FCA Sees Huge Increase in Illegal Financial Promotions

Don’t let economic conditions cloud your judgement

According to data from the U.K. Financial Conduct Authority (FCA), the number of online financial promotions that are not legally compliant increased 1398% in 2022 among authorized firms. 

There’s a difference between authorised and registered 

A firm or individual must be authorised by the FCA to carry out regulated financial service activities and offer credit to consumers. Authorised companies have passed a rigorous testing process.  

The FCA has been working closely with several ‘big tech’ companies to change their advertising policies. The changes allow financial promotions that have been approved by FCA-authorised firms, it said, but it remains concerned regarding the levels of compliance. 

Entities that say they are registered with the FCA have applied for FCA authorisation, but have not passed and have not received authorisation status. Unauthorised firms might be committing a criminal offence if they don’t have an FCA-authorised firm approve their financial promotions. 

The number of non-compliant ads from unauthorised firms increased 34% in 2022, compared to the previous year. 

Why the increase? 

The reason for the increase in FCA ad identifications is attributed to the significant improvements in the digital tools the agency uses to identify problem firms and ads. The new tools have allowed the FCA to work through a much larger number of cases than in 2021. 

The FCA says that the number of misleading financial promotion ads is also increasing due to the financial difficulties of millions who are struggling to cope with the biggest cost of living crisis in a generation. They are having to make difficult decisions about their finances and how they pay for goods and services. 

You may buy now and pay (more) later 

The FCA is especially concerned that consumers could be misled by Buy Now Pay Later (BNPL) financial promotions. Even though BNPL offers may not be regulated, their promotions must comply with the relevant rules unless an exemption applies. BNPL financial promotions must be clear, fair and not misleading. 

For example, while advertising the benefits of BNPL products, they must also include fair and prominent warnings of any risks to customers, such as: 

  • the risk of taking on debt that customers cannot afford to repay   
  • the consequences of missed payments   
  • any other adverse consequences such as the impact on the customer’s credit file   
  • information about when charges become payable 

Beware of social media advice 

The FCA is increasingly concerned about ‘fin-fluencers’. Social media influencers, as unauthorised individuals, should not advise people on the merits of certain investments. The FCA has already acted against several social media influencers over the past year. 

The regulator also continues to use its ScamSmart campaign to provide people with information on how to avoid investment and pension scams. Consumers can also check the FCA Register of Unauthorized Firms and Individuals to help determine if the advertising entity has already been identified as untrustworthy. 

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation. 



Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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