The FCA has recently adapted its approach to tackling non-compliant financial promotions and breaches of the regulatory perimeter by setting up the Financial Promotions and Enforcement Taskforce (FPET). This is a joint taskforce bringing together FCA Enforcement and Supervision teams, and builds upon the Joint Supervision & Enforcement Taskforce model (set up to address concerns around mini-bonds and other high-risk investments). The FCA is looking for FPET to provide more of a joined-up approach, enabling it to take action quicker and intervene at an earlier stage.
In practical terms, the change in approach will have a number of consequences, including the following:
- The Regulatory Gateway: FCA Authorisations will be scrutinising firms seeking authorisation to conduct regulated activities where they have a regulatory history of approving “concerning” financial promotions. This may arise where Authorisations is considering an application by the firm to vary permissions (known as a ‘VoP’) or where the firm is seeking to become directly authorised having previously acted as an appointed representative. Under the new process, Authorisations will refer these firms to FPET for “closer scrutiny” and, where there are substantiated concerns, will work together to refuse these applications.
- Financial Promotions Breaches: the FCA has overhauled its approach to firms breaching financial promotions rules, including the adoption of a more holistic review when it considers potential breaches. It’s likely that the FCA will look at previous breaches and correspondence with the firm, as well as looking at the other types of promotions that the firm is running. The FCA is clear that this is intended to bring in a “more interventionist approach” and suggests that this may result in requirements being placed on a number of firms preventing further activity. In addition, and echoing wider recent statements by the FCA over the last year, it has made clear that it is adopting a “tougher stance”. This includes placing a particular focus on serious cases at the first breach, taking action at an earlier stage with the aim of deterring repeat breaches in the future.
- Online platforms: the FCA is working closely with online platforms to prevent harm from online advertising. This includes talking to a number of firms operating in this space and engaging with them on the Warning List Really Simple Syndication feed. This provides daily updates on new additions to the FCA Warning List (showing firms known to be operating without authorisation) and the ScamSmart tool in a standardised, computer-readable format. The FCA is also approaching social media platforms proactively, directly requesting that they suspend user accounts that create content in breach of financial services legislation and their policies.