FCA must come forward with tangible, tested proposals to strengthen the financial promotions rules

6 July 2021

FCA must come forward with tangible, tested proposals to strengthen the financial promotions rules 

PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, has urged the Financial Conduct Authority (FCA) to press forward with tangible, tested proposals to introduce friction into the consumer journey with respect to financial promotions.

Responding to the FCA’s discussion paper on strengthening the financial promotions rules for higher risk investments, PMFA argues that the FCA is right to look at the financial promotions rules and should adopt an approach which focuses on consumer protection balanced against their own personal responsibilities.

Any approach adopted should keep this principle front of mind while ensuring those who could reasonably benefit from higher risk investments are not inadvertently excluded from them as a result of frictions which encourage consumers not to deal when they should.

PIMFA has reiterated its belief that the approval of financial promotions should be a regulated activity. While the FCA is clearly seeking to improve the due diligence process, it would ultimately be better if the responsibility for financial promotion approvals were enhanced by making it a regulated activity.

Simon Harrington, Senior Policy Adviser at PIMFA commented:
“As we set out in our original response to the Call for Input into the Consumer Investment Market, the current investor exemptions for higher risk investments are not fit for purpose. While we welcome the intent of this discussion paper it is somewhat disappointing that many of the proposals put forward within it have been tested against how they impact on consumer behaviour.

“We believe there is scope in testing a number of these and believe the FCA should return in the near future with a consultation, which evidences how consumer behaviour is impacted with the positive frictions, which it introduces in this discussion paper.

“More broadly, it is disappointing that the direction of travel for the approval of financial promotions seems to be that the government and regulator are seeking to make tweaks to the existing regime rather than overhaul it. As we set out to the Treasury in our response on the approval of financial promotions, we believe that this should, ultimately, be a regulated activity. We have enhanced concerns about businesses who see this activity as a viable revenue stream and this in combination with a lack of regulatory oversight will only continue to introduce harm into the market.”

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About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide investment management, investment services and advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, the Future of Supervision, & the FSCS levy – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376

Sheena Gillett, PIMFA Communications & PR Director – SheenaG@pimfa.co.uk / +44 (0)7979 493225