April 9, 2024


by: kiran


Tags: "Regulation"

Practical Steps to Avoid FCA Financial Promotion Interventions

The FCA was busy in February in the world of financial promotions. This is no surprise really considering the Consumer Duty requires firms to demonstrate that they are providing consumers with information which helps them to make effective and informed decisions about financial products and services.

Firstly, the FCA fined and banned a compliance officer for signing off misleading financial promotions. The FCA deemed this person unfit for their role due to a lack of integrity and the risk that he poses to consumers and the wider financial system. The compliance officer failed to provide proper scrutiny or challenge senior management on these promotions which resulted in the products appearing as far more attractive investments than they were.

The day after the FCA released details of this fine, they also issued a press release showing a 17% year on year increase in intervention of financial promotions. Over 10,000 financial adverts and other promotions were withdrawn or changed in 2023 following intervention from the FCA in yet another example of the regulator ‘showing their teeth’.

The FCA remains concerned about the levels of compliance with the financial promotions rules and so we can expect further work in this area, and further intervention in the future. It is worth noting that the FCA has increased their capability to search across all social media to identify non-compliance financial promotions faster and in larger volumes.

What Firms need to consider:

Firms should take this as a nudge to consider whether their financial promotions systems and controls are fit for purpose. The process should not be a ‘go through the motions tick-box exercise’!

It is recommended that firms read the recent final notice in full and use this as a gap analysis against their existing processes.

Anyone responsible for signing off financial promotions needs to ensure that they obtain evidence of the claims being made in any drafted promotions, do not allow promotions that give a misleading impression of the product to be published and take appropriate action when they identify any recurring issues in the promotions being drafted by the business. Ultimately, before signing off anything, they should ensure it is clear, fair and not misleading.

Padda Consulting can help provide an independent check of the systems and controls you have in place in this area, or indeed provide independent review on any promotions you are considering issuing. If you need any assistance, please get in touch.