The UK Financial Conduct Authority (FCA) has outlined new rules to stymie financial promotions that are misleading, illegal or unfair. Simultaneously, the FCA has kicked off a consultation to garner feedback on the new rules. The goal is to halt “rogue financial promotions.”
Currently, any FCA-authorised firm is allowed to approve financial promotions on behalf of other firms who are not authorized by the regulator. Changes being introduced by Parliament will require authorized firms to undergo new screening checks before they are allowed to approve financial promotions.
Firms will also be required to regularly report back to the FCA on financial promotions they have approved. The FCA mentioned specifically promotions of high-risk investments as well as BNPL services.
Sarah Pritchard, FCA Executive Director of Markets, commented:
“Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision. It is, therefore, essential that they are equipped with the right information at the right time so that they can make good financial decisions. This is especially important as we face the rising cost of living. These proposals will ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off.”
The FCA notes that it has removed or amended over 5,000 financial promotions from authorized firms between January and October this year, compared to 564 in 2021.
The consultation is open until February 7, 2023.