Digital services make it faster and easier than ever for consumers to undertake financial services activity. Consumers need good information to make good decisions – particularly in a challenging economic environment.
But this doesn’t always happen. Instead, they’re often targeted with adverts that are unclear, unfair, misleading or illegally communicated by unauthorised persons.
Non-compliant or illegal financial promotions can lead to a range of consumer harms including unsuitable purchases and financial losses. Our outcomes are to reduce the potential for these harms to occur.
Suitability and treatment
Outcome 1: Reduce the potential for consumer financial losses from mis-selling products due to the issuing of non-compliant financial promotions by authorised entities
|
Metric code |
Metric description |
Source |
Baseline Value |
Year 1 values |
Year 2 values |
Latest status (year 2 value compared to baseline) |
|---|---|---|---|---|---|---|
|
IHT1-M01 |
An increase in the number of interventions on non-compliant financial promotions by authorised firms |
FCA data |
573 interventions (2021) |
8,582 interventions (2022) |
10,008 (2023) |
Improved |
Outcome 2: Reduce the potential for consumer financial losses and mis-selling products due to the issuing of illegal financial promotions by unauthorised entities
|
Metric code |
Metric description |
Source |
Baseline Value |
Year 1 values |
Year 2 values |
Latest status (year 2 value compared to baseline)
|
|---|---|---|---|---|---|---|
|
IHT2-M01 |
An increase in the number of warnings on FCA website about unauthorised entities |
FCA data |
1,410 warnings (2021) |
1,882 (2022) |
2,285 (2023) |
Improved |
Suitability and treatment/confidence
Outcome 3: Reduce the potential for financial loss from scams and the mis-selling of high-risk non-standard investments involving authorised firms
|
Metric code |
Metric description |
Source |
Baseline Value |
Year 1 values |
Year 2 values |
Latest status (year 2 value compared to baseline) |
|---|---|---|---|---|---|---|
|
IHT3-M01
Also metric CCO3-M03 and metric PFC1-M01 under topline outcome on consumer confidence and the Reducing and preventing financial crime commitment. |
Reported investment fraud victims and losses
|
National Fraud Intelligence Bureau
|
26,482 total reported victims (2021) |
25,558 total reported victims (2022) |
26,643 total reported victims (2023) |
Improved |
|
£832.5m total reported losses (2021) |
£888.8m total reported losses (2022) |
£525.7m total reported losses (2023) |
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|
28% growth in reported victims (Between 2020 and 2021) |
3.5% reduction in reported victims (Between 2021 and 2022) |
4.2% growth in reported victims (Between 2022 and 2023) |
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|
53% growth in losses (Between 2020 and 2021) |
6.8% growth in losses (Between 2021 and 2022) |
40.8% reduction in reported losses (Between 2022 and 2023) |
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|
IHT3-M02 |
Reduction in the proportion of consumers investing in high-risk investments (HRIs) whose general tolerance to risk is very low or who demonstrate any characteristics of vulnerability |
43% of consumers with high-risk investments (cryptoassets, innovative finance ISAs, peer to peer lending or investment based crowdfunding products) have a very low general tolerance for risk or demonstrate at least 1 characteristic of vulnerability (2020) |
44% of consumers with high-risk investments (cryptoassets, P2P lending, Innovative Finance ISAs, investment-based crowdfunding, CFDs, shares in unlisted companies, mini-bonds) have a very low general tolerance for risk or demonstrate at least 1 characteristic of vulnerability (2022) |
48% of consumers with high-risk investments (cryptoassets, P2P lending, Innovative Finance ISAs, investment-based crowdfunding, CFDs, shares in unlisted companies, mini-bonds) have a very low general tolerance for risk or demonstrate at least one characteristic of vulnerability Difference between year 2 and baseline value is not statistically significant. |
Little or no change |
|
|
IHT3-M03 |
Reduction in the proportion of consumers investing in HRIs whose tolerance to investment risk is very low or who demonstrate characteristics of vulnerability |
52% of consumers with high-risk investments (cryptoassets, P2P lending, Innovative Finance ISAs, investment-based crowdfunding, CFDs, shares in unlisted companies, mini-bonds) have a very low tolerance for investment risk or demonstrate at least 1 characteristic of vulnerability (2022) |
|
55% of consumers with high-risk investments (cryptoassets, Peer 2 Peer lending, Innovative Finance ISAs, investment-based crowdfunding, CFDs, shares in unlisted companies, mini-bonds) have a very low tolerance for investment risk or demonstrate at least one characteristic of vulnerability (2023 re-contact survey) Difference between year 2 and baseline value is not statistically significant. |
Little or no change |
What the latest metric values tell us
Lows in consumer confidence may mean consumers lose trust in mainstream financial services providers. This could increase the risk to consumers from harmful financial promotions (both legitimate and scams).
Our metric on the number of interventions on non-compliant financial promotions (IHT1-M01) refers to the use of regulatory tools to reduce potential or actual harm to consumers and markets. We have significantly increased our interventions in this area. The number of times we required authorised firms to withdraw or amend their financial promotions has increased by 16.6% compared to 2022. An increase in interventions indicates that we’re more effectively able to address promotions that are likely to lead to mis-selling and financial losses. For metric IHT2-M01 (see table above), we’ve improved our ability to proactively identify illegal financial promotions and have issued 21% more warnings than in 2022. This signals that we’re more effectively able to address activity by unauthorised entities with the potential to lead to mis-selling and financial losses. While the volume of our interventions and warnings has continued to increase to date, we expect these rates of growth will start to slow as other measures (e.g. the Consumer Duty) begin to influence firms’ behaviour. We also expect the growth in activity from our technology and data enhancements to start to flatten.
For metric IHT3-M01, while there were 4.2% more victims of investment fraud in 2023 compared with 2022, losses reduced by 40.8%. This is against our baseline of 28% growth in victims and 53% growth in losses in 2022 compared to 2021. It remains challenging to measure our impact on overall investment fraud trends as there are wide-ranging drivers of fraud and parties who can affect its prevalence and impact. However, we have made a significant contribution through interventions to protect consumers and campaigns to raise their awareness. The ‘Reducing and preventing financial crime’ section and our 2023/24 Annual Report further highlights our work in this area.
For metric IHT3-M02, there’s been no statistically significant change between 2022 and 2023 in the proportion of consumers holding high risk investments (cryptoassets, innovative finance ISAs, peer to peer lending, investment-based crowdfunding, CFDs, shares in unlisted companies or mini-bonds) whose general tolerance to risk is very low or who demonstrate at least one characteristic of vulnerability.
However, overall ownership of high-risk investments (HRIs) has changed over time among the general adult population. A total of 4% of UK adults stated that they held high-risk investments (cryptoassets, innovative finance ISAs, peer to peer lending or investment based crowdfunding products) in 2020. In 2022, 11% reported holding high-risk investments. This was partly because the FLS 2003 re-contact survey specifically asked about ownership of additional high-risk investment products (CFDs, shares in unlisted companies, mini-bonds). This proportion fell to 9% of UK adults in 2023.
In August 2022, we introduced new rules for HRIs to help make sure consumers fully understand the risks before investing. We found varying levels of compliance in the firms we assessed and published our findings with examples of good and poor practice for consideration by the wider industry.
In the future, cost-of-living pressures and our policy interventions may decrease demand for HRIs. On the other hand, declines in mainstream investment markets, increased regulation of cryptoassets and wider income pressures may drive more consumers to seek higher returns. We will monitor HRI ownership levels, taking action where needed.