Niall Hearty of Rahman Ravelli examines the Financial Conduct Authority’s ongoing battle against unauthorised and misleading financial websites, drawing on figures from the FCA’s latest annual report

In what appears to be the financial sector’s equivalent of Whac-A-Mole, the Financial Conduct Authority (FCA) has been explaining how it has come down hard on websites that have been popping up and promoting financial services without permission. Niall Hearty (pictured) of Rahman Ravelli suggests the scale of the problem may far exceed what’s being addressed, and argues that the FCA can’t – and shouldn’t – be left to handle this alone. The editors are pleased to share these insights; the usual editorial disclaimers apply to views of guest writers. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com.

The FCA’s annual report says that more than 1,600 websites were suspended, removed or blocked last year as a result of its action. It adds that it has been collaborating with big tech platforms and, as a result, more than 50 apps have been removed from Google Play and the Apple App Store.

According to the regulator, it has been using new technology to identify the firms that were not meeting its standards. The result was the FCA intervening last year so that “almost 20,000 non-compliant financial promotions were amended or withdrawn by authorised firms.’’ This figure is one that the FCA is keen to trumpet, given that the figure for similar action in 2021 was just 600. Any organisation that achieves a 3233 per cent increase on the results it was obtaining a few years ago has to be worthy of praise.

On a similar note, the FCA states that it cancelled the authorisations of more than 1,500 firms in 2024. This was a 20 per cent increase on 2023 and more than triple the figure for 2021.

So it is understandable that the FCA takes a couple of lines in its annual report to talk about its delivery of important improvements for consumers, firms and markets in what was the final year of its 2022-2025 strategy.  And FCA chief executive Nikhil Rathi stating “We’ve embraced data and technology to crack down on harm and ensure high standards. I’m proud of our achievements,’’ appears justifiable praise for those who work in his organisation.

But – and there does often seem to be a but when it comes to the FCA – the stats that are being celebrated could also indicate cause for concern.

Rathi talks of the FCA’s commitment to “enabling a fair and thriving financial services market for the good of consumers and the economy.” The figures we have read reflect that commitment. But they also show the scale of the challenge the FCA faces. And it is a challenge that, in this increasingly digital world, continues to evolve – and is being posed by those seeking to avoid detection.

To take an example, while we know about all the websites that were subject to FCA action last year, it stands to reason that there must be many more that have escaped action – for now, at least. Action taken against 1,600 websites in a year is impressive, whatever the circumstances. But such action – while worthy of praise – may actually be totally inadequate if there are (to pick a random number) ten times that number of suspect financial websites in operation that the FCA is either unaware of or has not had the chance to act against.

This is not a criticism of the FCA or even an argument driven by pessimism. But while we do not know – and never will know – the exact number of dubious financial websites peddling their wares at any given time, we can gauge with some degree of accuracy the mindset of many who will be operating them.

Those running such websites will be driven – to a greater or lesser degree – by any combination of optimism, opportunism, incompetence and criminal cunning. They will be keen to stay out of the FCA’s line of vision. And if they fail to achieve this and are subject to FCA action, it would be very surprising if each and every one of them acknowledged it was a fair cop and then decided to find a legitimate line of work.

There is a strong likelihood that many will go back to doing exactly what prompted the FCA to take action. Their enterprise may go by a new name and may even operate in a slightly different way, but the problem of providing unauthorised services will remain, and it won’t be going away.

Faced with this, it is hard to see what the FCA can do. We can view the FCA as a modern-day, online ratcatcher, searching to identify and remove the problem. But unlike any busy pest controller, the FCA’s problems are evolving and can be coming from absolutely anywhere – and it receives no reward for eradicating them. Unless it receives a huge (and hugely unlikely) increase in resources, it is hard to see this situation changing.

This may be a dilemma that can only be properly addressed by taking a more holistic approach, one that doesn’t pin all responsibility on the FCA. The shady minds behind the many online financial risks can only function with apparatus such as websites, financial accounts and payment systems, and means of promoting their activities. To ask the FCA to police all or even part of this appears, at the very least, optimistic.