The UK Financial Conduct Authority (FCA) has issued a statement to expand its oversight to cover “paid for advertising and user-generated content.” The securities regulator asks that the Online Safety bill should designate content relating to fraud offenses as priority illegal content and thus require monitoring and preventative action by platforms.
Many online investment platforms allow for discourse between issuers and potential investors. Additionally, social media offers digital platforms to discuss investment strategies.
The requests are highlighted in the FCA’s 2020/2021 perimeter report which notes:
“…in recent years with the advent of investment-based crowdfunding, ordinary consumers can now easily meet this criteria. For example, our latest Financial Lives Survey, conducted in October 2020, shows that at least 1.6 million consumers hold investments in unlisted companies.”
Regarding crypto assets (digital assets) the report states:
“Many cryptoassets and cryptoasset-related activities sit outside the regulatory perimeter, and will continue to do so, even if the Treasury’s proposed extensions of the perimeter are made. The development of more complex business models, many of which are decentralised, that present themselves as ways cryptoasset owners can generate returns, interest or rewards from their cryptoasset holdings, are also making the perimeter issues for us and other UK Authorities more challenging.”
The report also notes the benefit of distributed ledger technology and crypto.
The FCA adds that it has also called again for amendments to the Financial Promotions Order. The FCA states that current exemptions to the Order mean more ordinary investors are at risk of receiving financial promotions, including for high-risk products, that don’t have to comply with the FCA’s rules.
Nikhil Rathi, Chief Executive of the FCA, commented:
“The annual perimeter report is an important part of our accountability to Parliament, particularly the Treasury Committee. The FCA is committed to being more innovative, assertive and adaptive. That means being more proactive at the limits of our regulation, working with partners and other agencies where we don’t have powers and setting out where we believe more powers are necessary. We see real risks to consumers from outside our remit from both online advertising and from those using exemptions to sell products to ordinary customers. Change is needed and we will continue to push for powers where we need them.”
The FCA adds that it believes legislative change is needed such as extending the Senior Managers and Certification Regime to payment and e-money firms.