This page gives a summary of data generated between 1 January 2023 and 31 March 2023 from our actions against firms breaching financial promotion rules, and referrals and investigations into unregulated activity.
This data provides an overview of how we are working to improve standards across the market so that consumers are provided with clear and fair financial promotions which are not misleading.
What’s included in the data
- Key messages
- Authorised firms
- number of financial promotions reviewed during this period
- number of closed cases where promotions have been amended and withdrawn, including split across sectors, excluding cases which are still ongoing
- Unauthorised firms
- number of unauthorised reports received, and alerts issued
- Examples of our work on financial promotions during 2023 Q1:
- reducing and preventing serious harm
- setting and testing higher standards
- promoting competition and positive change
- Information on how to report a misleading financial advert or potential scam
Key messages
- Our interventions in 2023 Q1 resulted in 2235 promotions being amended/withdrawn by authorised firms.
- We issued 611 alerts on unauthorised firms and individuals, with 12% of these about clone scams.
- Given the rising cost of living we did some work focussed on unauthorised and authorised firms who offered debt advice which resulted in 9 alerts being issued, and we imposed voluntary requirements (VREQs) on 2 firms.
- We took action against a firm using a trading name which could potentially mislead consumers that the firm was a not-for-profit organisation or part of a government scheme. Firms should not use misleading trading names.
- We reviewed the marketing and promotion of Speculative Illiquid Securities (SIS), including mini-bonds where we found that some investments are being ‘rolled over’. Some investors were also being wrongly categorised as high net worth or sophisticated.
Authorised firms
Number of promotions reviewed
In 2023 Q1 we reviewed 539 financial promotions from multiple sources.
41% from our proactive monitoring
23% from consumers
19% from different areas of the FCA
10% from UK Regulators
7% from firms
Following our intervention, in Q1 we had 2235 promotions amended/withdrawn.
Table 1: Number of cases with interventions and amend/withdraw outcomes
|
2023 Q1 |
|---|
|
0 s137S (the Banning Power) directing a firm to withdraw financial promotions |
|
0 Own Initiative for Imposition of Requirements (OIREQs) were approved, restricting the firms’ ability to communicate or approve financial promotions |
|
10 Voluntary Applications for Imposition of Requirements (VREQs) were approved, restricting the firms’ ability to communicate or approve financial promotions |
| 0 Undertaking and Attestation |
| 2235 promotions were amended or withdrawn following our intervention with 47 authorised firms |
Figure 1 shows the split across sectors.
Chart
Data table
Figures rounded to the nearest percentage.
Retail investments and retail lending are the sectors with the highest amend/withdraw outcomes, totalling 90% of our interventions with authorised firms.
Some of the most common breaches involved credit brokers, lenders and firms promoting high-risk investments.
Unauthorised firms
Number of reports received
In 2023 Q1, we received 6989 reports about potential unauthorised business.
We issued 611 alerts[1] about unauthorised firms and individuals, an increase of 15% from 531 in Q4 2022. 12% of these related to clone scams, which is where fraudsters use details such as the name and address of authorised firms and individuals, and a 'firm registration number' (FRN) to suggest they are genuine. Many of these involved breaches of the financial promotion restriction online. In almost all cases we asked for the websites to be taken down.
Examples of our interventions - authorised and unauthorised firms
Reducing and preventing serious harm
|
Mis-using consumers funds |
|
|---|---|
| Issue |
A firm was referred to us by the Financial Ombudsman Service due to an outstanding award of £70,000, where a consumer was told their funds had been invested in a bond. We had concerns whether the firm could be effectively supervised and held appropriate resources. We imposed restrictions on the firm because we found no evidence that the money transferred by the consumer was invested in a bond or any other form of investment. Some of the funds were also transferred into a personal account of the Director. |
| Action taken |
Our actions included freezing the firm’s bank account and its permissions to carry out regulated activities were cancelled. |
|
The Halo effect – cracking down on firms implying unregulated activities are authorised |
|
|---|---|
|
Issue |
We identified that a credit broking firm had an excessive number of trading names. Websites linked to the trading names promoted FX and Crypto trading platforms and listed the parent firms regulated status, despite it only having limited credit broker permissions. We found that no regulated activity had been undertaken in the previous 12 months and we were unable to engage with the Senior Management Function (SMF) directly. |
|
Action |
We had all trading names removed from the Financial Services Register and all reference to the parent firm has been removed from the trading name websites. The firm is now being processed using our ‘use it or lose it’[2] initiative. |
|
Debt packager firm uses misleading trading name |
|
|---|---|
|
Issue |
A debt packager firm was using a trading name which could potentially mislead consumers that it was a not-for-profit organisation or part of a government scheme. Consumers are unlikely to realise they were directed to a fee-paying service rather than free debt advice. Firms should not use trading names which mislead on the nature of the services they offer. Following our intervention, the firm agreed to remove the trading name and all associated promotional material |
|
Action |
We will continue to focus on monitoring firms’ use of trading names and act where we identify misuse. Firms should review October 2022’s Regulation Round-Up[3] and our website[4] on how they may be used appropriately. |
|
Firms taking advantage of the rising costs of living |
|
|---|---|
|
Issue |
