The Financial Conduct Authority (FCA), Great Britain's financial watchdog, has presented new measures for companies approving financial promotions to better identify and exclude rogue campaigns.
According to the press releases published on Tuesday, currently, any company authorized by the FCA can approve financial promotion on behalf of another unauthorized firm. Parliament introduced some changes to current legislation, requiring licensed entities to undergo a new assessment to ensure that they appropriately approve promotional campaigns. In this way, the FCA wants to increase its oversight of rogue advertising content and reduce the negative impact of its presence in public spaces.
The proposed legal amendment is intended to ensure that the FCA will be able to effectively block advertising by unauthorized firms, including those in the high-risk investment sector. According to the FCA's announcement, firms must regularly report what promotions they have approved to help detect poorly constructed and deceptive campaigns.
"Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision. 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," Sarah Pritchard, an Executive Director of Markets Division at the FCA, said.
"These proposals will ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off."
The Number of Rogue Financial Promotions Increases
In early November, the FCA reported that it intervened 4,151 times between July and September 2022 to change the content or block rogue financial promotions. The number of campaigns promoting risky investments is growing, with the regulator having to intervene only 564 times in the same period a year earlier.
The British regulator's efforts to protect consumers from fraudulent ads are part of the broader FCA's Consumer Investment Strategy. Its goal is to increase investor confidence, encourage investment and reduce the number of people who dishonest and unauthorized providers have defrauded. In May, the regulator showed similar concerns regarding ways some service providers promote cryptocurrencies and NFTs on social media.
