FCA cracks down on misleading financial promotions
The City watchdog intervened to amend or withdraw 4,151 financial promotions in the third quarter of this year, up from 374 in the second quarter and the highest since it started publishing the data.
The Financial Conduct Authority (FCA) released new data today for the period between July and September, which revealed that retail lending was the sector with the highest amend/withdraw outcomes, at 46 per cent.
This was followed by retail banking and retail investments, both at 24 per cent.
Read more: FCA chief says competitiveness should not compromise consumer protection
The FCA also revealed that it received 6,243 reports about potential unauthorised businesses in the third quarter.
It issued 303 warnings about unauthorised firms and individuals, with over 20 per cent being about clone scams.
“As consumers feel the financial squeeze, they could be tempted by high risk, unregulated products and services or they could become a target for scammers preying on moments of vulnerability,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
“As a result, we’re doing even more to tackle false claims in adverts, issue prompt warnings to consumers, and we continue to engage with the largest tech and social media platforms as they also play an important part in protecting consumers from online harm. This is why changes to the Online Safety Bill to cover paid-for financial services advertising online are very much needed right now.”
The buy-now-pay-later (BNPL) sector also came under scrutiny. Although the FCA does not yet regulate BNPL, it warned BNPL firms about misleading financial promotions earlier this year.
The FCA said its intervention resulted in 66 BNPL promotions from one firm across various social media platforms being amended or withdrawn. It said the adverts did not give fair or prominent risk warnings and were misleading about fees.
Additionally, the regulator wrote to consumers that were included in a mailing list being used by scammers to carry out “loan fee” or “advanced fee” fraud. It warned that this type of scam is becoming more common and relaunched its ScamSmart campaign around loan free fraud over the summer to help raise awareness.
In August, the FCA finalised its long-awaited rules regarding the marketing of high-risk investments to consumers, which includes P2P lending under its definition. Investor incentives such as ‘refer a friend’ offers have been banned and firms have been told to use clearer and more prominent risk warnings.
Read more: New financial promotion rules will cost £135 per investor
