The Financial Conduct Authority (FCA) have announced plans to introduce more controls over the marketing of financial services including pension help.
In particular cold calling. Already banned for many financial products, the ban is to be extended to cover all financial products including crypto. That way anyone receiving a cold call about a financial product will know that it’s a scam.
They are also planning a ban on unsolicited text messages.
This move is probably overdue. People do not need phone calls and texts to encourage them to consider investments, pension help etc. They should be left to make their own decisions without coercion. With financial fraud running at £750 million in the last year, something needed to be done.
Financial products covered by the proposed ban will include:
- Any money transfer arrangements
- Warranties (on white goods for example)
- Protection products
- Pension help
- Debt management including IVA’s
A comprehensive list.
They are also tightening the controls over who can approve financial adverts. Currently any FCA authorised firm can approve a financial promotion. Even if that promotion is for an unregulated firm. That will be changing from February next year. At that point firms will have to have applied to the FCA for approval to authorise financial promotions. In order to qualify firms will have to demonstrate that they have the skills to assess the adverts and ensure that they are compliant. They will also be responsible for the adverts and promotions that they approve.
This should have a further positive affect on the financial promotions that are approved and distributed online.
The FCA has reported that it intervened to prevent or close down over 1,500 financial promotions over the last 3 months.
This meant taking action against over 50 different firms. Many of these actions were increasingly online, with 16% of under 35’s getting their pension help from Facebook and 8% finding “advice” via TikTok.
On top of this they took action against over 400 non-regulated firms, many of which were scams. Including a scam posing as the Financial Services Compensation Scheme (FSCS) and claiming to offer compensation under the London and Capital Finance (LCF) mini bond scheme.
Not surprising when you consider that over 40% of people in the UK say that they have been the target of a scam in the last 12 months, according to a survey by Canada Life. The survey also found that:
- 6 million people actually fell victim to a scam
- The average loss was almost £5,000 and over £17 billion in total. That is a big business.
- 32% of scams involved tax rebates or debt collection.
- 25% are advanced fee scams claiming an inheritance which needs the tax paying upfront first.
- Then 22% are so called “hello mum” scams where the scam poses as a close family member needing help to pay a bill or debt
- The over 50’s are most likely to be targeted.
- But 48% do get their money back.
- Sadly 25% don’t.
However, the number of insurance scams has gone down. According to data from the Association of British Insurers (ABI) the number of fraudulent claims fell by almost 20% in 2022. But the overall cost only fell by 4% to £1.1 billion.
60% of fraudulent insurance claims are still motor insurance related. Despite a crackdown on Claims Companies cold calling and texting for claims.
Meanwhile, the FCA have also announced that will be investigating the practice of de-banking. After the high-profile Nigel Farage case with Nat West and Coutts, the FCA want to know how many more cases there are. So, they have now written to the major banks and building societies to find out just how many accounts have been closed and what the reasons for closure were. It’s illegal to close someone’s bank account for their political views. Or to refuse an application to open an account for the same reason.
This exercise has now been completed pretty quickly. The FCA say there is no evidence that Banks closed any accounts between July 22 and June 23 for political reasons. That’s according to the Banks themselves of course. Some might wonder why the period looked at only runs until June 23 when the Farage claim falls after that date!