Financial Conduct Authority  

FCA urges govt to change online ads position over scam fears

FCA urges govt to change online ads position over scam fears

The Financial Conduct Authority’s chief executive officer has pressed the government to amend its planned online harms rules to include advertisements as a way of tackling scams.

In a podcast today (August 4), Nikhil Rathi reiterated the regulator was keen for ads to be included in the Online Safety bill, which is currently going through parliament, in line with calls from the industry.

Rathi said; “We’re very keen for investment fraud, economic harm, to be included in that bill, in particular as it relates to online advertising and we’ve been very clear publicly about that, so that as parliament considers this legislation they can consider whether they wish to amend this. 

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“And in that regard, both the Treasury Select Committee, and The Work and Pensions Select Committee have supported this proposal. It will now be a matter for parliament and government to decide whether to pass the amendment that would enable this to happen. 

“We think it would play a decisive role in helping us to protect consumers from online harm, and particularly those scams that target vulnerable consumers and cause them to lose significant parts of their life savings.”

In May, the government announced measures to tackle some online scams in the bill but stopped short of including fraud via advertising, emails or cloned websites.

Since then industry members and MPs have hit back urging the government to include these amendments in the bill.

In particular, they want the government to force internet giants to stop investment fraud facilitated through online advertisements as part of the bill.

But so far the government has rejected these calls. Instead, it said there would be a consultation on online advertising regulation later in the year.

However, the industry has not given up as towards the end of last month, a coalition of consumer groups, charities and financial services industry bodies came together to increase pressure on the legislators.

The Personal Investment Management and Financial Advice Association, the Investment Association, Which?, UK Finance, Martin Lewis and MoneySavingExpert, among others, warned the government that its approach to tackling online fraud was “flawed” and would lead to "complex and muddled regulations, and far worse consumer outcomes than an Online Safety bill with a comprehensive approach to online fraud".

The group said this view was backed by the Financial Conduct Authority, Bank of England, City of London Police and Work and Pensions committee and Treasury committee. 

Around the same time, the Treasury and Work and Pensions committees also wrote to the prime minister urging him to reconsider the government's position.

In the letter, they argued legislating against fraud committed through paid-for advertisement had "strong cross party support” and that not doing so would result in "potentially large financial losses to the public”.

FCA’s ambitious roadmap

Meanwhile last month, the FCA announced its policy goals in its business plan for the coming year, most notably a pending review of the Financial Services Compensation Scheme.