Written by Pooja Bokhiria
On 18 May 2021, the Financial Conduct Authority ('FCA') published a speech by Mark Steward, FCA Executive Director of Enforcement and Market Oversight, on the increasing threat of scams to a "legitimate financial services industry".
Mr. Steward noted that there has been an increase in the number of investment scams over the past year, which is expected to continue rising. Several measures have been put in place by the regulator to combat the threat which Mr. Steward described as an "economic scourge":
- "Proactive monitoring of the internet with a dragnet approach": The FCA's aim is to capture suspicious advertising "on the same day or 24 hours" after the advert first appears. The FCA will then aim to issue warnings immediately in most cases and will continue to update its Warning List on a daily basis. Mr. Steward emphasised that the Warning List should be an essential component of the controls that firms have in place to inhibit financial crime.
- Promotion restrictions on social media: The FCA has been engaging with social media firms regarding compliance with the financial promotion restriction in section 21 of the Financial Services and Markets Act 2000 when providing any value adding services.
- Draft Online Safety Bill: The proposed Bill, if passed, will provide a regulatory framework tackling user-generated online scams.
- Investigations on suspected scams: The FCA currently has 50 investigations open involving unauthorised activity relating to 183 suspects.
"While the FCA does have statutory power over the use of false or misleading statements in relation to securities, those offences will not bite where the investment product is outside the financial promotions perimeter. The perimeter, or perimeters (there is more than one), is an intricate boundary that can produce different results in terms of regulatory power, consumer protection and outcome, depending on some equally technical distinctions." Mark Steward, FCA Executive Director of Enforcement and Market Oversight