The Financial Conduct Authority (FCA)
has proposed new measures to clamp down on illegal, unfair or
misleading financial marketing.
The FCA has today 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.
Notes to editors:
-
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
