FCA warns on ‘Isa-but-not-Isa’ savings accounts

FCA warns on ‘Isa-but-not-Isa’ savings accounts

The FCA has expressed concern over how some peer-to-peer savings accounts are being promoted in a way that might make the ordinary saver think the firms and products are regulated.

In one example, which was a listed bond from a peer-to-peer lender, the national newspaper advert highlighted a headline rate of 5.25 per cent.

It was being advertised direct to consumers under the bold strapline ‘Even nicer in your Isa’, although the bond – which was not an Isa – was issued by Wellesley Finance, whose products are not currently covered by the FSCS.

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The FCA would not comment on the specific advertisement, but said it was concerned that some financial product promotions had the potential to confuse consumers.

David Cross, a spokesman for the FCA, said: “We recently looked at financial promotions in the peer-to-peer market and following that we expressed concerns that promotions compared crowdfunding investing to savings accounts and banking and, in doing so, created the impression that the lender’s capital was secure.

He said: “We will continue to monitor financial promotions in this sector and to take action where firms do not meet our standards.”

Wellesley marketing manager Aldwyn Boscawen said the press advertisement for the Wellesley Listed Bond had been approved as a financial promotion by Highpoint Trustees Limited.

He said: “Highpoint Trustees Limited are authorised and regulated by the FCA.”

The advertisement includes a prominent risk warning stating: “Investing in Wellesley Finance Bonds involves risk to capital and interest payments. This investment is not covered by the FSCS.”

Adviser view:

Scott Gallacher, chartered financial planner at Leicester-based Rowley Turton, said: “I think Wellesley is being relatively clear, as while the ad might be a bit misleading, when you visit their website there is a visible button for you to register for an Isa.

“That said, I still suspect that many readers will not notice the warnings – but this tends to be because people skip everything but the headlines, rather than there being a specific problem with the advert. Perhaps the bigger problem is with people not taking advice and chasing rates/returns who, if things turn out badly, might be somewhat disappointed at the end.”