The city’s regulator has proposed stricter measures to crack down on unscrupulous or misleading financial marketing following a surge in online marketing.
The Financial Conduct Authority (FCA) is calling for new scrutiny to ensure companies demonstrate they have the necessary experience before approving financial stocks.
FCA-authorized companies can currently authorize financial shares on behalf of other non-authorized companies.
Amendments to the Financial Services and Markets Act proposed by Parliament before MPs would require authorized companies to undergo a new review before approving financial grants, giving the FCA more power to prevent harm.
Businesses must report approved promotions. These proposals ensure that the FCA can act quickly to stop harmful financial advertising from unauthorized companies, including in areas of high-risk investment and buy now, pay later (BNPL).
The FCA said consumers are investing in high-risk products that exceed their risk tolerance levels due to low-quality approved financial promotions.
“In the worst case, the performance of the investment deviated significantly from what was advertised, or the product failed, resulting in significant and unexpected losses for retail investors,” the company said in a statement.
Sarah Pritchard of the FCA stated: “Social media and online advertising is helping consumers shorten the time between seeing a promotion and making a financial decision.
“It is important that they have the right information at the right time so they can make the right financial decision.[s]. These offers ensure that those who approve ads are qualified and accountable for the promotions they agree to.”
The FCA has already warned BNPL providers that they could face sanctions if they do not inform consumers of the debt risk associated with such products.
Through the British Retail Consortium, the company sent letters to authorized companies and retailers warning that while some BNPL agreements may not be regulated, they must ensure that promotions comply with legal requirements and are “clear, fair and not misleading.” .
The FCA is also using its authority to oversee whether companies dealing in crypto assets must comply with Advertising Standards Authority guidelines and state that their products are not regulated by the FCA and are not protected by financial compensation schemes.
The FCA insists they are not consumer advocates, but protection is becoming increasingly important. Business and retail misconduct accounts for nearly a third of law enforcement cases.
Source: I News
I am Moises Cosgrove and I work for a news website as an author. I specialize in the market section, writing stories about the latest developments in the world of finance and economics. My articles are read by people from all walks of life, from investors to analysts, to everyday citizens looking for insight into how news will affect their finances.