Compliance
Compliance Corner: FCA Tightens Screws On Promotions, Adverts

The latest compliance news: regulatory developments, punishments, guidance, permissions and new product and service offerings.
The Financial
Conduct Authority in the UK has proposed new measures to
clamp down on illegal, unfair or misleading financial marketing.
The regulator yesterday set out new checks for those firms which
want to approve financial promotions. The new measures will
require firms to demonstrate that they have the right expertise
for the promotions they wish to approve, it said in a statement.
At present, any FCA-authorised firm may approve financial
promotions on behalf of other firms who are not authorised by the
regulator. Changes being introduced by Parliament will require
authorised firms to undergo new screening checks before they are
allowed to approve financial promotions, giving the FCA greater
oversight to stop harm before it occurs.
The move comes at a time when watchdogs such as the FCA
keep trying to stamp out dishonest and misleading
promotional campaigns. For example, the regulator is keen to
tighten controls on areas such as risky investments and “buy now
pay later” deals. The FCA is also concerned at the proliferation
of misleading advertisement campaigns on social media.
“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,” Sarah Pritchard,
executive director, markets said.
The FCA said that firms will also be required to regularly report
back to it about financial promotions which they have approved,
helping the FCA crack down on rogue adverts.
The FCA has tightened rules on advertising for high-risk
investments and gone more aggressively after misleading adverts,
removing, or amending more than 5,000 financial promotions from
authorised firms between January and October this year, compared
with 564 in 2021.
“Accountable financial advertising will be a recurring theme for
the FCA in 2023 and today's news is a continuation of the
Consumer Duty and commentary of that paper," Alain Desmier,
managing director of Contact State and author of Data Control
Matters – a report into data consent within financial
services, said. "The financial regulator wants to see firms
create more robust sign-off procedures of financial promotions
and will achieve its aims through direct intervention, firm and
control function accountability. In black and white, if you run
the marketing and/or compliance function of a financial firm,
these proposals (CP22/27) should feature in your New Year's
resolutions."
“Lead generation for products like insurance and mortgages is classified as financial promotions and so this document also applies to anyone buying or creating leads. Compliance does not need to be onerous or scary, firms just need to keep a real-time record of the adverts and landing pages that are being used to create consumer leads they are speaking to," he added.