"These proposals will ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off."
The FCA has outlined new checks for firms which want to approve financial promotions. The new measures will require firms to demonstrate they have the right expertise for the promotions they wish to approve.
Under current legislation, any FCA authorised firm is allowed to approve financial promotions on behalf of other firms who are not authorised by the regulator. Changes being introduced by Parliament will require authorised firms to undergo new screening checks before they are allowed to approve financial promotions, giving the FCA greater oversight to stop harm before it occurs.
Firms will also be required to regularly report back to the FCA on financial promotions they have approved, helping the FCA crack down on rogue adverts.
The proposed reforms will ensure the FCA can act quickly to put a stop to harmful financial promotions communicated by unauthorised firms, including in areas such as high-risk investments and Buy Now Pay Later.
The publication today builds on the FCA’s recent work on strengthening rules around advertising for high-risk investments and being more assertive in removing misleading adverts, with the FCA removing or amending over 5,000 financial promotions from authorised firms between January and October this year, compared to 564 in 2021.
Sarah Pritchard, executive director of markets at the FCA, said: "Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision. It is, therefore, essential that they are equipped with the right information at the right time so that they can make good financial decisions. This is especially important as we face the rising cost of living.
"These proposals will ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off."
Alain Desmier, managing director of Contact State, commented: “Accountable financial advertising will be a recurring theme for the FCA in 2023 and today's news is a continuation of the Consumer Duty and commentary of that paper. The financial regulator wants to see firms create more robust signoff procedures of financial promotions and will achieve its aims through direct intervention, firm and control function accountability. In black and white, if you run the marketing and / or compliance function of a financial firm, these proposals (CP22/27) should feature in your new year's resolutions.
“Lead generation for products like insurance and mortgages is classified as financial promotions and so this document also applies to anyone buying or creating leads. Compliance does not need to be onerous or scary, firms just need to keep a real time record of the adverts and landing pages that are being used to create consumer leads they are speaking to.”
