Written by Carly Phillips-Jones
On 3 February 2022, the FCA published a new webpage setting out its analysis of the financial promotions data for 2021.
The FCA has analysed data resulting from action taken against authorised firms breaching financial promotion rules and referrals and investigations into unregulated activity. This data is published in line with the FCA’s Consumer Investments Strategy which sets out the steps being taken by the FCA to be more innovative, assertive and adaptive in tackling harm. However, this data relates to financial promotions across all sectors, not just consumer investments.
The FCA's key messages from its data analysis include the following:
- Retail investments and retail lending are the sectors with the highest financial promotion amendment or withdraw outcomes, amounting to 77% of the FCA's interventions with authorised firms.
- Some of the most common breaches were in the Retail Lending sector, in particular Claims Management Companies and Retail Finance promotions.
- The Retail Investment sector's use of social media influencers on various platforms to market investments is becoming a concern for the FCA. It advises firms to ensure they have taken appropriate legal advice to understand their responsibilities prior to using influencers.
- In relation to illegal financial promotions by unauthorised persons, last year saw an overall increase of 10% of total reports received compared with 2020. However, the FCA has seen a significant reduction in non-compliant paid for advertisements by unauthorised entities on Google since its engagement and implementation of Google's new financial services advertisement policy.
The FCA also clarified the ways in which it can act in response to breaches. For authorised firms, the FCA use a range of tools available, including agreeing to voluntary or imposing own initiative requirements, requiring the firm which has communicated or approved the advert to withdraw it or change it so that it complies with FCA requirements. In the most serious circumstances, it can use powers under s137S FSMA to ban a promotion or advert. For firms acting outside of regulation, the FCA can take proportionate enforcement action including challenging firms and individuals' activities via technical correspondence, publishing consumer alerts, and escalating to the Unauthorised Business Department's investigation teams for investigation using powers under FSMA, with a view to commencing civil, criminal and/or insolvency proceedings.
"retail investments’ use of social media influencers on various platforms to market investments is becoming a concern for us"