Compliance
UK Regulator Not Entirely Happy About Firms' Observance Of Advertising Rules
Promotions for financial products are still falling short of rules to protect consumers and firms need to do more to ensure that advertisements do not mislead, the UK financial regulator said.
Promotions for financial products are still falling short of
rules to protect consumers and firms need to do more to ensure
that advertisements do not mislead, the UK financial regulator
said.
The Financial
Conduct Authority reviewed 1,500 promotions for consumer
credit products.
While not explicitly referring to wealth management, the findings
are likely to remind the industry of a need to avoid falling into
regulatory trouble.
Since 1 April this year, the FCA has opened 227 cases about
non-compliant promotions for products such as payday loans, debt
management services and credit brokers. A quarter of these cases
relate to advertisements for high-cost short term-credit, with
many not prominently displaying a risk warning or representative
APR, according to a statement by the FCA. 80 per cent of
consumer credit cases relate to digital media, such as websites,
emails and text messages.
Some examples of financial promotions failing FCA regulations
include advertisements for fee-paying debt management firms that
did not make it clear that services are not free of charge;
promotions that guaranteed firms would provide credit regardless
of customers' circumstances; a logbook lender who provided
misleading information about its APR and implied its services
were endorsed by the FCA; internet search terms that took
consumers to unrelated links.
The FCA declined to comment on the names of firms involved in the
review.
In a related matter, the watchdog recently published a
guidance consultation paper that reinforced its stance on social
media financial product promotion rules, stating that all
communications need to be "media-neutral" and even suggested the
use of "#ad" for character- limited sites such as twitter, in
order to reduce customer risk.