This page analyses the data, between 1 January 2022 to 31 December 2022, resulting from action taken against authorised firms breaching financial promotion rules and referrals and investigations into unregulated activity.
Financial services play a critical role in the lives of everyone in the UK. The rising cost of living continues to heavily impact consumers, with the most vulnerable being hit the hardest, so it is important for consumers to get the outcomes they need from financial markets. A large part of delivering good consumer outcomes is linked to good quality marketing information. Unclear or misleading marketing is highly concerning because of the complex and often long-term nature of financial products. It is more important than ever that financial promotions are responsible and clear so consumers can commit to appropriate financial products.
This data provides an overview of how we are working to improve standards across the market so that consumers are provided with clear, fair and not misleading financial promotions to enable them to make an informed decision before parting with their money. It brings together the data and themes reported in our quarterly financial promotions publications during 2022, where we significantly increased our intervention activity. We expect firms to read this and take necessary steps to ensure they deliver good consumer outcomes. We will continue our intervention activity where we identify authorised and unauthorised firms and/or individuals causing consumer harm.
What’s included in the data
- key messages
- examples of our work on financial promotions during 2022:
- 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
1. Key messages
- 2022 has seen us significantly increase our intervention activity in response to poor financial promotions compliance in authorised firms and activity involving unauthorised firms and individuals.
- In relation to authorised firms, following our intervention, last year we had 8,582 promotions amended/withdrawn which is an increase of 1398%, compared to 573 in 2021.
- In relation to unauthorised firms and individuals, we issued 1,882 alerts in 2022, an increase of 34% from 1,410 in 2021. This is despite us seeing an overall decrease of 24% of total reports received in 2022 compared with 2021.
- We remain concerned regarding the levels of compliance.
2. Our work
Trends and themes identified and action taken
Last year we saw an increase in the use of bloggers and influencers on social media, such as Instagram, Facebook and YouTube, promoting financial products, particularly investment products, to younger age groups. We also saw an ongoing trend in the number of bloggers promoting credit on behalf of unauthorised third parties, with a particular growth in financial promotions targeting students. In response:
- Where we have identified an unlawful promotion, while we have no powers to require sites to be taken down, we have requested the platform hosting the harmful content to remove it. We have made these requests to all major social media companies, including Instagram, Facebook, YouTube and TikTok.
- We have increased our capability to search across all social media to identify illegal financial promotions faster and in larger volumes. Given the substantial number of illegal promotions we continue to identify, our expectation is that every social media platform improves their capability to identify and remove the illegal financial promotions on a proactive basis. As such, we are continuing our engagement with them and continue to carry out proactive searches across all platforms to identify and seek to remove the illegal content.
- We are working with other regulators to educate fin-fluencers (influencers that publicise content on financial matters) about their obligations when seeking to promote financial products or services. In particular, we want unauthorised fin-fluencers to think carefully before promoting financial products and to be clear about their obligations when advertising to consumers through their social media channels to avoid breaching the Financial Services and Markets Act 2000 (FSMA) by issuing illegal financial promotions which entice consumers to invest money they cannot afford to lose or provide consumers with financial advice. Issuing an illegal financial promotion is potentially a criminal offence. In the most serious of cases, we have and will refer fin-influencers for criminal investigation.
- We have used our financial promotions banning power twice to direct firms to withdraw financial promotions.
- We have accepted voluntary requirements from 12 firms and used our own initiative powers on 1 firm restricting their ability to communicate or approve financial promotions.
Examples of our interventions
2.1. Reducing and preventing serious harm
Taking action against a fin-fluencer
A social media influencer had, on at least 2 occasions, promoted unauthorised traders to their followers. This individual was also the sole director of a regulated firm with permission for secondary credit broking. The social media promotions were made using the individual’s personal profile and made no reference to the regulated firm. We engaged with the individual who agreed not to use their personal social media to promote financial services, and we imposed a requirement on the firm that neither the firm nor its director would promote any financial services offered by third parties.
Taking action when we see firms taking advantage of the rising costs of living
We took action against a company seeking to take advantage of the rising cost of living to target potentially vulnerable consumers. The entity was providing trading signals to over 70,000 followers. We issued an alert and requested the online posts be removed.
Using the s137S banning power where we see the highest amount of harm
An online retail broker with over 1.1m UK retail customers with a primary target market of millennial investors was issued with a s137S financial promotions ban, requiring the firm to cease its marketing campaign. We had serious concerns that the firm’s financial promotions, which involved social media influencers, were targeting vulnerable consumers with significant debt. We also invited the firm to apply for a voluntary imposition of requirements (VREQ) which meant it ceased all financial promotion activity until we were satisfied it had effective systems and controls in place at all points of the firm's lines of defence.
Taking action against unauthorised business
In 2022, 25,861 reports were received about potential unauthorised business. Every report is assessed individually alongside any other reports we may have received on that matter. Where we identify sufficient and credible evidence of a breach of our rules, the matter is escalated to enable more detailed enquiries to be carried out. The most serious cases are referred to our Enforcement and Markets Oversight Department for investigation. Additionally, we capture relevant intelligence, issue alerts on our website to warn consumers at the earliest opportunity about our concerns and make referrals to specialist teams, law enforcement agencies and other regulators where appropriate to facilitate wider action.
We took decisive action against an unregistered cryptocurrency exchange provider that appeared to be offering derivative cryptocurrency products to UK consumers. To protect consumers, we issued an alert and sought removal of the firm’s website.
We contacted 55 consumers who had been identified on a scammer's list targeting consumers who had been searching for loans online. We wrote to each consumer to warn them that they had been included on a scammer's list and provided them with detailed guidance about how they can identify scams and how to protect themselves in the future.
