA engagement resulted in 84 amends/withdrawals.
  • Retail investments and retail lending are the sectors with the highest amend/withdraw outcomes, amounting to 72% of FCA interventions with authorised firms.
  • Some of the most common breaches involved claims management companies’, retail finance promotions and peer-to-peer lending platforms.
  • FCA identified and took action to correct several ‘clickbait’ promotions [content designed to attract attention and encourage visitors] in the general insurance & protection sector. In particular, firms using terms such as ‘benefit’ or ‘treat’ as well as mis-leading imagery to attract consumers when the firms are advertising life insurance.
  • In 2021, the FCA issued 1410 alerts about illegal financial promotions by unauthorised persons. This was an increase of 18% from 2020, with 30% of these about clone scams:
    • so far, they have issued 762 alerts about unauthorised firms and individuals in 2022, with 11% of these related to clone scams
    • the increase in alerts this year has been due to FCA increased proactive focus on sites relating to Forex, Binary Options and Contracts For Differences (CFDs)
  • With increased resources the FCA will aim to intervene swiftly and assertively against authorised firms that make non-complaint financial promotions and against unauthorised firms conducting activity that could lead to mis-selling and financial losses.
  • The FCA has engaged positively with the Government to ensure scams are covered by its proposed Online Safety Bill and, following FCA public intervention, Google has changed its policy to only permit FCA-authorised firms or promotions approved by FCA-authorised firms to advertise financial promotions with them. The FCA continue to work with online platforms to ensure that they are complying with applicable requirements and now expect commitments from Meta, Twitter, and other social media companies to be turned into clear timetables for action.

 

Authorised firms

 

Number of promotions reviewed

In Q1 2022 the FCA reviewed 379 financial promotions from multiple sources.

 

  • 36% from consumers
  • 18% from FCA monitoring
  • 17% from different areas of the FCA
  • 15% from firms 
  • 14% from UK Regulators

Table 1: Number of cases with interventions and amend/withdraw outcomes

 

 

Figure 1 shows how the cases in Q1 2022 which resulted in firms withdrawing or amending a promotion are spread across different sectors.

 

Figure 1: Financial promotions 2022 Q1 data. Source: FCA data.

 

Unauthorised firms

 

Number of reports received

The FCA has issued 762 alerts about unauthorised firms and individuals. Just over 11% of these were about clone scams. Many of these involved breaches of the financial promotion restriction online. In almost all cases the FCA asked for the websites to be taken down.

 

How the FCA act

Millions of people are facing the biggest cost of living crisis in more than a decade with bills expected to rise considerably. In line with their Business Plan and Strategy, the FCA will keep financial promotions under close review and focus on making sure authorised firms are selling products and services that are suitable for the consumers that buy them, stopping firms doing unauthorised business and warning consumers about firms that do.

 

The FCA is working towards raising industry standards through proposed new rules to increase the information consumers receive to enable them to make informed decisions. This is especially important at a time when people may consider taking on riskier investments or are increasingly being targeted by scams. Higher quality promotions will allow consumers to more easily identify suitable products that meet their investment needs and risk tolerance. FCA InvestSmart campaign will also help less experienced consumers to make well-informed decisions and avoid unaffordable risk.

 

Complimenting the InvestSmart campaign, the FCA informs and educates consumers to the risks of scams and how to avoid them, through its ScamSmart campaign. Launched nationally in 2014, the FCA target specific audiences (all investors aged 21-75), via the method of evidence based, creative communications developed with guidance from behavioural science. The FCA has used TV, print, radio and digital advertising, as well as press activity and partner communications to build awareness of the risks of investment scams, loan fee fraud and pension fraud. FCA evaluation data shows strong ScamSmart recognition and engagement levels. For example, two thirds of the Investment Scams campaign recognisers confirmed that they had taken action involving the FCA and its resources after having seen the ads. FCA website allows them to track actions, and to date, they have seen the following:

 

  • Over 2 million visitors to the ScamSmart website
  • Nearly 250,000 users that have interacted with the Warning List tool
  • Almost 35,000 users have been warned about an unauthorised firm

 

For authorised firms, the FCA use a range of tools, including obtaining their agreement to impose voluntary requirement, or using their powers to impose own initiative requirements requiring the firm which has communicated or approved the advert to withdraw it or change it so that it complies with FCA requirements. In the most serious circumstances, the FCA will use powers under s137S of FSMA to ban a promotion or advert. Where they see repeated non-compliance with the rules, they xpect these firms to conduct more detailed reviews and provide reports on these findings, particularly on their systems and controls for their financial promotions. The FCA 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 subsequently suffered.

 

The FCA conduct proactive monitoring daily to identify websites containing illegal promotions and, where they identify such promotions, they take prompt action by publishing an alert on their website, typically within 24 hours of identification and request that the offending website is taken down.  For firms and individuals identified as potentially acting outside of FCA Perimeter, they have a range of tools that they use including enquiries, challenging firms and individuals’ activities via technical correspondence, publishing consumer alerts on the FCA website, and escalating the most serious problems to the FCA Unauthorised Business Department’s investigation teams, who can use powers under Financial Services and Markets Act 2000 (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 FSMA. The FCA is therefore unlikely to be able to provide further information about particular cases. Find out more about the information they can share.

 

Source: FCA

 

Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.

 

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