The financial regulator has published a letter addressing CEOs and equivalents of authorities firms. The letter is to urge the companies to make sure that they are giving all necessary information to their customers so that investors are well informed and have all needed information in hands about the regulatory coverage of the products and services they are offered.
With the letter, the Financial Conduct Authority is reminding regulated firms the importance of the clear communications and the obligations they have when communicating with clients through their promotional activities. FCA also strongly encourages companies to review their financial promotions and websites to make sure that the content placed there is in relevance to the obligations they have.
The main reason behind addressing CEOs in such manner is that FCA found many companies that are running promotions in a way that they are misleading the customers. Many of the investors know it well that the best way to protect their investments is to work with FCA regulated broker companies and take the products that are also regulated by the high financial authorities like FCA. This is why many of the firms, as regulator found out, is promoting their products as regulated when they are not. As a result, certain unregulated services and products are sold to investors inappropriately, as the customers were assuming that FCA or other regulators are supervising such activities.
Rules for promotions are changing
Purchasing unregulated products and services because of the misleading promotions is living investors at risk of serious loses which they are not aware of. This is why FCA is changing the rules of the promotion. The discovery of such companies has previously led to a ban on the way some of the investments are promoted. More specifically, the companies can no longer use the FCA authorization status in a promotional way. The ban also includes usage of FCA logo without their permission.
Keep it fair and clear
FCA’s executive director of supervision, Jonathan Davidson, has made the comments regarding such companies saying that it is completely unacceptable for the firms which are regulated for some of their business to promote their unregulated investments as regulated. As per his statement, FCA is trying to eliminate the misleading promotional activities that are putting the customers under the risk and is encouraging the investors to check if certain products are regulated even if they are offered by the regulated company.
According to the official letter, the regulator is also very concerned about the poor standards in this field. Some of the companies might even be subject of the investigations that will be held by the Enforcement Division. In order to avoid further complications firms that might be having misleading promotions must ensure that they communicate a clear business message with the FCA’s relevant requirements. It is also very important for companies CEOs to consider how fair and clear the financial promotion is before they approve it to make sure that they are not communicating misleading information.
In their letter, FCA also states that they are not approving advertising and it is completely up to the firm to ensure that the financial promotions they are leading are compliant with the standards and rules. however FCA fo monitor advert across different media in the United Kingdom.