The FCA has toughened its approach on misleading and inappropriate financial promotions, with the number of promotions withdrawn or amended rising 61 per cent.
According to regulatory consultancy Bovill, the regulator went after 328 promotions in 2013/14, up from 204 the year before.
Mark Spiers, head of wealth management at Bovill, attributed the increase to more aggressive regulation and changes to the rules governing promotions, to which some firms had not yet adapted.
He 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.”
“As the regulator becomes increasingly pro-active – much more so than its predecessor the FSA – and issues a spate of recent changes and clarifications to its guidance, many firms are scrambling to keep up.”
Particularly, the FCA’s guidance on social media promotions may have caught promoters flat-footed. The paper released in August requires companies to include risk warnings in 140-character tweets, and treats all individual communications as possible promotions. Financial promotions can be banned for failing to indicate risk clearly on all promotions properly.
Mr Spiers added: “Firms cannot 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.”
Adviser view
Aj Somal, financial planner for Aurora Financial Planning in Birmingham, said: “More advertising is on online than in traditional media, so there should be forms of control. The problem with online advertising is that a lot of fraudsters are successful through it.”
