The FCA intervened to amend or withdraw 4,151 financial promotions between July and September, the highest since it started publishing the data.
According to the FCA, some of the most common breaches involved e-money and payment providers, with examples given of firms not adequately explaining the differences between their protections and those of a bank, and providing misleading information and examples about their exchange rate offering.
Although e-money firms are considered outside the scope of financial promotions rules, as set out in the FCA Handbook, as a minimum, firms are required to adhere to the principle of ‘clear, fair and not misleading’.
With the FCA putting more resources into scrutinising financial promotions and social media, including those circulated by e-money businesses, it is vital that firms ensure their financial promotions controls remain robust through auditing and review.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA commented:
‘As consumers feel the financial squeeze, they could be tempted by high risk, unregulated products and services or they could become a target for scammers preying on moments of vulnerability.
‘As a result, we’re doing even more to tackle false claims in adverts, issue prompt warnings to consumers, and we continue to engage with the largest tech and social media platforms as they also play an important part in protecting consumers from online harm. This is why changes to the Online Safety Bill to cover paid-for financial services advertising online are very much needed right now.’
Key factors to operating a compliant financial promotions framework
To ensure they remain compliant with the FCA’s financial promotion rules, firms should:
- Make sure all financial promotions are ‘fair, clear and not misleading’, as set out by the FCA
- Consider the presentation of the promotion (eg, whether the risk warnings are given sufficient prominence)
- Consider the substance (eg, the fairness and veracity of claims made and whether these can be substantiated)
- Communicate all of the necessary information, and present that information with sufficient clarity and prominence
- Provide important documents such as Terms of Use, Privacy Policy or Complaints Handling Policy
- Provide customer support and contact methods
Further details of financial promotions requirements can be found in the FCA handbook here.
How we can help
Neopay can provide an ongoing support to your business to ensure your financial promotions meet the regulatory standards and expectation. With the FCA’s more proactive approach to supervision, firms need to make sure they keep abreast of FCA priorities and activities. Neopay’s Virtual Compliance Service helps firms stay up-to-date with changes as well as assisting firms in remaining compliant through reviews and guidance. We also offer a range of audits, including tailored mini-audits for specific areas of concern, for example Financial Promotions. If you would like more information on how we can support your business, our specialist team are here to help.
