Recommendation 32

HM Government Not Addressed

In September 2019, we established our Joint Supervision and Enforcement Team to develop and deliver the supervisory strategy for non-standard investments. From 2020, the team has taken forward or referred for further assessment over 800 non-standard investment financial promotions cases. Since October 2019 we have used the full suite of our powers more assertively to intervene to stop non-compliant financial promotions and marketing. We have used formal powers to impose 10 own initiative requirements and agreed 16 additional voluntary requirements to restrict marketing and financial promotions activity as well as using the section 137 banning power three times. Section 137 gives us the power under FSMA to get a financial promotion or advert withdrawn if it is misleading or prevent it from being used in the first place. In addition, since introducing our Repeat Breacher protocol in January 2021 we have intervened in 14 Repeat Breacher cases. In order to achieve swift outcomes, we also engage with firms to ensure they withdraw and amend non-compliant financial promotions. In the first two quarters of 2021, 185 promotions were withdrawn or amended in this way. Our temporary product intervention for Speculative Illiquid Securities prohibited this category of investment, including speculative mini-bonds, from being mass-marketed to retail investors. It also improved disclosure of key risks and costs to the limited number of retail investors who were still eligible to receive promotions for Speculative Illiquid Securities under the temporary product intervention. When we made those rules permanent, we extended the restriction to certain listed bonds which are not regularly traded. We know there is even more that we can do, both in terms of our culture and our supervisory approach. That is why we have developed a new strategy for financial promotions that has a more data-led and proactive approach to surveillance, triage and intervention in relation to financial promotions and scams. In addition, the change in our internal processes to speed up decision-making in intervention cases, as highlighted in the Business Plan, will enable even greater efficiencies in disrupting harm caused by non-compliant promotions. In 2020 we issued around 1,200 warnings to consumers, a 100% increase on 2019. We are now issuing those warnings within 24–48 hours of identifying them so the information available to consumers and firms is up-to-date. Our target is that 90–95% of warnings will now be issued within 24–48 hours.