Proactive action, monitoring new websites
During the year we used various tools to assess around 180,000 websites which resulted in just over 4,500 websites and social media platforms being reviewed. This led to 1,441 alerts being issued and approximately 400 of the offending websites were taken down.
Cancelled firms promoting they are authorised
As part of our proactive work, we reviewed 1,100 firms who had been cancelled and were therefore now unauthorised. We found 62 firms that were in breach of s19, s21 and/or s24 of FSMA who we contacted requesting that they amend their websites. On the back of this work, we have issued 4 alerts.
High-risk, non-standard investments and scams
Alongside our work on financial promotions, we look specifically at high-risk, non-standard investments. Our work in this area focuses on firms that have significant adverse intelligence including known engagement in harmful behaviour and persons of interest and often results in intervention activity. During 2022, we agreed 13 variations of permissions or the imposition of a requirement with the firms (VREQs or VVOPs), imposed requirements under our own-initiative (OIREQS) on 3 firms and varied permissions of 4 firms under our own-initiative (OIVOPS) as part of this work.
Taking assertive action
We imposed an OIREQ on a firm who were issuing and promoting speculative illiquid securities (SIS) to investors without carrying out a preliminary assessment of suitability. None of the promotional material included the specific risk warnings required when promoting a SIS and we believe that the SIS were sold to retail investors. Following the OIREQ, the firm went into administration because it was unable to make capital and interest payments on the bonds it issued.
Preventing harm against vulnerable consumers
We imposed an OIREQ on a high-cost lender, who had accepted loans with excessive interest rates to fund its business. It was subsequently unable to repay these loans. We believe the firm misappropriated loan monies by enabling some to be paid to a connected person, then advised us the funds had been cascaded to the firm, when they had not. Our requirements included an Asset Restriction and prevented the firm from accepting new funding.
2.2. Setting and testing higher standards
On 29 July 2022, we started regulating pre-paid funeral plans. From this date all funeral plan providers need to follow new FCA rules, which include a ban on cold calling and commission paid to intermediaries, and high standards on governance and financial resilience. Since this date we have intervened with 3 firms who were breaching our rules, resulting in all of the firms’ websites being amended. We also intervened where a firm was offering regulated pre-paid funeral plans as well as insurance without authorisation.
Strengthening our financial promotions rules
In August 2022, we published our Policy Statement, strengthening our financial promotions rules for high-risk investments. The first half of these rules came into force on 1 December 2022, requiring all firms to display a prescribed risk warning when promoting high-risk investments. In December we reviewed 67 crowdfunding and peer-to-peer firms to assess whether they had complied with the requirements. Of those firms, we found 60% had failed to comply with our rules. We were extremely concerned with this lack of compliance and took immediate action to ensure the firms remedied this. Due to the exceptionally low compliance rate, we will be looking at more firms and will closely monitor compliance against the second half of the rules which came into force on 1 February 2023. Firms must be ready to comply with the new rules. We will take action against any breaches, using our assertive supervisory tools when we identify persistent breaches as well as potential use of enforcement action where necessary.
Raising market standards
We issued a Dear CEO letter in May 2022 warning c28,000 lenders and brokers to stop using misleading terms in their advertising or face regulatory action. Since this date over 50% of our interventions have seen firms entering into the imposition of a voluntary requirement (VREQ), who were breaching our rules. Our intervention in this sector has resulted in 7,191 promotions being amended or withdrawn; which is one of the contributing factors to the significant increase in our amend and withdraw outcomes for 2022.
We also wrote a letter to the British Retail Consortium and issued a Dear CEO letter in August 2022 to c27,000 firms with lending permissions that could offer Buy Now, Pay Later (BNPL) products. Plans to bring BNPL credit agreements into full regulation are underway. However, BNPL financial promotions do not fall outside of the Financial Promotions Order and therefore must comply with the financial promotion rules. We have engaged BNPL providers and its retailers on the content of its financial promotions and communications to ensure good standards and expectations are met. We are working closely with regulated firms who have confirmed section 21 approval for the financial promotions of unauthorised BNPL providers and their retailers, to ensure that regulated firms have appropriate systems and controls to effectively oversee compliance with our rules.
2.3. Promoting competition and positive change
We engaged positively with the Government to ensure scams were covered by its proposed Online Safety Bill. We took a leading role in influencing online search engines and social media firms and, following our public intervention, Google changed its policy to only permit FCA-authorised firms or promotions approved by FCA-authorised firms to advertise financial promotions with them. We continue to influence social media firms to implement effective controls to stop scams, or otherwise illegal ads from appearing on their platforms. Following our engagement, Meta (Instagram and Facebook), TikTok, Twitter as well as Bing, have all changed their policies to permit only FCA-authorised firms to market financial services. Meta only introduced their policy at the end of October 2022 and we continue to be in discussions with them about how this policy is implemented in practice to ensure that it is effective in blocking illegal advertising content consistently across all their platforms.
Mis-use of trading names
We identified that some firms had been misusing trading names, registering trading names in the wrong circumstances and/or using them in a way which may mislead consumers. In order to promote better conduct in this area we updated the information on the appropriate use of trading names on our website and highlighted this to firms in the October 2022 edition of Regulation Round-Up. We have since increased our focus in this area and will continue to intervene with firms where we identify misuse of trading names.
We will continue to report on our progress and findings in our quarterly financial promotions updates.
3. How to report a misleading financial advert or potential scam
Report a financial advert or promotion that you think is misleading, unfair or unclear.
Report a scam, authorised firm or individual to us.
Our casework will usually involve confidential information for the purposes of section 348 of FSMA. We are therefore unlikely to be able to provide further information about particular cases. Find out more about the information we can share.
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.
The data on this page is available under the terms of the Open Government Licence.