FCA fines firm for misleading financial promotions

PoundThe Financial Conduct Authority has fined claims management firm Professional Personal Claims Limited £70,000 for misleading consumers through its websites and printed materials.

The decision, published by the FCA on 17 December 2019, is the first claims management company case closed by the regulator since it took over responsibility for CMCs on 1 April 2019.

What has changed for CMCs since the FCA took over regulation?

The financial regulator took over regulation of claims management firms on 1 April 2019.

In June last year, the FCA sent a ‘Dear CEO’ letter to claims management firms, getting tough on unethical practices. The letter reinforced CMCs’ obligations under its regulation and flagged a number of areas where it had found practices falling short of its standards since it took over regulation.

And on 9 August, the FCA announced a new co-operation agreement with the Competition and Markets Authority aimed at improving competition in claims management.

On 23 August, it, announced a number of new rules in relation to financial promotions.

How did Professional Personal Claims Limited breach regulations?

The FCA announcement states that:

PPC’s websites and printed materials prominently used the logos of five major banks which was liable to mislead consumers into believing they were submitting redress claims for mis-sold payment protection insurance (PPI) directly to their banks, rather than engaging PPC as a CMC to pursue claims on their behalf in return for payment of a success fee.

PPC also failed to present accurate, fully formed, detailed and specific complaints to banks. It had submitted Financial Ombudsman Service (FOS) questionnaires to banks on behalf of different consumers. The questionnaires in part contained identical factual allegations where evidence specific to each client should have been presented.

Speaking about the FCA action, Mark Steward, Executive Director of Enforcement and Market Oversight, said that:

‘PPC’s misleading website and marketing material suggested PPC was associated with the five banks when this was not the case. Claims management firms must ensure their advertising is accurate. Not only in terms of what they say about themselves and their services but also in terms of what is represented.'

The fine was the conclusion of action initiated by the previous regulator for CMCs, the Claims Management Regulator (CMR), under the CMR’s prior regulatory framework applicable before 1 April 2019.

PPC had originally appealed its penalty notice under the CMC, but after the FCA took over the regulation of CMCs and replaced the CMR as the respondent to PPC’s pending appeal, PPC withdrew its appeal. The FCA’s £70,000 fine was imposed as a result.

How can you ensure your promotions don’t fail the ‘misleading’ test?

The FCA has a number of tactics it can employ to challenge unfair and misleading promotions. It has clear rules about financial promotions compliance, many of which are focused around fairness and clarity.

The regulator is particularly keen to ensure that customers are treated fairly and that any marketing, advertising or sales material is clear, fair and not misleading. To make sure you comply with its requirements, you need to ensure that:

  • Your firm’s advice and financial promotions are suitable for your audience.
  • Your financial promotions – whether they’re adverts, brochures, webpages, emails or other digital marketing – comply with the regulator’s financial promotions rules.
  • Any promotions or client communications feature the correct disclaimers, displayed with the required prominence.
  • Pricing is fair and clear; data included in any promotion, including on performance and fees, is completely accurate.
  • Your adverts meet the requirements, not just of the FCA, but of the ASA and CAP, who regulate all advertising in the UK. Read our blog on how to avoid producing misleading adverts for more on this.
  • Financial promotions copy meets FCA requirements around clarity and substantiating claims.
  • Your Compliance team reviews and provides the requisite sign off for client communications and financial promotions. An element of automation can help here.

Get to grips with the realities of FCA regulation

FCA regulation is new for CMCs, and firms need to get up to speed quickly with the regulator’s requirements and expectations.

Our Financial Promotions Checklist for Compliance has guidance, tips and advice for firms wanting to refresh their understanding of the regulator’s FP rules. You can download a free copy from our resource library.

Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.

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