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The FCA has announced a steep rise in the number of financial promotions that had to be amended or withdrawn in 2021. The regulator order financial promotions to be amended or, in some cases, completely withdrawn, if they fail to comply with its standards. We take a look at why so many FPs are non-compliant – and how you can avoid the same fate.

What does the FCA financial promotions data say?

The FCA data, released in February, covers action taken on financial promotions between January 2021 and December 2021. The action stems from both authorised firms breaching financial promotion rules, and referrals and investigations into unregulated activity.

Key headlines

In relation to authorised firms:

• 2021 saw an increase of 172% in the number of financial adverts amended or withdrawn; 564 promotions of the 1,686 the FCA reviewed
• Retail investments and retail lending were the worst offenders, accounting for 77% of the FCA’s interventions with authorised firms
• Claims management companies and retail finance promotions saw some of the most common breaches
• 46% of the 1,686 promotions reviewed were flagged by consumers
• And although social media use can have distinct benefits, marketers need to beware: the FCA called out firms’ use of social media influencers as an area of “concern”

The FCA also saw a jump of 10% in reports received about illegal financial promotions by unauthorised persons. It issued 1410 alerts about unauthorised firms and individuals in 2021, (up 18% from 2020); 30% of these related to clone scams, where an unauthorised company tries to pass itself off as a legitimate entity.

How does the FCA respond to non-compliant promotions?

When dealing with authorised firms, the regulator has a number of tools at its disposal:

• Firms can agree to voluntary “initiative requirements”, or impose their own. These require the firm which has communicated or approved the advert to change it so it becomes compliant, or withdraw it altogether
• In the most serious circumstances, the FCA can ban a promotion or advert
• If a firm repeatedly fails to comply with the rules, the regulator will expect the firm to conduct more detailed reviews into its own financial promotions production and approval process, and report the findings to the FCA, who will be particularly interested in “their systems and controls in relation to their financial promotions”
• The firm may be asked to remedy any harm which consumers may have suffered as a result of acting on a non-compliant promotion

How can you avoid falling foul of the FCA?

If you want to ensure your financial promotions are compliant, and don’t risk forming part of the FCA’s data in 2022, what can you do?

1. Familiarise yourself with the FCA’s financial promotions rules and requirements. These evolve regularly – for instance, with the plans for a new consumer duty to protect customers, so it’s important to keep up to date.
2. Revisit your processes for financial promotions creation and approval. Are they watertight? “Systems and control” are called out specifically in the FCA’s rules. Marketing and Compliance teams often fall short here because they lack the necessary processes and controls to ensure content is approved before it’s used – one reason why many firms are turning to automation and online workflow tools to help make the FP approvals process more robust.
3. Ensure your processes create the compliant audit trails needed to reduce your risk of regulatory breaches, penalties and fines.
4. Ensure everyone has access to the correct, approved versions of promotions. Version control can be an issue if there is insufficient rigour around your marketing asset management.

Ensure you’re producing compliant financial promotions

The FCA has clearly seen a huge uptick in the number of financial promotions it has to deal with for non-compliance. This may be due to firms’ other pressing priorities during the pandemic, a result of processes becoming less disciplined at a time of remote working, or of firms losing sight of what FCA financial promotions compliance entails – or a combination of all these and more.

One thing is for sure; putting more rigour around your financial promotions production and approvals process is the key to better financial promotions compliance. More and more financial services firms are recognising the benefits of marketing automation and digital asset management tools to mandate reviews and approvals; tools which can improve marketing team collaboration, bring structure to your financial promotions production process, and make compliance baked in, not bolted on.

Marketing automation and digital asset management platforms can ensure all content is compliant and approved before being published – covering digital assets like social media and web content as well as printed collateral, and capturing a compliant audit trail as you go. (They also have numerous other benefits, like their ability to improve brand consistency and ESG performance!)

To find out more about how you can make your financial promotions more easily produced, consistent and compliant read our latest whitepaper The Compliance Guide to Financial Promotions.