Recommendation 16

HM Government · verbatim extract Acknowledged

An authorised firm that approves a financial promotion must ensure that it complies with FCA rules, and this is likely to mean undertaking a degree of due diligence on the person issuing the promotion. While there is not currently an obligation to perform KYC checks, our view is that platforms (depending on how their advertising service operates) must ensure that financial promotions communicated by way of their sites are either made, or approved, by an FCA/PRA authorised firm (s21 FSMA). The implication of this is that authorised firms are subject to robust checks prior to authorisation and must ensure that their financial promotions comply with FCA rules. We agreed with the Committee that online platforms need to set out a clear timetable for delivering their commitments in this area. The application of the Financial Promotion Regime is covered in further detail in the section below. Additionally, we welcome the suggestion in the Government’s announcement that the codes of practice to be drawn up by OFCOM might include recommendations that platforms check the identities of those wishing to publish adverts on their platforms. We think that understanding who is publishing material is an important step in reducing the risk that platforms are used to promote fraudulent content. We look forward to working closely with OFCOM as it develops the Codes, to ensure platforms minimise the risk of exposing their users to fraudulent content by conducting KYC checks on advertisers.