Data was recently published by the Financial Conduct Authority (FCA) regarding its amendments or withdrawals to over 4,000 financial promotions from July 2022 to September 2022. This action followed the reviews of 340 promotions. These numbers are the highest seen since the FCA began publishing such financial data.
In today’s blog, we’ll be breaking down the reasons why the FCA’s intervention was necessary, as well as the sectors facing the highest rates of amends or withdrawals: investments, retail lending, and banking.
Consumers are Being Tempted by High-Risk Services
So, what were the factors that led to the FCA intervening to such a degree? The FCA’s Mark Steward, who is currently the executive director of enforcement & market oversight, explained that many consumers are particularly susceptible right now due to current financial pressures. Scammers prey on vulnerability, after all, and now more than ever, consumers are being tempted by unregulated products or services with high, hidden risk.
As a result of this, the FCA deemed it crucial to debunk false claims made in advertisements and warn consumers of the dangers of these deceptive schemes. They have also been continuing to engage with social media and tech platforms, as it is largely in the power of those platforms to minimise online harm.
High Rates of Amendments in Retail Lending, Banking, and Investments
Of the sectors affected by the amends and withdrawals to financial promotions, there are three which make up 95% of the FCA’s intervention: investments, retail lending, and banking. The retail lending sector made up 46% of their interventions, with retail investments coming in at 24%. The retail banking sector made up 24%, and retirement income & pensions accounted for 6%.
According to the FCA, a number of these cases were instances where unauthorised individuals or firms were deliberately out to benefit from the cost of living crisis.
FCA Relaunches ScamSmart Campaign
Many consumers had also been included in mailing lists, which were a means for scammers to perpetuate ‘advanced fee’ or ‘loan fee’ fraud. The FCA began writing to impacted consumers, and since scams of this kind have been increasingly common throughout the cost of living crisis, they also brought back ScamSmart. This campaign is centred around exactly that type of fraud, in an attempt to raise more awareness for vulnerable people.
How to Report Misleading Financial Promotions
In the wake of their interventions, the Financial Conduct Authority has reiterated the ways in which people can report financial promotions they suspect to be misleading. On their website, you’ll find an online reporting form, with which you can let the FCA know of a promotion that appears to be non-compliant. Be sure to include as much information about the promotion as you can.
Once the FCA has received a report, they will decide whether they deem it non-compliant. If they do, they will do one, or all, of the following: request that the firm alters or removes the promotion, request that the firm contacts customers they may have misled, give the firm a fine or warning, and lastly, ban the promotion altogether.
Our Marketing Distribution Platform, Enable, includes workflow tools that will streamline your financial promotions approval processes. This will help you save time and money while reducing your risk by ensuring all content is compliant and approved before it can be used. To find out more, contact our team today.