P2P firm censured under financial promotions rule
A peer-to-peer lending firm has been censured by the Financial Conduct Authority (FCA) after it was found to be in breach of the regulator’s rules around financial promotions.
In an update of the regulator’s first quarter operations, the FCA revealed that it has been cracking down on firms which are not in compliance with the financial promotions rules.
During the first three months of the year, 2,235 promotions were either amended or withdrawn by authorised firms following FCA intervention.
A further 611 alerts were raised on unauthorised firms and individuals, with 12 per cent of these relating to clone scams.
The FCA said that an unnamed P2P lending platform, which specialises in short term consumer lending, was found to be in breach of several financial promotion rules across its Google Ads, Facebook sponsored ads and on its website.
“The promotions were missing important risk warnings, the representative annual percentage rate, it implied immediacy of funds and used potentially misleading language, headlines and illustrations,” said an FCA spokesperson.
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“Given the number of breaches, the firm applied for the imposition of a VREQ which we agreed to, and withdrew all non-compliant financial promotions.”
The FCA added that the firm also undertook a review of its systems and controls, policies and procedures in relation to financial promotion activity. The P2P platform also signed an attestation, formally taking accountability for carrying out the actions.
Last year, the FCA finalised its rules on the marketing of high-risk investments to consumers, which includes P2P lending under its definition. The new rules require firms to use clearer and more prominent risk warnings, and to stop offering investor incentives such as ‘refer a friend bonuses’.
The City regulator challenged 8,582 financial promotions during 2022, 14 times more than in 2021.
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