The Financial Conduct Authority (FCA) has flagged nearly 20,000 financial promotions in 2024, which were then “withdrawn or amended.” The figure almost doubled compared to the previous year's flagged ads.
Misleading Financial Ads Are Growing
In the announcement today (Friday), the British regulator highlighted concerns with crypto assets, debt solutions, and claims management company promotions. Amid the regulatory action, 9,197 promotions for claims management companies, mostly related to housing disrepair and motor finance claims targeted at vulnerable consumers, were withdrawn.
“Over the past year, we have seen a growing number of misleading and illegal financial promotions,” said Lucy Castledine, Director of Consumer Investments at the FCA. “We have stepped up our efforts in response to make sure that financial promotions are clear, fair, and accurate.”
The regulator also urged social media platforms to identify and prevent illegal financial promotions proactively. However, whether such platforms, including Facebook, Instagram, WhatsApp, TikTok, and others, will take any action remains to be seen.
The FCA pointed out that last year it launched targeted actions against the so-called ‘finfluencers,’ who promote financial literacy and also products on social media. It even “interviewed under caution” 20 such people.
“We expect firms to take the necessary steps to meet standards and will continue to work with other bodies, including social media platforms, to prevent illegal promotions being pushed at consumers.”
FCA Tightening Rules for Financial Firms
The FCA tightened its rules around financial promotions in 2023, mandating firms to prove their competence in understanding the products they promote. Previously, any firm authorised by the FCA could approve ads for unregulated firms.
Last year, the regulator also introduced Consumer Duty rules to the financial services industry. These rules are meant to protect customers but also increase companies' compliance costs. Now, the regulator is considering easing some of these Consumer Duty rules.
Recently, the British watchdog fined a CFDs broker, Infinox, for failure in transaction reporting, which was its first enforcement action under the UK Markets in Financial Instruments Regulation (MiFIR).