Financial promotion approvers need to raise standards

The Financial Conduct Authority's (FCA) review of firms that approve financial promotions revealed a varied landscape in consumer protection.

While the strongest firms consistently applied the Consumer Duty, ensuring promotions were accurate, clear, and targeted correctly, others fell short.

The FCA identified instances where firms approved adverts containing unsubstantiated claims or allowed retail investors to view promotions intended solely for professional clients.

Lucy Castledine, director of consumer investments at the FCA, noted that 'when approvers fail in their responsibilities, people can be misled into harmful financial decisions.'

This disparity in standards underscores a critical vulnerability in safeguarding consumers, especially given daily exposure to such promotions across digital platforms.

The FCA's review targeted 10 'Section 21 approvers' – authorised firms tasked with vetting financial promotions from unregulated businesses.

Their role, active since February 7, 2024, is to ensure these promotions meet FCA rules for UK consumers.

Following the findings, one firm has already conducted a remediation exercise, leading to some websites being blocked for retail customers.

The FCA affirmed its commitment to ongoing compliance monitoring, stressing it will hold firms accountable for shortcomings in this critical gatekeeping function.