Firms must demonstrate the right expertise before they can approve financial promotions
The Financial Conduct Authority (FCA) has recommended new measures to clamp down on illegal, unfair, or misleading financial marketing.
The new rules, which the conduct regulator has outlined, will require firms that seek to allow financial promotions to demonstrate that they have the right expertise for the promotions they wish to approve.
Firms will also be required to regularly report back to the FCA on financial promotions they have approved, helping the regulator crack down on rogue adverts.
We're consulting on proposals to introduce new screening checks for firms to demonstrate they have the right expertise before they can approve financial promotions https://t.co/XhdTTYrVUR— Financial Conduct Authority (@TheFCA) December 6, 2022
The FCA said the proposed reforms will ensure that they can act quickly to put a stop to harmful financial promotions communicated by unauthorised firms, including in areas such as high-risk investments and Buy Now Pay Later.
Under current legislation, any FCA authorised firm is allowed to 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.
“Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision,” Sarah Pritchard, executive director for markets at the FCA, said. “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.
“These proposals will ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off.”
The proposal of new rules builds on the FCA’s recent work on strengthening rules around advertising for high-risk investments and being more assertive in removing misleading adverts, with the FCA removing or amending over 5,000 financial promotions from authorised firms between January and October this year, compared to 564 in 2021.
The FCA said it is committed to setting and testing higher standards across financial services to give consumers the confidence to make good financial decisions based on accurate and relevant information.