(Bloomberg) -- Britain’s markets watchdog has proposed checks for firms that can approve financial advertisements in a bid to clamp down on “rogue” promotions.
Firms will be required to undergo screening checks before they can sign off on promotions, the Financial Conduct Authority said in a statement Tuesday. The proposal, part of wider finance reforms the UK Parliament is considering, would enable the regulator to act more quickly to prevent “harmful” ads from unauthorized firms, including in areas such as high-risk investments and buy-now pay-later, it said.
“Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision,” Sarah Pritchard, the FCA’s executive director of markets said. Having the “right information at the right time” was especially important amid the rising cost of living, she added.
Under the current rules, any firm with FCA authorization can approve promotions for an unapproved business. “We have seen examples of authorized firms approving financial promotions for products which are completely unrelated to the firm’s permissions and areas of expertise,” the FCA said, noting that in some cases it only found out that a company was approving promotions after customers had been harmed.
Between January and October, the FCA removed or amended over 5,000 financial promotions, compared to 564 last year.
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