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FCA warns firms again how ‘seriously’ it takes misleading advertisements

The FCA has written again to regulated firms about “how seriously” it treats misleading promotion of unauthorized retail investments.

In a Dear CEO letter from yesterday, the FCA chief executive Andrew Bailey said that despite FCA’s letter from 9 January, the regulator has identified a number of examples “where it appears the due diligence carried out on a financial promotion may have fallen well short of the standard we expect.”

This comes at a time, when the FCA is under spotlight for its possible regulatory failings in overseeing a collapsed mini-bond issuer London and Finance Capital, which led to 11,500 retail investors losing over £237m.

The firm collapsed after the FCA ordered it to withdraw its promotional material this January. The regulator deemed the advertising unclear, unfair and misleading.

Also because of “undue prominence given to the firm’s FCA authorisation despite the bonds not being regulated or having FSCS protection.”

The regulator said that while the LFC’s website disclosed that the bonds were unregulated and not FSCS-protected, “these important caveats were not given the same prominence as the statements about FCA authorisation.”

Collapsed mini-bond provider appoints adminstrators after FCA investigation

In the Dear Ceo letter Bailey says: “A firm should ensure that a financial promotion that quotes a yield figure gives a balanced impression of both the short and long term prospects for the investment.

“Given that a number of retail investments promise high returns and/or feature complex terms and structures, they present an inherent challenge to being promoted in a manner that is fair, clear and not misleading.”

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  1. Any thoughts, Mr Bailey, about the FCA’s responsibility to ensure that any regulated firm selling retail investments produced by a provider that’s neither authorised or regulated by the FCA should have in place relevant PII?

    Surely that should take priority over ensuring that their adverts are properly worded (albeit that too is important)? A firm’s adverts may be absolutely perfect but, if the product they’re advertising and selling goes down the pan and the firm is held responsible but has no PII, what will happen to its liabilities? Or is this of no concern to you?

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