The Financial Conduct Authority (FCA) required firms to amend or remove 8,582 promotions during 2022 – 14 times more than 2021, a report published today shows.
The FCA also published over 1,800 alerts to help prevent consumers from losing their money to scams.
Social media remains a major focus for the regulator’s work in combatting misleading promotions. The FCA has worked closely with several Big Tech companies to change their advertising policies to only allow financial promotions that have been approved by FCA-authorised firms, but more needs to be done by tech companies to protect consumers.
The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.
‘Fin-fluencers’ have also been a growing concern for the regulator. Unauthorised individuals should not advise people on the merits of certain investments, as this will likely be subject to our regulations and it could lead to action being taken against them. The FCA has already acted against several social media influencers over the past year.
In one case, the FCA found a director of a regulated firm using their personal profile to promote the advice of unauthorised traders and other financial products. The FCA blocked them from using their personal social media to promote financial services and imposed a requirement on the firm to halt any financial services promotions.
Sarah Pritchard, Executive Director, Markets said:
‘Our expectations remain the same. Financial promotions must be fair, clear and not misleading. What has changed is the FCA’s approach. By drawing on better technology, we’re finding poor quality or misleading ads quicker. And where we find them, we’re stepping in to make firms improve them or remove them entirely.
‘This year, we will continue to put the pressure on people using social media to illegally promote investments, which put people’s hard-earned money at risk.’
While households continue to be affected by the rising cost of living, the FCA is concerned that people struggling with their finances may be more susceptible to scammers or adverts showing high risk, unregulated products.
The FCA is currently consulting on introducing tougher checks for firms which want to approve financial promotions. The measures will make sure the FCA is able to quickly put a stop to harmful financial promotions by unauthorised firms and individuals.
It will also be introducing the Consumer Duty in July. Under the Duty, firms will need to demonstrate that they are providing consumers with information, which help them to make effective and informed decisions about financial products and services.
The regulator continues to use its ScamSmart campaign to provide people with information on how to avoid investment and pension scams.