This page gives a summary of data generated between 1 April 2024 and 30 June 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- number of closed cases where promotions have been amended and withdrawn, including split across sectors, excluding cases which are still ongoing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 Q2:
- 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- Our interventions in 2024 Q2 resulted in 3,273 promotions being amended or withdrawn by authorised firms.
- We issued 528 alerts on unauthorised firms and individuals, 11% of these were clone scams.
- We have been engaged with several registered cryptoasset firms who provide fiat to crypto on/off ramp services to third party firms (‘partner firms’). We are encouraged by the steps many registered cryptoasset businesses are taking to address our concerns, by engaging with authorised firms to have them approve the promotions of partner firms.
- In Q1 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 conducted reviews to test compliance with these rules. Based on these reviews, we provided feedback to firms and acted where breaches were identified, using supervisory tools where necessary.
- We proactively reviewed 187 promotions relating to 19 firms that were promoting lifetime mortgages. We identified concerns with promotions from 4 firms. These promotions either did not provide sufficient balance to the benefits being promoted or the prominence of the risks/downsides were not presented sufficiently.
Authorised firms
Number of promotions reviewed
In 2024 Q2 we reviewed 943 financial promotions from multiple sources:
69% from our proactive monitoring
11% from consumers
10% from firms
6% from UK Regulators
4% from different areas of the FCA
Following our intervention, in Q2 we had 3,273 promotions amended/withdrawn.
Table 1: Number of cases with interventions and amend/withdraw outcomes
|
2024 Q2 |
|---|
|
0 s137S (the Banning Power) directing a firm to withdraw financial promotions |
|
1 Own Initiative Action for Imposition of Requirements (OIREQ) were approved, restricting the firm’s ability to communicate or approve financial promotions |
|
6 Voluntary Application for Imposition of Requirements (VREQ) were approved, restricting the firm’s ability to communicate or approve financial promotions |
|
1 Undertaking and Attestation |
|
3,273 promotions were amended or withdrawn following our intervention with 39 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 89% 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 Q2, we received 5,544 reports about potential unauthorised business.
We issued 528 alerts[2] about unauthorised firms and individuals. Some 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
|
Concerns regarding a firm not being fit and proper |
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|---|---|
| Issue |
We reviewed a firm’s financial promotions which were offering investments in bonds of up to five years at high rates of interest. The firm had limited permission to only carry out credit broking and we were concerned it was acting beyond its scope of permissions. |
| Action |
We asked the firm to provide details of its business model and use of its part 4a permissions. We invited the firm’s senior management to meet with us, but they declined to do so, and we established they had no day-to-day role at the firm. Due to our concerns that the firm and individual running the firm were not fit and proper, an OIREQ and OIVOP were served. Following the firm declining our offer to cancel voluntarily we issued a final warning[3] and cancelled the firm’s authorisation. |
|
Claims management firms with non-compliant and potentially misleading financial promotions |
|
|---|---|
|
Issue |
Five claims management firms were found to be issuing non-complaint financial promotions on their websites and on social media. Concerns related to the firms:
|
|
Action |
We intervened by inviting all 5 firms to apply for the imposition of voluntary requirements (VREQ). Following our intervention, the firms amended or withdrew their financial promotions and provided a review of their systems and controls. |
|
Deferred Payment Credit / Buy Now Pay Later (BNPL) unbalanced financial promotions |
|
|---|---|
|
Issue |
A firm promoting BNPL had unbalanced financial promotions on their website and social media. We considered this a breach of CONC 3.3.1R which states that financial promotions must be clear, fair and not misleading. The promotions did not explain:
|
|
Action |
We intervened by inviting the firm to apply for the imposition of voluntary requirements (VREQ), where the firm were restricted from issuing financial promotions. The firm subsequently amended or withdrew its financial promotions to comply with the relevant Handbook rules and enhanced their policies and procedures for their financial promotion activity. |
|
Cryptoasset non-custodial wallet firm illegally promoting to UK consumers |
|
|---|---|
|
Issue |
We engaged with a large cryptoasset Non-Custodial Wallet (NCW) firm based overseas. We had concerns that the firm was illegally promoting cryptoasset investment activities, including the buying/selling of crypto assets, to UK consumers through its website, apps and social media accounts. We considered that the promotions could have an effect in the UK as the NCW firm had not implemented any controls to restrict UK consumers from accessing the services being promoted. The firm was not making its promotions through any of the 4 routes allowed under the regime, such as having an authorised person approve the promotions. So, we considered the NCW firm to be in breach of section 21 FSMA. |
|
Action |
Following our engagement the NCW firm implemented interim measures to reduce the harm from its breach of section 21 FSMA, such as only allowing UK consumers to buy crypto assets from firms who are registered with the FCA and removing certain promotional content from its communications. The NCW firm is now complying with the financial promotions regime by engaging with an authorised firm to have its financial promotions approved. |
