FCA Imposes New Screening Checks on Firms Approving Financial Ads

On September 12th, the United Kingdom Financial Conduct Authority (FCA) announced its new reforms on financial promotions approval. The FCA stated that companies approving financial marketing for unregulated companies must demonstrate that they possess the skills and expertise required to approve advertisements. Those firms signing them off must understand the product, ensure accurate promotion, and fairly balance risk and reward. 

Prior to this, any company authorized by the FCA could approve ads on behalf of companies not regulated by the regulatory body. This caused harm as companies approved ads for products that they were not aware of, as well as unclear, unfair, or misleading ads.

According to the FCA, firms need to apply to the FCA between November 6, 2023, and February 6, 2024, in order to continue approving ads before the new rules come into effect on February 7. Firms that have filed an application can continue to approve ads after this window period until they receive a decision regarding their application.

Firms that approve financial ads must also regularly report on what they have signed off on and any related ads they have cancelled approval, to help the FCA combat rogue ads faster.

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."

These reforms are built on the FCA's recent efforts to strengthen advertising rules for high-risk investments, its proposals to revise social media online promotion guidelines for financial products and services, and decisive actions to remove misleading ads.

(Source: FCA)