The Financial Conduct Authority (FCA) has increased its supervision of financial promotions for newly authorised firms.
The new Early and High Growth Oversight function provides closer supervision through the first stages of being authorised.
The 2021/22 pilot of the function with 32 newly-authorised firms highlighted many did not fully understand the regulator’s rules on promoting financial products to the public.
Common errors including describing products and services as ‘FCA approved’ on their websites and claiming on websites to have ‘worked with the regulator to deliver a product/service’.
Other firms were advertising services for which the FCA had not given them permissions for, whilst others were advertising investment returns they could not substantiate.
As well as intervening in each case, the FCA also provided webinar training to around 500 attendees on its financial promotions rules. The training shared examples of the common pitfalls its finds on firms’ websites.
The FCA has now expanded the Early and High Growth Oversight function pilot, increasing the number of newly-authorised firms it is reviewing to 300.
The regulator will use the second stage of this pilot to identify other common areas where newly-authorised firms need to raise standards in order to meet FCA rules.
The FCA has increased the number of financial promotions that it has blocked from all regulated firms, forcing providers to amend or withdraw their promotions or advertisements.
Investments, banking and retail lending were the sectors with the highest rate of amends or withdrawal of adverts and formed 95% of the FCA’s interventions with authorised firms.
A quarter (24%) of interventions were related to retail investments and 6% to pensions and retirement income.
The FCA said it was concerned about several recent cases involving unauthorised firms and individuals seeking to take advantage of hard-pressed consumers.
Mark Steward, executive director of enforcement and market oversight at the FCA, warned that the cost of living crisis was putting pressure on consumers.
He said the FCA wanted to see the Online Safety Bill, currently stalled in Parliament, moved forward as soon as possible as it would cover paid-for financial services online advertising.