|
A high-risk investment firm with promotions lacking the required risk warning |
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|---|---|
|
Issue |
A high-risk investment firm was inviting consumers to invest in its products without including the prescribed risk warning required to protect consumers from the potential harm from these products. The risk warning was missing in its social media promotions on Facebook and on X (formerly Twitter), and in some sponsored ads. In addition, the warning was not prominently displayed in its communications to clients and potential consumers. |
|
Action |
Following our intervention, the firm amended its social media promotions and other financial promotions and communications and provided a review of its systems and controls. |
|
Misuse of trading names |
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|---|---|
|
Issue |
A firm was misusing trading names by registering unauthorised companies who were separate legal entities, as trading names. The separate legal entities then claimed they were authorised when they were not. |
|
Action |
We invited the firm to remove the trading names and they did. We also provided supervisory feedback to the firm. The firm has conducted a review of its systems and controls to make sure the issue is not repeated. |
|
Alert issued on recovery room scam |
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|---|---|
|
Issue |
We previously placed restrictions on a firm to stop it from conducting regulated activities for new clients and new investments. We then became aware investors were being targeted by recovery room scammers who claimed they could assist investors in recovering funds. |
|
Action |
We issued an alert to investors to be aware they might be targeted by scammers and/or recovery room fraud. |
Setting and testing higher standards
Cryptoasset financial promotions regime - reviews of compliance with the ‘back end’ Direct Offer Financial Promotion (DOFP) Rules
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 conducted reviews to test compliance with these rules. Based on these reviews, we provided feedback to firms and acted where breaches were identified, using supervisory tools where necessary. We have also published our good and poor practice findings[4] from our reviews to help improve the standards across the sector.
Cryptoasset ‘widget’ models and the financial promotions regime
We have been engaged with several registered cryptoasset firms who operate a ‘widget’ model whereby they provide fiat to crypto on/off ramp services to third party firms (‘partner firms’) via an API that integrates into the partner firm's website and apps. Firms operating this model must do so carefully and consider the impact of the financial promotions regime on their business model.
In a letter to firms[5] on 23 September 2023, we reiterated our expectation that from 8 October 2023, unregistered cryptoasset firms must cease making illegal financial promotions to UK consumers. We made clear our expectation that those businesses who support unregistered cryptoasset firms must also play their part in protecting UK consumers.
We consider that many of the partner firms are communicating financial promotions in breach of section 21 FSMA and are therefore committing a criminal offence. Many of these partner firms are Non-Custodial Wallet providers. We are concerned that registered cryptoasset firms may be benefiting from the conduct of their partners, as the illegal promotions appear to generate revenue and transaction fees for the registered firm.
Registered firms should guard against these risks by implementing rigorous systems and controls with respect to due diligence and risk management. We expect registered firms to:
- have a comprehensive understanding of the UK financial promotion regime, and in particular, the requirements of section 21 FSMA
- conduct a thorough review of their partner firms to determine whether the partners are compliant with section 21 FSMA
- implement proactive ongoing monitoring procedures to promptly detect potential breaches by partners of section 21 FSMA
- make sure that they do not expressly or inadvertently give the impression to their unregistered business partners that the business partners do not need to comply with the financial promotions regime
- take action to mitigate the risks of continuing to provide services to a business partner, where the firm identifies a partner is in breach of section 21 FSMA
We are encouraged by the steps many registered cryptoasset businesses are taking to address our concerns. These include strengthening the due diligence that is carried out on unregistered business partners, engaging directly with specific business partners, engaging with authorised firms to have the financial promotions of the partner firms be approved and placing restrictions on those partner firms who do not remedy their breach of section 21 FSMA.
If registered firms were to implement these steps in a rigorous and timely way, we expect it is likely to be an effective means of addressing our concerns.
Promoting competition and positive change
Follow-up proactive monitoring for later life mortgage advertising
Following the previously published findings of the multi-firm work on later life mortgage advertising[6], we performed a multimedia review of promotions by other providers and intermediaries promoting lifetime mortgages. We reviewed 187 promotions relating to 19 separate firms. Financial promotions concerns were identified across 4 firms. In these cases, the promotions either did not provide sufficient balance to the benefits being promoted or the risks/downsides were not prominent enough. These cases have all been progressed with the relevant firms to make sure that their promotions are either amended or withdrawn.
How to report a misleading financial advert or potential scam
Report a financial advert or promotion[7] that you think is misleading, unfair or unclear.
Report a scam[8], 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[9].
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[10].