The Financial Conduct Authority has warned firms against falsely advertising unregulated products as being regulated by the city watchdog.
In a letter addressed to the chief executives of all FCA regulated firms published yesterday (January 9), Andrew Bailey reminded firms of their responsibilities relating to the use of financial promotions, defined by Mr Bailey as an invitation or inducement to engage in investment activity.
Under section 21 of the Financial Services and Markets Act 2000, it is unlawful for a person in the course of business to communicate a financial promotion unless that person is an authorised person, the content of the communication is approved by an authorised person, or a "relevant exemption" applies.
Mr Bailey said the FCA had identified some regulated firms, which undertake both regulated and unregulated business, issuing financial promotions which falsely implied all of their activities were regulated by the FCA or the Prudential Regulation Authority.
Mr Bailey said these financial promotions were unlikely to provide consumers with the "clarity" required by FCA rules and could leave consumers "unable to understand" whether the promoted products or services were regulated.
He said: "We make clear in our handbook that if a firm names the FCA or the PRA as its regulator in a financial promotion that refers to aspects of its business, such as products or services, which are not regulated by the FCA or the PRA, then the promotion should make clear those aspects which are not regulated."
Jonathan Davidson, executive director of supervision in retail and authorisations at the FCA, said: "It is completely unacceptable for firms, which are regulated for some of their business, to market unregulated investments by implying to customers that all their business is regulated.
"We are committed to stamping out this misleading practice and recommend that customers should ask firms whether what they are buying is really regulated by the FCA."
The FCA said whilst it does not approve advertising, it does monitor adverts across different media in the UK.
rachel.addison@ft.com
