A year ago Pimfa, UK Finance, consumer group Which?, the Money and Mental Health Policy Institute and many other organisations formed a campaign group to lobby the government to include fraudulent online adverts and user-generated content – which cause untold financial and mental distress to thousands of victims each year – within the scope of the online safety bill, which seeks to clamp down on harmful online content.
In May 2021 the government conceded our point about user-generated content and included this within the scope of the bill. In March of this year it once again accepted our argument that paid-for online adverts should also be included but, in celebrating this success, we are also aware that we need to go even further.
A good example of why lies in the London Capital & Finance debacle.
LCF was able to advertise high-risk mini-bonds that fell outside of the regulatory perimeter. Given that LCF financial promotions were not considered to be fraud and LCF was a regulated entity, these adverts would not have been caught by sections 34 and 35 of the bill.
Our view is that consideration, in partnership with the Financial Conduct Authority, should be given to how these instances can be caught within the bill. We believe that a clear definition of what is and is not fraud would also be particularly helpful, and we will continue campaigning to that effect.
Again, as a result of Pimfa lobbying, we also welcomed the government’s recent decision to bring mini-bonds within the regulatory perimeter, as well as ongoing work to strengthen the financial promotions regime, which we strongly advocated for and believe is important in protecting mass market consumers, who are plainly unsuited to these sorts of investments.
Another major, member-led priority for Pimfa has been the Financial Services Compensation Scheme levy. Here we have scored major success, with the FCA agreeing that the levy is no longer sustainable and that a formula for significant reduction needs to be found.
While we accept this will take time, we have proposed a short-term solution to use FCA fines to reduce the burden of the levy until a more permanent solution is found.
These are examples of how we represent the interests of our industry and are the first port of call for information and insight.
This is evidenced by Tim Fassam, Pimfa’s director of government relations and policy, being asked to give evidence to the long-awaited parliamentary public accounts committee inquiry into the British Steel Pension Scheme fiasco, which has been described as a feeding frenzy for unscrupulous introducers, along with some advisers.
Pimfa will be working together with the regulator on the design and delivery of the BSPS redress scheme and we believe it is vital that such a scheme gives due consideration to individual outcomes with respect to the calculation of their transfer value, the investment they found themselves in and, of course, the suitability of the advice given.
We are also preparing for the introduction of the consumer duty, expected by July 2022, with an implementation period running until April 2023. But we retain concerns that the inherent subjectivity of the duty will ultimately lead to confusion both for consumers and businesses in terms of their expectations of a good outcome.