This page analyses the latest data, from 01 July 2022 to 30 September 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• number of closed cases where promotions have been amended and withdrawn including split across sectors, and excluding cases which are still ongoing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 2022 Q3, we reviewed 340 promotions.
• Our engagement resulted in 4,151 amends/withdrawals.
• Retail lending (with 46%), retail investments and retail banking are the sectors with the highest amend/withdraw outcomes, amounting to 95% of our interventions with authorised firms.
• Some of the most common breaches involved credit brokers, e-money providers and CFD providers.
• In 2022 Q3, we issued 303 alerts about unauthorised firms and individuals, with 20% of these related to clone scams.
• On 29 July 2022, we started regulating pre-paid funeral plans. From this date all funeral plan providers needed to follow new FCA rules, which include a ban on cold calling and commission paid to intermediaries, and high standards on governance and financial resilience. Failure to comply with our Handbook rules will result in action being taken.
• We issued a Dear CEO letter to circa 27,000 firms and a similar letter to The British Retail Consortium (BRC) to reach unregulated merchants and retailers. The letter warned firms offering BNPL products that although some agreements are unregulated the financial promotions of all BNPL products must comply with the financial promotion rules. We will be undertaking proactive monitoring during Q4 and if firms fail to comply, we may use criminal and regulatory enforcement powers.

Authorised firms

Number of promotions reviewed

In 2022 Q3 the FCA reviewed 340 financial promotions from multiple sources.

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

2022 Q3

• 27,000 firms were issued with a Dear CEO letter setting out our expectations for firms offering Buy Now Pay Later (BNPL) products.
• 1 s137S (the Banning Power) directing a firm to withdraw financial promotions
• 4 Voluntary Applications for Imposition of Requirements (VREQs) were approved, restricting the firms’ ability to communicate or approve financial promotions
• 4,151 promotions were amended or withdrawn following our intervention with 37 authorised firms (3,878 of these promotions related to follow-up work following the Credit Brokers Dear CEO letter)
• 65% of these involved website or social media promotions

Graph below shows the split across sectors.

Expectations 

The FCA expect authorised firms issuing and/or approving financial promotions to take responsibility in making sure all communications of financial promotions are clear, fair and not misleading and otherwise comply with our relevant rules.

This can also include oversight of appointed representatives, or introducer appointed representatives, and marketing across all media platforms such as websites, paid for Google ads and social media sites.

The FCA will continue to intervene swiftly and assertively against authorised firms that make non-compliant financial promotions.

Example interventions 

To show how the FCA bring these principles to life,  set out how they intervened in 4 cases.

#1 Misleading and unclear promotions by debt advice firm

• Issue

The FCA identified a debt advice firm that was breaching the financial promotions rules across multiple platforms, including the firm’s website, social media and Google ads promotions. The firm used the phrase ‘no credit check’ and stated that an application would not affect a consumers’ credit score. Whilst the firm may not conduct an assessment itself, consumers could be misled to believe no credit checks would be performed.

The debt advice firm also had misleading claims regarding immediacy of funds as well as missing the credit broker statement, representative example and representative APR where triggered.

• Action taken

Given the firm’s breaches were across many platforms and the potential vulnerability of consumers searching for a credit check free loan, FCA imposed a voluntary requirement (VREQ) that the firm amend or withdraw all financial promotions that fail to comply with the relevant handbook rules.

This resulted in 28 promotions being amended.

#2 Misleading and unclear social media promotions by Contracts for Difference (CFD) provider  

• Issue

CFD provider who had failed to meet the requirements in terms of prominence and proportionality regarding the required risk warning in respect of loss percentage on a video shared via their social media promotions which included YouTube and Twitter.

• Action taken

FCA wrote to the firm requesting that they rectify the identified issues as well as conduct a full review of all their financial promotions. The firm subsequently amended its prominence across multiple videos and several banner promotions that the firm had further identified.

This resulted in 43 promotions being amended or withdrawn.

