The Financial Conduct Authority (FCA) has announced new screening checks for companies that approve financial advertising.
Firms responsible for approving marketing materials for unregulated entities will need to exhibit the requisite skills and knowledge. Anyone signing off on these adverts must fully understand the product to guarantee that the promotional content is both accurate and presents a balanced view of risks and rewards.
Previously, all FCA-authorised firms had the authority to approve promotional material for unregulated companies. This led to incidents where firms greenlit adverts for products they didn’t comprehend, often resulting in unclear or misleading advertising.
Companies wishing to continue approving ads must apply to the FCA between 6th November 2023 and 6th February 2024. Those who submit an application within this period can proceed with approvals until they receive a final decision.
Additionally, firms will be obligated to submit regular reports on the ads they approve and those they rescind approval for, aiding the FCA in more promptly eliminating rogue advertising.
Sarah Pritchard, executive director of markets at the FCA, said: “By introducing these new checks, we will ensure people approving adverts have the right skills and understanding they need to do so. Firms need to make sure people are equipped with the right information at the right time, so they can make properly informed decisions. As we face the rising cost of living, consumers are having to make difficult decisions about their finances and how they pay for things, so this is more important than ever.”
This move aligns with the FCA’s three-year strategy aimed at raising standards across the financial sector and bolstering consumer confidence. This strategy is underscored by the Consumer Duty, which amplifies protections and calls for understandable consumer communications.
These new measures build upon the FCA’s recent initiatives to tighten advertising regulations for high-risk investments and to improve social media guidelines for the promotion of financial products and services.
The Financial Services and Markets Act 2023 now includes provisions for a new gateway for authorised firms wishing to approve promotional material for unregulated entities. A consultation on this new gateway was initiated by the FCA in December 2022.
Alain Desmier, manging director at Contact State, said: “The FCA measures announced today further strengthen the regulators interest and scrutiny of financial advertising.
“Put simply, if you buy or generate leads, the FCA will require you to keep a log of your advertising and the rationale behind why each advert was created.
“If you buy leads without certified proof and awareness of the customer journey or create financial promotions without considering how your product information is being communicated to the consumer, the time to wake up and make a change is right now.”
