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FCA sounds warning over unregulated investment promotions

The FCA has warned firms not to imply that all of their activities, including unregulated investments, are authorised by the FCA in marketing material if they are not actually regulated.

In a letter to chief executives of all regulated firms, the FCA outlines its rules on making sure financial promotions are fair, clear and unambiguous, having noted examples where marketing material had suggested all activities from some firms fell under FCA regulation when they did not.

FCA director of supervision Jonathan Davidson says: “It is completely unacceptable for firms, which are regulated for some of their business, to market unregulated investments by implying to customers that all their business is regulated.

“We are committed to stamping out this misleading practice and recommend that customers should ask firms whether what they are buying is really regulated by the FCA.”

The letter reminds chief executives that while it does not approve adverts, the FCA does regulate invitatations to engage in investment activity as well as investment conduct itself, and monitors adverts across the UK as part of this.

The regulator says that to meet the FCA’s standards on financial promotions, firms must ensure customers “understand the extent of the relevant firm’s business that is regulated”.

The letter, which is signed off by FCA chief executive Andrew Bailey, reads: “We make clear in our handbook that if a firm names the FCA and/or the Prudential Regulation Authority as its regulator in a financial promotion that refers to aspects of its business (e.g., products or services) which are not regulated by the FCA and/or the PRA, then the promotion should make clear those aspects which are not regulated.”

The FCA also reminds firms it has the power to force them to take down adverts or prevent them being put up if it discovers breaches of its rules.


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Rt Hon Sir Arthur Streeb-Greebling 10th January 2019 at 9:25 am

    Bugger! I was going to suggest my clients invest in my new chain of knocking shops. It’s the ideal business. You’ve got it, you sell it, you still got it.1st branch was going to be in Canary Wharf.

  2. Here’s an ‘off the wall’ idea. Instead of the FCA being ‘committed’, although they ought to be, how about a list of the most ‘unregulated activities’ offered by ‘regulated’ companies in order to educate the uninitiated? Not to proscribe not using them, just to make everybody aware of ‘what is what’? Just because those in the ‘know’ realise that ‘if it walks like a duck, quacks like a duck then it IS a duck’ it doesn’t mean that everybody recognises the signs.

  3. And also make it clear they are not covered by the FOS/FSCS or any other “compensation” scheme when it all goes “…’s up” and that any attempt to claim will be thrown out, intead of them all sitting there with open doors saying come on in…

    • The consequences of all advice on and the sale of anything (product or service) undertaken by an FCA-authorised intermediary firm or individual ARE covered by the FOS/FSC. Hence the volume of liabilities for advice on and the sales of UCIS and such like by authorised firms being taken on by the FSCS (usually due to no relevant PII cover, on which the FCA should but, for some unfathomable reason, doesn’t insist). Whether or not such products are from FCA-authorised providers makes no difference.

      For this reason, I don’t quite understand why the FCA is making an issue of whether or not authorised firms specify in their IDD’s that they sometimes advise on the products or services of non-FCA-authorised providers.

      • Investments, regulated or not are covered by the advice but they could be referring to something like a will writing services or tax advice.

      • Think about scenarios like when an authorised firm acts as a security trustee. You *could* say your trustee is regulated by the FCA and that’d be true – but also utterly misleading because acting in that role isn’t a regulated activity.

        It’s not a new issue – see e.g.

        • The key part of that FCA bulletin appears to be “….investors should note that it is unlikely their complaint [if referred to the FOS] will succeed if it is based wholly on IPM’s role as approver of a financial promotion – the firm would need to have carried on another activity in addition to approving the financial promotion (for example, advising the investor, or arranging the transaction for them).

          This indicates that advising an investor (in this instance on Secured Energy Bonds which, like UCIS and various other types of investment aren’t FCA-authorised), or arranging an investment into one is an activity that would be subject to regulatory jurisdiction.

          Any complaint against an FCA-authorised intermediary would need to be handled in accordance with the FCA’s defined procedure and, should the investor not be satisfied with the response, he could then refer it to the FOS.

          I don’t see how advice (from an FCA-authorised firm) on tax or drawing up a will (or investing in fine wines or classic cars, etc), should it turn out badly, would be treated any differently.

  4. I’m sorry I just don’t get it. If they are unregulated why is the FCA warning? Why don’t they just say that any adviser firm that uses these is automatically disbarred and shut down?

    Surely that would solve the problem.

  5. @HK absolutely, its because they do not have to pay for the complaints, we do!

    Like banning pension ‘cold calling’, the MPs and FCA have no idea about the real world. This is fine if you have a mature business and do not need extra leads and sniping at those who do butters no parsnips.
    In my experience, if nobody calls these people they will more than likely not do anything themselves, so throwing the baby out with the bath water eases MPs and the FCA’s consciences but does nothing for the people who benefit from the contact and to date there have been thousands of such beneficiaries.

  6. Christopher Petrie 10th January 2019 at 8:59 pm

    @ Ted Shaw

    I’m sorry, but no respectable professional company, whether accountants, layers, architects, financial advisers etc needs or wants to cold call “prospects” and “leads”. That old rubbish went out 20 years ago.

    The pension cold calling ban is a step in the right direction, and now urgent attention needs to move to banning cold calls on all investment products.

    If a few “hand-to-mouth” financial advice firms close as a result, then I’m afraid their loss is more than compensated by the thousands of lives ruined by the scammers and crooks who feed on naive people, as is currently the case.

    Defending these cold-callers butters no parsnips with me either.

  7. @CP How pompous was that for a reply. So you think that the ‘scammers’, being decent, honest and upright people will obey the new FCA ruling?

    The ‘respectable’ companies have so many ‘legacy’ clients that havent been spoken with for many years, they don’t need to search elsewhere.

    Unbiased are not, Vouchedfor vouchonly that someone is breathing and how may I ask does someone who hasn’t looked at their pension for 20 years, because the ‘respectable’ company who set it up haven’t bothered to contact him/her, get ‘enthused’ to start planning for retirement unless somebody calls them? There used to be 220,000 ‘Advisers’ and now there are only ‘22,000’ and all much to busy to ‘look’ for people in need.

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