The FCA has announced it is planning to clamp down on misleading financial marketing.

The regulator has outlined new measures for firms wanting to approve financial promotions, which 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 prevent harm before it occurs.

Firms will also be required to regularly report back to the FCA on financial promotions they have approved, further helping the FCA to crack down on rogue adverts.

The FCA said that its proposed reforms will ensure it 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.

Executive director, markets at the FCA, Sarah Pritchard, 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.”

The FCA also said that its latest publication builds on its recent work to strengthen rules around advertising for high-risk investments and being more assertive in removing misleading adverts. The regulator removed or amended over 5,000 financial promotions from authorised firms between January and October this year, compared to 564 in 2021.

Commenting on the new plans, head of personal finance at AJ Bell, Laura Suter, said: “It’s timely that the regulator is putting this out now. During the cost of living crunch and expected recession it’s inevitable that more people will turn to alternative forms of debt, such as Buy Now Pay Later, and it’s crucial they go in with their eyes open to the risks involved.

“On top of that, when money is tight more people will be drawn into high-risk investment schemes, or even outright scams, with the promise of high returns being too much of a draw to resist for many cash-strapped people.

“However, the scope of the FCA only goes so far. The changes it is making will do little to stop outright scammers who lure people in through social media with promises of high returns from investments only to steal all their money.”

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