This page gives a summary of data generated between 1 January 2024 and 31 March 2024 from our actions against firms breaching financial promotion rules, and referrals and investigations into unregulated activity.
This data provides an overview of how we are working to improve standards across the market so that consumers are provided with clear and fair financial promotions which are not misleading.
What’s included in the data
- Key messages
- Authorised firms
- number of financial promotions reviewed during this period
- number of closed cases where promotions have been amended and withdrawn, including split across sectors, excluding cases which are still ongoing
- Unauthorised firms
- number of unauthorised reports received, and alerts issued
- Examples of our work on financial promotions during 2024 Q1:
- reducing and preventing serious harm
- setting and testing higher standards
- promoting competition and positive change
- Information on how to report a misleading financial advert or potential scam
Key messages
- Our interventions in 2024 Q1 resulted in 2,211 promotions being amended or withdrawn by authorised firms.
- We issued 597 alerts on unauthorised firms and individuals, 11% of these were clone scams.
- On 8 January 2024, the modification by consent - which delayed the start of the Direct Offer Financial Promotion (DOFP or ‘back end’) rules introduced by Policy Statement 23/6[1] - ended. We are conducting reviews to test the level of compliance with these rules and will act where we see breaches, using our supervisory tools and potentially enforcement action, where necessary.
- On 7 February 2024, the financial promotions approval gateway came into effect. This means that firms that wish to approve financial promotions on behalf of unauthorised firms outside of their group must apply to the FCA for approver permission. Firms that submitted an application before 7 February can benefit from transitional arrangements allowing them to continue approving promotions while their application is being considered. Reporting requirements also came into effect from 7 February for all firms with approver permission or benefitting from the transitional arrangements.
- We proactively reviewed the marketing and promotions of claims management firms for housing disrepair claims. In Q1 2024 following our engagement with 7 authorised firms, this resulted in 83 amendments/withdrawals and alongside this, we are focussing our work regarding unauthorised firms; working to remove unlawful financial promotions.
Authorised firms
Number of promotions reviewed
In 2024 Q1 we reviewed 722 financial promotions from multiple sources:
61% from our proactive monitoring
22% from consumers
7% from UK Regulators
6% from different areas of the FCA
4% from firms
Following our intervention, in Q1 we had 2,211 promotions amended/withdrawn.
Table 1: Number of cases with interventions and amend/withdraw outcomes
|
2024 Q1 |
|---|
|
0 s137S (the Banning Power) directing a firm to withdraw financial promotions |
|
0 Own Initiative Action for Imposition of Requirements (OIREQ) were approved, restricting the firm’s ability to communicate or approve financial promotions |
|
3 Voluntary Application for Imposition of Requirements (VREQ) were approved, restricting the firm’s ability to communicate or approve financial promotions |
|
0 Undertaking and Attestation |
|
2,211 promotions were amended or withdrawn following our intervention with 35 authorised firms |
Figure 1 shows the split across sectors.
Chart
Data table
Figures rounded to the nearest percentage.
The retail investments and retail lending sectors had the highest amend/withdraw outcomes, totalling 85% of our interventions with authorised firms.
Some of the most common breaches involved claims management companies, credit broker firms, and Contract for Difference (CFDs) providers.
Unauthorised firms
Number of reports received
In 2024 Q1, we received 5,722 reports about potential unauthorised business.
We issued 597 alerts[2] about unauthorised firms and individuals. 11% of these related to clone scams, which is where fraudsters use details such as the name and address of authorised firms and individuals, and a 'firm registration number' (FRN) to suggest they are genuine. Many of these involved breaches of the financial promotion restriction online. In almost all cases we asked for the websites to be taken down.
Examples of our interventions - authorised and unauthorised firms
Reducing and preventing serious harm
|
Housing disrepair claims management firms with unclear and potentially misleading financial promotions |
|
|---|---|
| Issue |
Two claims management firms were not making it clear on their websites and social media promotions, that a consumer is not required to use their services to make a claim and did not advise that it is possible for a consumer to present the claim themselves for free, either to the person against whom they wish to complain, to the relevant statutory ombudsman or the statutory compensation scheme – in this case, to the Housing Ombudsman Service[3]. In addition, both firms were using the term, ‘no win, no fee’ on their promotions without providing further details of the applicable fees. They also did not make it clear in their promotions that they are a claims management company and one of the firms we had previously written to about its non-compliant promotions, within the last 12 months. |
| Action taken |
We intervened by inviting the firms to apply for the imposition of voluntary requirements (VREQ). The firms amended their websites and all other social media platforms to comply with the relevant Handbook rules; and in addition, the firms reviewed their systems and controls, policies and procedures for their financial promotion activity. |
|
Contract For Differences (CFD) firm with a lack of compliant risk warning and misleading financial promotions |
|
|---|---|
|
Issue |
A CFD firm was offering over-the-counter leverage derivatives without the appropriate risk warning required to protect consumers from the potential harm from these products. The firm also used misleading language regarding the safety of funds, was unclear regarding its fees, and misused its regulatory status. |
|
Action |
We intervened by inviting the firm to apply for the imposition of voluntary requirements (VREQ). The firm amended its websites to comply with the relevant Handbook rules; in addition, the firm provided a review of its systems and controls. |
|
Credit Broker firm with unclear and misleading financial promotions |
|
|---|---|
|
Issue |
A credit broker firm was providing cost of credit information, such as ‘£100 per month’ on its promotions without providing a representative example (RepEx) as required. The firm’s representative APR also lacked prominence on its website, and it was missing the credit broker statement. In addition to this, the firm was promoting both regulated and unregulated activities on its website, without making this clear, and the customer journey was also unclear. |
|
Action |
Following our intervention, the firm amended its website and social media promotions. |
|
Two firms seeking to approve cryptoasset financial promotions without being ready |
|
|---|---|
|
Issue |
We became aware of the firms’ intention to be s21 approver for cryptoasset financial promotions. We reviewed systems and controls, competence and expertise, risk framework and due diligence. For one firm we concluded them to be unsatisfactory because it appeared to be overly reliant on an external firm to provide the service and lacked the in-house knowledge and experience in cryptoassets. For another firm, its risk framework and due diligence on its proposed cryptoasset client was inadequate. |
|
Action |
Following engagement with the firms, both agreed not to proceed with approving cryptoasset financial promotions at this time. One postponed its s21 gateway application until all identified gaps have been adequately addressed and the other agreed not to approve promotions until its s21 gateway application had been assessed. |
Setting and testing higher standards
Our work with Claims Management Companies (CMCs)
We have recently seen an increase in activity with CMC firms undertaking lead generation or offering their services for housing disrepair claims – this is widespread across both authorised and unauthorised firm activities.