Due to the rising cost of living, we have been focusing on firms that appear to be providing unauthorised debt advice to consumers. Where we have identified a breach of our regulatory perimeter, we have engaged with 19 unauthorised firms and have issued 9 alerts. Our work remains ongoing, and we will continue to work to prevent harm to consumers in this area. A debt firm whose target market are likely to display vulnerable characteristics, was misleading consumers by suggesting they could become debt free without incurring any costs. The firm provides free debt advice, but the different debt solutions on offer are not free. We also found that the firm was:
|
|
Action |
Following our engagement, given the scale and severity of the breaches, the firm applied for the imposition of a voluntary requirements (VREQ) which we agreed to. The firm withdrew their financial promotions and did a review of their systems and controls for their marketing of financial promotions. |
|
Review of the marketing and promotion of Speculative Illiquid Securities including mini-bonds |
|
|---|---|
|
Issue |
We reviewed a sample of firms that have previously been involved in the distribution of Speculative Illiquid Securities (SIS) including mini-bonds[6], to find out what exposure, if any, these firms still have and the amount that remains outstanding. Our review identified examples of SIS, not being fully repaid at maturity. Instead, those investments were: ‘rolled over’ by either:
|
|
Action |
We are concerned that these events could cause consumer harm as the investor cannot access their money as originally expected. If rollovers are considered necessary, we expect firms to communicate with investors in advance, about the impact this will have on them. Given the potential for consumer harm, we also expect the firm to promptly submit a SUP 15[7] notification. We also saw examples of investors being incorrectly categorised as high net worth or sophisticated. All firms involved in the distribution or issuing of SIS must ensure they have robust processes in place to categorise investors correctly. These responsibilities remain with the firm even if it outsources client categorisation processes to a third party (e.g., when using a ‘white-labelled’ platform). |
|
Life insurer |
|
|---|---|
|
Issue |
An insurance firm used an inappropriate image in its marketing campaign for life insurance. We viewed this promotional content as breaching a number of our principles[8], including ‘integrity’ and ‘management and control’. The firm immediately received many complaints about the promotion and removed it. |
|
Action |
Our intervention centred on the systems and controls and questionable taste and decency, and the firm agreed to cease to communicate any further financial promotions that had not received prior approval from the product manufacturer (or co-manufacturer) or another authorised person, under section 21 of FSMA. |
|
Peer-to- Peer firm multimedia failures |
|
|---|---|
|
Issue |
We found a peer-to-peer firm, who were providing high-cost short term credit and investment opportunities, in breach of several financial promotion rules across its Google Ads, Facebook sponsored Ads and on its website. The promotions were missing important risk warnings, the representative annual percentage rate (“RAPR”), it implied immediacy of funds and used potentially misleading language, headlines and illustrations. |
|
Action |
Given the number of breaches, the firm applied for the imposition of a VREQ which we agreed to, and withdrew all non-compliant financial promotions. The firm also undertook a review of its systems and controls, policies and procedures in relation to financial promotion activity. The firm also signed an attestation, formally taking accountability for carrying out the actions we required. |
Setting and testing higher standards
Consumer Duty Expectations
We published 17 sector/portfolio letters[9] to over 45,000 firms in scope of the Consumer Duty. The letters describe our expectations and aim to help firms implement and embed the Duty effectively.
Strengthening our financial promotions rules
As highlighted in the annual publication[10] we were extremely concerned with firms’ poor compliance with our new financial promotions rules[11] for high-risk investments. Even after we notified firms that their websites were in breach of our rules, it took over two weeks for firms to update their websites to be compliant. This is far below the standard we expect from firms. The second half of the rules came into force on 1 February 2023. We have now started to investigate whether firms have updated their processes to meet these rules and take action against any failings.
Promoting competition and positive change
Cryptoasset firms marketing to UK customers
In January 2022 we consulted on proposed rules for cryptoasset promotions[12]. We will publish our final rules for cryptoasset promotions once the relevant legislation has been made. We expect to take a consistent approach to that taken for other high-risk investments, subject to any specific nuances in relation to cryptoassets. Cryptoasset businesses marketing to UK consumers, including firms based overseas, must get ready now[13] for this regime. Firms may potentially face criminal sanctions if they do not comply with this regime.
Cracking down on misleading credit brokers
Following on from our earlier work on credit brokers[14] we published a case study[15] which highlighted some of the misleading phrases we see from lenders who offer high-cost short-term credit. This aims to let consumers know what to look out for when looking to borrow money and therefore prevent potential consumer harm.
How to report a misleading financial advert or potential scam
Report a financial advert or promotion[16] that you think is misleading, unfair or unclear.
Report a scam[17], authorised firm or individual to us.
Our casework with will usually involve confidential information for the purposes of section 348 of the Financial Services and Markets Act 2000. We are therefore unlikely to be able to provide further information about particular cases. Find out more about the information we can share[18].
Disclaimer
The figures reported within this data are accurate at the time of publication. However, they can be subject to change depending on any ongoing work with a Firm.
Copyright
The data on this page is available under the terms of the Open Government Licence[19].