FCA has written to the chair of the Commons Work and Pensions Committee highlighting the role that online platforms play in putting consumers at risk by exposing them to advertisements for financial products. It notes that the adverts may fall inside or outside FCA’s jurisdiction. FCA explains that it has tried to engage with the online platforms even to the extent of paying Google to promote its warnings. It notes that it has also paid Google to promote messages in respect of specific unauthorised firms, which means that Google was paid by both the scammer and then the regulator.
FCA feels the best way to protect consumers from these sorts of adverts is for financial harm to be included as an online harm in the Online Safety Bill, and that online advertising should be part of this, as well as user-generated content. FCA says that without this, it has to negotiate with every platform to persuade them to provide some consumer protection.
The letter also responds to specific questions the Committee had posed, including on elements of the FPO. FCA says that the exemption from the financial promotion restriction for “mere conduits”, wold not apply where an intermediary has a significant role in optimising the content or actively determining who will receive promotions. This may represent a change in stance, given the exemption originally came from EU legislation. FCA is now looking closely at operators of online platforms with a few to taking action if it does not deem them compliant with regulatory requirements.
In answer to other questions, FCA also notes (as it has done in its consultation on the financial promotion regime) that is considers the HNWI and SI exemptions to be a “significant vulnerability” in the regime – and the more FCA strengthens its rules, the more firms use these exemptions. It wants the Government to amend these exemptions as it questions both how self-certification can really work, and the thresholds in the exemptions.