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Journey to the FCA: Financial promotions banning power.

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Presentation on theme: "Journey to the FCA: Financial promotions banning power."— Presentation transcript:

1 Journey to the FCA: Financial promotions banning power

2 Agenda The importance of financial promotions The financial promotions team What is a financial promotion? Some current financial promotion issues The FCA approach Financial promotions banning power Case studies

3 Why are financial promotions important? Financial promotions are a firm’s shop window Asymmetry of information and power Consumers rely on them when shopping around for financial products –you can’t test-drive them … and those products are important for the financial well-being of consumers

4 Consumers depend on the products meeting their expectations

5 The financial promotions team Monitor a variety of media across the UK Consumer hotline - complaints Casework – deal with non-compliant financial promotions Thematic work – identifying and dealing with product, sector or media type risks

6 What is a financial promotion? “A financial promotion is an invitation or inducement to engage in investment activity”

7 Are these financial promotions?


9 Some current financial promotion issues Media neutral –banners can be a form of promotion Social media - you can use social media such as Twitter and Facebook Stand-alone compliance –there is no ‘one click’ rule Prominence –‘roll over’ risk warnings are not adequate Does the customer qualify for the offer/deal? –you must clearly present any ‘show-stoppers’

10 The FCA approach “To make markets work well so consumers get a fair deal”

11 The FCA approach ‘Journey to the FCA’ document details: –Our current thinking on how the FCA will operate –Our expectations of the industry –How the FCA will regulate firms –How the FCA will be different –Detail of the new FCA powers, including product intervention

12 Financial promotions - Repeat breaches FCA will be more intrusive and consumer- focused Repeat breaches SIF attestation Disciplinary action

13 Financial promotions banning power The Financial Services Bill includes the power to ban financial promotions and publicise details of the action taken The publicising of the ban is intended to send a clear message to the industry The power is intended to be flexible, to deal swiftly with misleading advertising.

14 How it will work in practice

15 When do we plan to use the power To ban the ‘worse case’ promotions but also where there is a risk of other firms following suit We will not always measure harm to consumers in terms of actual or potential financial detriment, but will consider the impact of misleading information on consumers’ ability to make informed choices We will be ready to use our powers from Legal Cutover

16 Publication of a banned promotion We have been challenged about the level of transparency we provide on the actions Publication will serve as a good educational tool for firms to better understand our rules It will allow us to set out clearly our expectations on financial promotions in a way which has not been possible before It will serve as a deterrent to firms who intend to mislead customers or do not pay enough attention to ensuring compliance with the financial promotions rules

17 Questions?

18 Case studies

19 Journey to the FCA: Financial promotions banning power

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