AJ Bell press comment – 6 December 2022
Laura Suter, head of personal finance at AJ Bell, comments on the FCA’s latest consultation on financial promotions:
“The regulator is turning up the heat on influencers touting investment schemes, crypto platforms or other trading schemes. The FCA is aiming to make it harder for adverts and promotions to be approved, in a bid to stop people handing over their cash for investment schemes based on inaccurate social media posts.
“The FCA has been slow to move on tackling the huge number of social media posts luring people into investing in high-risk schemes or crypto trading without stating the real risks involved. Its latest move is to have more oversight of the adverts and promotions that are put out to advertise all manner of investments.
“Alongside this the regulator wants to squeeze the Buy Now Pay Later market and ensure that people fully understand the risks of using the products. Currently many people using BNPL aren’t aware that it’s even debt or the impact that missing payments will have – and the FCA wants these points made much clearer on the marketing material.
“It’s timely that the regulator is putting this out now. During the cost of living crunch and expected recession it’s inevitable that more people will turn to alternative forms of debt, such as Buy Now Pay Later, and it’s crucial they go in with their eyes open to the risks involved. On top of that, when money is tight more people will be drawn into high-risk investment schemes, or even outright scams, with the promise of high returns being too much of a draw to resist for many cash-strapped people.
“However, the scope of the FCA only goes so far. The changes it is making will do little to stop outright scammers who lure people in through social media with promises of high returns from investments only to steal all their money. It also can’t do much about the mini-bond sector, as it doesn’t regulate these ‘non-transferable securities’.”
