The UK Financial Conduct Authority (FCA) today published financial promotions data for 2021.

The data covers the period from January 2021 to 31 December 2021, resulting from action taken against authorised firms breaching financial promotion rules and referrals and investigations into unregulated activity.

In relation to authorised firms, last year saw an increase in approximately 300 amends/withdrawals of promotions, compared to around the same number of cases as 2020:

• retail investments and retail lending are the sectors with the highest amend/withdraw outcomes, amounting to 77% of FCA’s interventions with authorised firms;
• some of the most common breaches were in the Retail Lending sector, in particular Claims Management Companies’ and Retail Finance promotions;
• retail investments’ use of social media influencers on various platforms to market investments is becoming a concern for the FCA. Firms should ensure they have taken appropriate legal advice to understand their responsibilities prior to using influencers.

In relation to illegal financial promotions by unauthorised persons, last year saw an overall increase of 10% of total reports received compared with 2020:

• the FCA issued 1410 alerts about unauthorised firms and individuals in 2021, an increase of 18% from 2020, with 30% of these related to clone scams;
• The FCA has seen a significant reduction in non-compliant paid for advertisements by unauthorised entities on Google since its engagement and the implementation of their new financial services ad policy.

In 2021 1,686 financial promotions from multiple sources were reviewed. Last year, 34,244 reports were received about potential unauthorised business.

The number of alerts issued about unauthorised firms and individuals totalled 1,410, an increase of 18% from 2020. Just under 30% of these alerts related to clone scams. Many of these involved breaches of the financial promotion restriction online. In exceptional cases, the FCA requests that any linked websites and/or social media accounts identified as carrying illegal content are taken down.

Whilst the FCA has seen a significant reduction in non-compliant paid for advertisements by unauthorised entities on Google since its engagement and the implementation of their new financial services ad policy, the regulator is continuing engagement with other social media platforms and continuing to monitor the online market carefully and update its Warning List as appropriate.

For authorised firms, the FCA uses a range of tools available, including agreeing to voluntary or imposing own initiative requirements, requiring the firm which has communicated or approved the advert to withdraw it or change it so that it complies with our requirements. In the most serious circumstances, the FCA will use its powers under s137S FSMA to ban a promotion or advert.

Where the FCA sees repeated non-compliance with its rules, it expects these firms to conduct more detailed reviews and provide reports on these findings, particularly on their systems and controls in relation to their financial promotions. The regulator may also ask firms to consider whether any customers may have acted on the non-compliant promotions and to take appropriate action to remedy any harm which consumers may have suffered as a result.

For firms acting outside of regulation, the FCA has a range of tools to take proportionate enforcement action including; inquiries, including challenging firms and individuals’ activities via technical correspondence or publishing consumer alerts, and escalating the most egregious matters to the Unauthorised Business Department’s investigation teams for investigation using powers under FSMA, with a view to commencing civil, criminal and/or insolvency proceedings.