There was a 61 per cent increase in the number of financial promotions that were withdrawn or amended by the Financial Conduct Authority in the 12 months to the end of June, new data from regulatory consultancy has revealed.
According to specialist regulatory consultancy Bovill, at the end of June the FCA had withdrawn or amended 328 financial promotions,
Bovill said the increase was the result of an interventionist approach by the FCA, as well as several recent updates to the rules on financial promotions.
In January, the regulator published its finalised guidance on inducements, hardening its stance on firms making a profit from services to product providers.
By August, the FCA revealed it was investigating 227 cases of potential non-compliance with financial promotion rules, as it published findings of a review which showed many consumer credit firms were still misleading consumers.
Bovill suggested that firms are still grappling with the implementation of new guidance in areas such as promoting financial products on social media.
Mark Spiers, head of wealth management at the firm, said: “This sharp jump shows that the FCA is scrutinising ever more intensively how the financial promotion rules are being applied and highlights the growing challenges firms face in getting it right.
“While it’s vital that the FCA is vigilant in protecting retail investors in particular, staying within the financial promotions rules is a very tricky balancing act for firms, as it is fairly easy to overstep the mark.”
Mr Spiers added that firm’s can no longer afford to make mistakes. “Not only will the FCA expect decisive remedial action from any firms who get it wrong, they could also face the prospect of getting a public ticking off from the regulator, which could be hugely damaging to their reputation.”
Examples of marketing which could fall foul of the regulator, include: failing to include sufficient risk warnings, failure to provide a balanced view of investment potential, or the use of unsubstantiated claims and confusing wording.
peter.walker@ft.com
