The Financial Conduct Authority is set for a fresh clampdown on the promotion of financial products to consumers next year with a slew of stringent new rules blocking some firms from signing-off on adverts, City A.M. can reveal.
The City watchdog will this morning unveil a package of new measures that will force financial firms to “demonstrate they have the necessary skills and expertise to approve adverts” that promote financial products to consumers, according to plans seen by City A.M.
Firms signing off on adverts must “understand the product, to ensure the promotion is accurate and fairly balances risk and reward”, the FCA will say.
Under the current rules, any regulated companies have been allowed to give the green light on financial promotional material. However, this regime has “caused harm”, according to the FCA’s own assessment.
The fresh measures come amid a wider clampdown from on the way that products are marketed to consumers.
Crypto firms are set to be reined in by the regulator in the coming months with a number of new restrictions on financial promotion, including the banning of ‘refer a friend’ bonuses and the roll out of ‘cooling off’ periods.
Buy-now pay-later firms, despite currently sitting outside the regulators remit, were also threatened with jail time if they did not get their promotional materials signed off by regulated firms, City A.M. revealed.
Under the latest plans, firms will need to apply to the FCA between 6th November and 6th February next year to continue approving adverts, with the new rules will come into effect from then.
Firms will now be forced to also report regularly on what they approve and on any “concerning adverts they cancel approval for” to give the watchdog visibility of any rogue actors in the industry.
“By introducing these new checks, we will ensure people approving adverts have the right skills and understanding they need to do so,” Sarah Pritchard, executive director of markets at the FCA, will tell firms today.
“Firms need to make sure people are equipped with the right information at the right time, so they can make properly informed decisions. As we face the rising cost of living, consumers are having to make difficult decisions about their finances and how they pay for things, so this is more important than ever.”
The move comes amid a wider clampdown on consumer-facing firms from the regulator this year. In July, the FCA introduced its new Consumer Duty for companies which has hiked the standard expected of firms in dealing with customers.
Regulators have also fired a volley of warning shots at companies over their conduct through the cost of living crisis. Banks and insurers have been among the firms under fire for lacklustre protection of cash-strapped Brits.