The UK’s FCA struggles to stop rogue financial campaigns

Great Britain’s FCA (Financial Conduct Authority), recently presented a new set of rules for companies in the country regarding the approvals of financial promotions. According to the financial watchdog, the number of rogue financial campaigns has seen a severe increase, with most of them featuring misleading and unfair deals that could end up tricking the users out of their money as they make financial decisions using inaccurate and vague information.

The number of fraudulent and dishonest ads sees a sharp rise

Previously, the FCA published a report on November 4th, noting that it had 4,151 interventions between July and September 2022 alone, requesting that the content of rogue financial promotions is changed or even blocking them entirely. The figure represents a tremendous growth from the year before when the same period saw only 564 interventions.

In a new press release published this Tuesday, the regulator announced that firms that were previously authorized by the FCA can still approve financial promotions on behalf of other, unauthorized companies. However, the Parliament also introduced certain changes to the standing legislation, and now, licensed companies will need to undergo a new assessment.

The goal is to check whether these companies are considering and approving promotional campaigns appropriately or not. By doing this, the FCA hopes to increase its oversight of the advertised content and prevent rogue advertisements without disrupting the firms too much. The desired result would be a noticeable reduction in rogue campaigns and, more than that, a decrease in the negative impact that they could have in public spaces.

According to the FCA, the new legal amendment should provide the regulator with the ability to act faster and be more efficient in blocking inappropriate advertising by unauthorized companies. This would also include firms that deal with high-risk investment opportunities. The announcement continues to say that firms will have to report the promotions that they have approved, and together with the FCA, this should help in detecting deceptive or badly constructed campaigns before they are published, which would also prevent their negative effects.

Modern advertising does not leave the authorities enough time to react

The FCA’s Executive Director of the Markets Division, Sarah Pritchard, said that online and social media advertising have changed the time needed to launch advertising campaigns. Consumers will now see ads and promotions, and make their financial decisions a lot faster, thus reducing the time that the authorities have to react.

As a result, it is crucial that consumers receive correct information right away, which will allow them to make better financial decisions. Pritchard pointed out that this is even more important in the current economy, where the cost of living is always on the ris.

FCA has been working on protecting investors for a long time, even developing the Consumer Investment Strategy meant to ensure the safety and fairness of participating in the financial industry. In fact, these latest efforts to prevent fraudulent ads is only a part of the strategy. The strategy itself is supposed to boost investor confidence and encourage investments while, at the same time, it should reduce the number of fraudulent campaigns and unauthorized providers, as well as their victims.