The Financial Conduct Authority (FCA), an independent regulatory body in the United Kingdom, has released a comprehensive report on its efforts to combat misleading financial promotions, specifically focusing on crypto-related advertisements.
In its report published on February 14th, the FCA revealed that it had uncovered “significant levels of non-compliance” with the crypto promotion rules implemented on October 8th, 2023. The regulator conducted reviews of both registered and unregistered crypto firms and identified several common issues. These included the use of generic risk summaries that failed to address product-specific risks like stablecoins or asset-backed coins, as well as the exploitation of regulated status for promotional purposes. Additionally, the FCA found that firms were making claims about the safety, security, and ease of use of crypto services without providing supporting evidence or adequately highlighting the associated risks.
To address these issues, the FCA warned firms that it would take action against persistent breaches of the rules and may resort to enforcement measures if necessary. Between October 8th and December 31st, 2023, the regulator issued 450 consumer alerts against digital asset companies that were illegally promoting crypto. In a statement, the FCA emphasized that it would continue to take action against firms engaging in illegal promotions in 2024. The regulator also expressed concerns about regulated firms failing to fulfill their obligations when providing supporting services to crypto companies that were unlawfully promoting their products to UK consumers.
In addition to its focus on crypto-related advertisements, the FCA reported that it had ordered the withdrawal or modification of over 10,000 finance-related ads in the UK in 2023. This highlights the regulator’s commitment to ensuring that financial promotions adhere to the necessary regulations and standards.
The FCA further revealed that it had received more than 24,000 reports of potential unauthorized businesses in 2023. These reports were escalated when credible evidence of a breach was identified, and the FCA encouraged consumers to continue reporting misleading advertisements and potential scams through its official channels.
In summary, the FCA’s report underscores its dedication to combating misleading financial promotions, particularly in the crypto sector, and its commitment to protecting consumers from potential risks and scams.