During Q1 2024, following our engagement with 7 CMC firms (including the 2 VREQ examples above) this resulted in 83 financial promotions being amended/withdrawn.
The most common financial promotion breaches we are seeing are:
- failure to clearly signpost to consumers, the free options that are available to them (CMCOB 2.2.8R (3) / CMCOB 3.2.7R)
- using the term, “no win, no fee” but not clearly providing the fee information (CMCOB 3.2.9R)
- not making it clear the firm are a claims management company (CMCOB 3.24R (1))
- not making it clear the firm receives payments from third parties for referrals made (CMCOB 2.2.8R (2))
We want authorised and regulated firms to understand the important role they play in empowering consumers to make informed decisions and providing consumers with all the information they need, at the right time. With the housing disrepair claims the consumers being targeted may display characteristics of vulnerability. The Consumer Duty[4] requires firms to pay attention to the needs of customers with characteristics of vulnerability to make sure vulnerable customers are treated fairly.
We have also seen unauthorised firms use social media to promote housing disrepair claims. Consumers are then referred to other fee-charging firms without setting out the free options available to them. The nature of seeking out consumers in this way is regulated activity. These firms might also promote debt management services, looking to capitalise on the cost-of-living crisis. We continue to focus our work to disrupt these activities, including seeking to remove unlawful financial promotions.
We will continue to monitor this sector closely.
Cryptoasset financial promotions regime - Modification by Consent of the ‘back end’ Direct Offer Financial Promotion (DOFP) Rules Expired
For crypto firms who successfully applied for a modification by consent, the DOFP rules introduced
by PS23/6[1] came into force on 8 January 2024. Specifically rules in COBS 4.10.2AR, COBS 4.12A.15R and COBS 10.1.2R. These rules require firms to provide personalised risk warnings, implement a 24-hour cooling-off period for investment reconsideration, and require client categorisation and appropriateness assessments.
We are now conducting reviews to test the level of compliance with these rules. We will take action where we see breaches, using our supervisory tools and potentially enforcement action, where necessary.
Promoting competition and positive change
Examples of good and poor practices for the monitoring and oversight of affiliate marketers, such as influencers
Many cryptoasset firms run ‘affiliate’ programmes where commission is paid to individuals or businesses who refer clients to the firm. Firms should proactively take responsibility for how their affiliates communicate financial promotions. This includes having appropriate monitoring and oversight systems to ensure that affiliates understand their responsibilities and do not communicate illegal or non-compliant financial promotions. Through our reviews of firms' various monitoring and oversight efforts, we identified examples of good and poor practices. These examples are included in FG24/1[5] which sets out finalised guidance on financial promotions on social media.
Financial promotions approval gateway
On 7 February 2024, the financial promotions approval gateway came into effect. Firms that want to approve financial promotions on behalf of unauthorised firms outside of their group must apply to the FCA for approver permission. Transitional arrangements are in place meaning that firms that applied before 7 February can continue to approve promotions while we consider their application. Any firms that choose to apply after 7 February will not be able to approve relevant promotions while we consider their application.
Reporting requirements also came into effect from 7 February for all firms with approver permission or benefitting from the transitional arrangements. This means they must notify the FCA when they approve new promotions for Non-Mass Market Investments (NMMIs) or qualifying cryptoassets, and if they amend or withdraw promotions due to notifiable concerns. They will also have to report aggregate data regarding their financial promotion approval activity every 6 months.
Amendments to the ban on incentives to invest in high-risk investments
On 2 April 2024 we confirmed minor changes to the rules in COBS 4.12A and COBS 4.12B that restrict financial promotions from offering retail clients incentives to invest in high-risk investments. The amendments[6] provide additional clarity on the application of the rules and also exempt incentives from the ban that are offered solely for the purpose of encouraging a client to switch platforms. You can find further details on the changes, including our feedback to the responses to Chapter 4 of CP23/14[7], in Handbook Notice 117[8].
How to report a misleading financial advert or potential scam
Report a financial advert or promotion[9] that you think is misleading, unfair or unclear.
Report a scam[10], authorised firm or individual to us.
Our casework will usually involve confidential information for the purposes of section 348 of Financial Services and Markets Act 2000 (FSMA). We are therefore unlikely to be able to provide further information about particular cases. Find out more about the information we can share[11].
Disclaimer
- The figures reported within this data are accurate at the time of publication. But they can be subject to change depending on any ongoing work with a Firm.
- The amend and/or withdraw outcome figure is based on cases closed during this period and will be determined by the number of promotions across various platforms.
Copyright
The data on this page is available under the terms of the Open Government Licence[12].