The FCA has just released its latest figures on financial planning promotions. That’s advertising for a range of financial products governed by the FCA. In the second quarter of the April to June, the FCA intervened in over 350 financial planning promotions requiring them to be withdrawn or amended.
The majority of these were financial planning promotions related to lending offers – 59%. Next were promotions for investments – 25%. Followed by banking and insurance – 8% each.
There were over 8,000 reports of potentially unauthorised firms, 20% of which turned out to be clone firms. That’s where an unauthorised business tried to impersonate an authorised business, usually online using a fake website address.
The number one area of investigation for the FCA was from unauthorised Claims Management Companies, many charging high up-front fees or high administration charges. Next were financial planning promotions by influencers and bloggers on social media who were unauthorised and offered no standard risk warnings.
The pending Online Safety Bill should help with some of these problems by requiring the social media platforms to do more themselves to police their content. Some of this has started already on a voluntary basis. But clearly not enough given the number of cases the FCA still has to deal with.
The FCA has also launched new rules for advertising high risk investment products. The new rules place extra requirements on firms. These include:
- A requirement to slow down the processing of high risk investment sales. In order to give customers more time to think.
- Banning refer a friend incentives and bonuses for new customers.
- Requirement for more prominent warnings about the risks.
- A simplified definition of what constitutes a high risk investment.
- Requirements for those advertising these products to perform more due diligence in the approval process and to document this clearly.
Sadly, these rules do not cover cryptocurrencies, which still fall outside the FCA’s domain.