8. Enabling consumers to help themselves

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  

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[4]’ section and our 2023/24 Annual Report[5] 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[2] 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[6] 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.