Compliance

Give UK Regulator More Teeth Over Online Scams – PIMFA

Editorial Staff, 27 May 2022

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The UK's proposed new Online Safety Bill is controversial, and is designed to remove fraudulent and harmful content from social media and the internet. A UK wealth industry group wants the UK's main regulator to direct Ofcom, a body overseeing the communications field, to have power to take certain content down.

A wealth management industry group wants the UK’s regulator – the Financial Conduct Authority – to be given power to direct authorities to erase fraudulent content from the internet under powers of the new Online Safety Bill.

The Personal Investment Management & Financial Advice Association, or PIMFA, has called on the FCA to direct Ofcom to remove such material. It issued a statement yesterday.

The Bill, which is designed to protect users of online services, has already been slammed as opening the way to censorship. The UK wealth manager Quilter has said it must be used to remove financial scams from websites.

PIMFA made its recommendations about how the law should work when giving evidence to MPs scrutinising the Online Safety Bill. 

Tim Fassam, director of government relations and policy at PIMFA, urge an amendment to the Bill that would see partner regulators such as the FCA provide strategic support to Ofcom to prevent harm being introduced to financial services consumers.

While the Bill deals very specifically with fraud and breaches of the Financial Services and Markets Act, PIMFA said it is unclear how Ofcom will ensure that it has the expertise needed to identify breaches. 

Fassam pointed to the case of London Capital & Finance where the regulated firm was able to introduce harm into the market through the sale of unregulated, speculative mini-bonds aided specifically by advertising, offering significant returns in a low interest rate economy. If the FCA were able to swiftly prevent adverts of this nature through Ofcom it could significantly reduce the risk of potential harm to consumers, PIMFA said.

He said that PIMFA was also supporting a Which amendment to the Bill to ensure that search engines had the same duty of care as social media websites to eliminate fraudulent adverts on their platforms.

According to the government’s website, “The Bill introduces new rules for firms which host user-generated content, i.e. those which allow users to post their own content online or interact with each other, and for search engines, which will have tailored duties focused on minimising the presentation of harmful search results to users. Those platforms which fail to protect people will need to answer to the regulator and could face fines of up to ten per cent of their revenues or, in the most serious cases, being blocked.”

Civil liberties campaigners argue that the law, while designed to protect the public, creates the risk of censorship because the definition of "harm" in certain cases is ambiguous.

As previously reported, Matthew Lesh, head of public policy at the Institute of Economic Affairs, a UK think tank, has said the Bill is dangerous.

"Companies will be required to remove anything that could potentially be illegal, from ‘hate speech’ to emotionally distressing content – under the threat of multi-billion-pound fines. This will empower the easily offended and malicious actors to push for removal of [free] speech,” he said. 

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