Firms carrying on both regulated and unregulated business should take heed of the FCA's latest Dear CEO letter. In its letter, the FCA states that it has become aware of firms issuing financial promotions which suggest or imply that all of the activities which they undertake are regulated by the FCA and / or the PRA when, in fact, they are not. The FCA reminds firms that if they carry on activities which are not regulated by the FCA and / or the PRA, then financial promotions, in whatever form of media, should make clear those aspects which are not regulated.
Firms are also reminded:
- that a firm must not indicate or imply that it is regulated or otherwise supervised by the FCA in respect of business for which it is not regulated by the FCA; and
- before they approve a financial promotion for communication by an unauthorised person, they must confirm that the promotion complies with the FCA rules on financial promotions. This includes ensuring that the financial promotions which they approve are fair, clear and not misleading.
The FCA stresses that it has the power direct a firm to withdraw an advert (or its approval of an advert), or to prevent it from being used in the first place. With the FCA cautioning firms that it is their responsibility to ensure compliance and that the FCA monitors financial promotions across the board, firms should be diligent in issuing and approving financial promotions.
It is completely unacceptable for firms, which are regulated for some of their business, to market unregulated investments by implying to customers that all their business is regulated. We are committed to stamping out this misleading practice and recommend that customers should ask firms whether what they are buying is really regulated by the FCA.