Adverts being referred to the Advertising Standards Authority, relating to financial products and services including cryptocurrency, have risen year-on-year.
Data obtained by FT Adviser from the ASA found the number of cases referred to the organisation has increased by 40 per cent between 2020 and 2023, rising from 499 to 703 cases.
In 2023, the number of cases formally investigated were 18, with 11 upheld, two not upheld and five withdrawn.
Meanwhile 2021 saw the largest number of cases formally investigated in the four year period covered by the data, totalling 24, with 20 upheld and 4 withdrawn.
ASA director of complaints and investigations, Miles Lockwood, told FT Adviser the rise in complaints was likely due to the cost-of-living crisis and in turn the prevalence of debt advice ads.
He added: “The number of ads we’ve taken action against is also a result of getting on the front foot and the ‘red alert’ prioritisation work we’ve been carrying out in this area.
“We know that, generally, people’s understanding of financial products and services is low which is why it’s even more important that ads are not misleading or irresponsible.
"And it’s why two years ago we launched a financial issues project, which is ongoing, to monitor, identify and tackle consumer protection issues particularly around buy-now-pay-later, lead generation and crypto advertising.”
| Year | 2020 | 2021 | 2022 | 2023 |
| Total no.cases | 499 | 515 | 576 | 703 |
| No additional investigation | 330 | 333 | 343 | 420 |
| Outside remit | 113 | 110 | 157 | 231 |
| Advice notices | 36 | 38 | 32 | 23 |
| Informally resolved | 17 | 8 | 16 | 11 |
| Formally investigated | 11 | 24 | 14 | 18 |
| Upheld | 7 | 20 | 9 | 11 |
| Not upheld | 2 | 0 | 0 | 2 |
| Withdrawn | 2 | 4 | 5 | 5 |
Source: ASA
Chris Morris, head of financial planning, policy and engagement at the CISI attributed the increase in cases to more firms perhaps using social media to promote themselves.
“The FCA have recently updated their guidance on financial promotions which is applicable to both regulated firms and influencers. This shows that the FCA has spotted the trend and has taken action to give firms more guidance on the rules that relate to financial promotions,” he said.
Priti Verma, chief risk officer at Quilter, said the steep 40 per cent rise was concurrent with the surge in crypto advertising and 'finfluencers' which have both been notable trends since 2020.
She added that the targeting of “inexperienced investors” by crypto ads in the UK was a “concerning trend" given the general low level of UK financial literacy.
Verma explained the common issue with crypto ads was the absence of mentioning the associated risks, lack of discussion on emergency funds, goal setting, and planning.
“While the FCA has partnered with the ASA to provide a warning to finfluencers, given the risks involved, it might be worth considering an extension of the regulations to encompass all financial products, not just crypto-assets,” she added.
In light of the data, Verma believed it was “imperative” to advocate for responsible advertising practices that provide “clear, accurate and comprehensive information to consumers enabling them to make informed financial decisions.”
Cryptoassets
Simon Harrington, head of public affairs at Pimfa, said the association recognised there was a “growing appetite” among some investors to expose themselves to crypto asset and therefore believed guidance was necessary to ensure financial promotions related to them were “fair and not misleading”.
He added: “Ideally, you would expect that the guidance issued will reduce the number of cases brought forward to either the FCA or the ASA although clearly this is an area where firms appear more relaxed operating closer to the regulatory boundaries than other parts of the financial services sector.
“Pimfa remains concerned that the FCA, since taking over the regulation of adverts of qualifying crypto assets from the ASA has chosen to classify these as restricted mass market instruments.
“Our view remains, regardless of their growing popularity, that they should be regarded as non-mass market instruments and should not be ‘promoted’ to retail investors in the same way that other ‘safer’ illiquid assets can be.”
Going forward, Harrington said Pimfa sees “very real risks” associated with the promotions of crypto assets.
“Not least the utilisation of third party non-regulated finfluencers to either promote products or firms, the utilisation of generic risk summaries, which are overlooked by underqualified financial promotion approvers and, of course, the downplaying of risk of these assets. This needs to be an area of focus from the FCA now that they have assumed control of regulation of this area,” he added.
A spokesperson for the FCA said: "We remain concerned about the levels of compliance with our financial promotions rules. We have continued to increase our intervention activity in response to poor financial promotions compliance in authorised firms and activity involving unauthorised firms and individuals."
alina.khan@ft.com
