Financial firms that approve promotions for unauthorised businesses must do more to protect consumers, according to a review by the Financial Conduct Authority (FCA).
The regulator found that the strongest firms were embedding the Consumer Duty into their approval processes from the outset, helping to ensure promotions were clear, accurate and targeted at the appropriate audience.
However, the FCA identified weaknesses at some firms, including the approval of adverts containing unsubstantiated claims and failures that allowed retail investors to view promotions intended only for professional clients.
In some cases, firms were found to be relying on third-party templates rather than carrying out robust checks themselves.
The review examined a sample of promotions approved since firms received authorisation under the new Section 21 regime, which came into force on 7 February 2024.
Lucy Castledine, the FCA’s director of consumer investments, said consumers encounter financial promotions daily across social media, online advertising, websites and apps, warning that poor oversight can lead to harmful financial decisions.
As a result of the regulator’s work, one firm has already been required to undertake a remediation exercise, while some websites have been blocked from retail customers.
The FCA said it would continue monitoring compliance and take action against firms that fail to meet the required standards.
The review covered 10 authorised firms approving promotions for sectors including Buy Now Pay Later, crowdfunding and corporate finance.