The Financial Conduct Authority (FCA) said it has ramped up efforts to protect consumers from misleading financial promotions, according to a report published today.
The UK’s leading financial watchdog required firms to amend or remove a staggering 8,582 promotions during 2022, compared to just 573 in the previous year. It also posted more than 1,800 alerts to warn consumers about potential scams.
In response to this escalating problem, the FCA has made “significant improvements” to its digital tools used to detect problematic companies and ads, allowing it to tackle a greater number of cases.
Sarah Pritchard, executive director of markets, said that the FCA’s expectations remain the same: “Financial promotions must be fair, clear and not misleading.”
She added that the regulator’s approach has changed, with the use of better technology allowing it to find poor quality or misleading ads more quickly, and take action to remove them.
One area of concern for the FCA is social media, which continues to be a major platform for deceptive promotions. The regulator has worked alongside several big tech companies to improve their advertising policies, but says there is still much work to be done to shield consumers from harm.
Another issue is the rise of ‘fin-fluencers’, or unaccredited individuals who offer online financial advice to the public.
The FCA has already taken action against several of these social media influencers over the past year, including a case where a director of a regulated firm used their personal profile to illegally promote investment advice.
With households feeling the strain of rising costs of living, the FCA is concerned that scammers or false adverts for high-risk, unregulated products may pose a greater threat for people struggling with their finances.
The watchdog is in discussions about stricter checks for firms that want to authorise financial promotions, and is also introducing the Consumer Duty in July, which will require firms to show that they are providing consumers with sufficient and accurate information to make informed financial decisions.
ScamSmart is FCA’s ongoing campaign that teaches people how to recognise and avoid investment and pension scams.