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The FCA may push ISPs to take down misleading or unfair financial promotions

Jun 20 2019
By
Jonathan Smith

The Financial Conduct Authority in the UK (FCA) is considering additional powers in respect of internet service providers (ISPs). In its first annual perimeter report, the FCA says it might push ISPs to take down misleading or unfair financial promotions, in order to improve consumer protection. The regulator also stated it might ban certain cryptoassets falling outside its regulatory perimeter.

 

It’s no secret that fraudsters offering investments in forex, contracts for difference (CFDs), and binary options often promote themselves online and via social media channels, such as Facebook. They promise high returns and use images of luxurious items like expensive cars and yachts to lure the people to put money in the scam.

 

“Digital channels enable firms to create, market and sell financial services products very quickly. This means that the speed at which harm can be caused by a misleading or unfair financial promotion has greatly increased. Internet or social media adverts reach millions of people in an instant, challenging our ability to detect and act against misleading adverts,” stated the UK financial watchdog in its report.

 

That is why the FCA will seek greater regulatory control over ISPs and push them to remove fraudulent content & social media ads. The British regulator also said that it is developing and deploying automated tools for detecting online products or practices that pose potential risks to consumers.

 

What is more, the FCA’s report addresses cryptoassets, which definitely present challenges to the regulatory perimeter due to their intangible and volatile nature. Although this market in the UK is still relatively small, the British regulator is considering a potential ban on the sale to retail consumers of some crypto derivatives that are outside the regulatory scope.

 

The first FCA annual perimeter report tackles issues such as the scope of the FCA’s regulation of financial services providers and affects the level of consumer protection. As financial markets are quite dynamic and scammers keep inventing new ways to avoid regulation, the FCA’s perimeter must be kept under constant review.

TAGS: FCA  consumer protection  UK  annual perimeter report  ban on crypto derivatives  scam 
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