#3 Misleading and unclear promotions by Buy Now Pay Later (BNPL) provider

• Issue

A firm who offered BNPL. Their financial promotions, which were across several platforms including, Facebook, YouTube and the firm’s website lacked balance as they emphasised the potential benefits without giving fair and prominent indication of any relevant risks.

In addition, the firm’s website was misleading regarding fees and their representative example lacked prominence.

• Action taken

FCA wrote to the firm requesting they address concerns. The firm amended or withdrew promotions across their multiple media channels to provide more balance to their promotions. This ensured consumers were aware that these promotions related to a credit agreement and they should carefully consider their circumstances before using this type of credit.

This resulted in 66 promotions being amended or withdrawn.

#4 Misleading and unclear promotions by Payment Services (e-money) Firm

• Issue

An e-money firm who were promoting their services as being similar to a bank but failed to adequately disclose the differences in protections between e-money accounts and bank accounts.

In addition, the firm were also misleading consumers with an incomparable example regarding their exchange rate offering.

• Action taken

FCA wrote to the firm requesting they rectify these concerns. The firm subsequently amended promotions across multiple media channels. In addition, the firm undertook remedial action by contacting around 6,500 consumers taken on through partially non-complainant promotions.

This also resulted in 16 promotions being amended.

Unauthorised firms

Number of reports received

In 2022 Q3, we received 6,243 reports about potential unauthorised business.

Issued 303 alerts about unauthorised firms and individuals. Just over 20% of these were about clone scams. Many of these involved breaches of the financial promotion restriction online. In almost all cases FCA asked for the websites to be taken down.

Over the last quarter, the FCA has seen a number of cases involving unauthorised firms and individuals seeking to take advantage of the rising cost of living. As consumers become financially squeezed, they are likely to be targeted by fraudsters and scams and also more likely to engage with high-risk and unregulated products such as cryptoassets. The FCA is aware that scammers are targeting consumers searching for investments online, in particular through search engines such as Google and social media such as Facebook, Instagram or YouTube. This means consumers often need help to understand which products and services are not necessarily authorised or regulated by them. Some of the examples of the action taken over the last quarter are set out below.

Action against a company seeking to take advantage of the rising cost of living to target potentially vulnerable consumers. An urgent review of its website and social media account indicated that the entity was providing trading signals, often on what appeared to be a ‘live’ basis to over 70,000 followers. The FCA issued an alert on their website and requested the online posts be removed within 24 hours of the matter being identified.

The FCA contacted 55 consumers who had been identified on a scammer’s list targeting consumers who had been searching for loans online. They wrote to each consumer to warn them that they had been included on a scammer’s list and provided them with detailed guidance about how they can identify scams and how to protect themselves in the future.

Engaged with a firm that was offering regulated pre-paid funeral plans as well as insurance without authorisation. The FCA is proactively monitoring promotions of funeral plans to ensure that only firms that are authorised by them promote and offer these plans.

How the FCA act

On 27 July, The FCA published Consumer Duty, which is a new Consumer Principle that requires firms to act and deliver good outcomes for retail customers. The rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. The rules and guidance being introduced come into force on a phased basis, this will enable the FCA to continue working towards raising industry standards.

For authorised firms, the regulator uses a range of tools. These include the imposition of voluntary requirements (VREQs) or using powers to impose own initiative requirements. The firm which has communicated or approved the advert is requested to withdraw or change it to comply with the 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 FCA rules, they expect these firms to conduct more detailed reviews and provide reports on these findings, particularly on their systems and controls for 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.

The FCA conduct proactive daily monitoring to identify websites containing illegal promotions and take prompt action by publishing an alert on their website, typically within 24 hours, requesting that the offending website is taken down.

They are continuing to develop our capability to identify more quickly, alert and request social media platforms take down unauthorised financial promotions. The FCA is engaging with social media firms, to identify, stop and remove illegal financial promotions on their platforms.

For firms and individuals identified as potentially acting outside of FCA perimeter, they have a range of tools including enquiries, challenging firms and individuals’ activities via technical correspondence and publishing consumer alerts on their website. The FCA escalate the most serious problems to the Unauthorised Business Department’s investigation teams, who can use powers under FSMA to commence 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

Download: Financial Promotion Guide

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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