Out-Law News | 15 Apr 2021 | 9:02 am | 2 min. read
The FCA said it reviewed 441 financial promotions in the first quarter of 2021, including promotions identified through complaints it had received as well as via its proactive work to ensure promotions meet the requirements of its rules, including that they are fair, clear and not misleading.
The impact on individual firms and sectors shown to have a poor track record on promotions may also be of wider regulatory significance, as it may potentially trigger greater focus at firm or sector-level by the regulator
In the first quarter of 2021, 105 promotions were amended or withdrawn due to the FCA's interaction with authorised firms. Nearly half (47%) of these amended or withdrawn promotions were for retail lending, while 26% concerned retail investments excluding unauthorised firms' promotions that were not approved by an authorised firm, as the FCA prepares data separately on its work addressing consumer harm from unauthorised firms in respect of investments. The other cases of promotions being amended or withdrawn in Q1 2021 showed 18% were for retail banking, and the remaining promotions were in the pensions and insurance sectors.
The vast majority – three-quarters – of the amended or withdrawn promotions were either website or social media promotions.
The FCA said it had realised there was a need for greater transparency over non-compliant financial promotions outcomes, and it would start to publish the data quarterly.
Financial services regulation expert Andrew Barber of Pinsent Masons, the law firm behind Out-Law, said it was notable that the FCA's quarterly data shows 45% of the reports the FCA received about promotions came from consumers.
Barber said: “Where the FCA’s action resulted in a promotion being amended or withdrawn, in the majority of cases these were retail lending promotions. It will be interesting to see whether the high proportion of promotions being amended or withdrawn by this part of the sector and the large proportion of reports about promotions that came from consumers remain constant features, or whether this quarter’s figures show the financial impacts of Covid-19, and resulting financial hardship for consumers, playing out. Also, the fact that three quarters of the amended or withdrawn promotions were either website or social media posts is probably not surprising given the pandemic but it shows the need for firms to be vigilant when using these media types to promote products.”
The FCA has also promoted a link to its page for reporting misleading financial adverts.
“The FCA is clearly keen to make the availability of this page well known and to facilitate further reporting,” Barber said.
“The impact on individual firms and sectors shown to have a poor track record on promotions may also be of wider regulatory significance, as it may potentially trigger greater focus at firm or sector-level by the regulator,” Barber said.
The move to publish the data follows a focus by the FCA, particularly in the last year, on safeguarding vulnerable customers and ensuring that advice provided to consumers is suitable. Last year it banned mass-marketing of speculative illiquid securities and some listed bonds to retail investors.
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