What made the FCA ban a firm’s online adverts?

PodcastLast week (18 February) the Financial Conduct Authority announced that it had banned a number of online adverts issued by a motor finance firm.

What caused the regulator to ban the ads, and what can regulated Marketers learn in terms of their own online advertising?

Why did the FCA ban the online ads?

The adverts were issued by Rix Motor Company Ltd, appearing on the firm’s Instagram account and three of its websites.

They related to credit broking of car finance. Each breached the FCA’s rules for one or more of the following reasons:

  • Representative examples of the cost of credit to the consumer were either missing from the advert or unlikely to be seen
  • The advert didn’t make clear whether consumers were dealing with a credit broker or a lender
  • The advert didn’t specify the legal name of the firm as it appears on the Financial Services Register, making it harder for consumers to check whether Rix Motors was authorised

Announcing the ban, the FCA reiterated that under its financial promotions rules, all financial promotions must be clear, fair and not misleading, including on social media.

Rix has now withdrawn the adverts and the FCA has directed the firm not to breach these rules again.

What do you need to know about online advertising compliance?

The ban seems a good opportunity to revisit the FCA’s rules on online advertising.

Often, web and social media promotions slip through the compliance net – frequently because the people publishing them don’t realise that social media platforms and promotions on websites (either your own firm’s or others’) fall under the same FCA rules as printed materials.

And any firm, whether governed by an industry regulator or not, falls under the remit of the ASA and CAP. The Advertising Standards Authority polices and enforces advertising standards set by the Committee of Advertising Practice (CAP), which makes the rules for advertising in the UK.

Their rules around marketing and advertising compliance are also platform-neutral – meaning they apply equally across any channel used. We explored this recently in our blog on the rules you need to follow when you advertise on new platforms.

Provided an ad falls within the broad categories of communication outlined in CAP’s ‘Scope of Code’, it will need to follow the rules, irrespective of the type of advertising. This includes ads appearing on a social media platform such as Twitter, Linkedin, Instagram or Facebook.

And if you are also regulated by the FCA, it’s vital that you also understand and comply with its financial promotions rules. In addition, there are more prescriptive requirements for some specific sectors  – claims management advertising, for example. 

What can you learn from Rix’s advert ban?

1. Include all key information, especially on price

One of Rix’s failings was its failure to show clearly the cost of credit. The ASA/CAP rules say that all relevant information should be made clear in the ad itself. Any terms or conditions should be stated close to, or clearly linked from, the main claim the ad is making. Pricing should also be made clear.

This is very similar to requirements set by the FCA. FCA rules require firms to display disclaimers with the required prominence.

2. Make it clear which firm is behind the promotion

The FCA pulled Rix up because the ads didn’t make it clear whether consumers were dealing with a credit broker or a lender. Defunct firm London Capital & Finance faced similar criticism when it failed to make clear whether it was offering products as a regulated or non-regulated firm, as we explored in our blog on misleading promotions.

3. Don't exaggerate the capability or performance of a product

This is particularly relevant in financial services. General financial promotions rules, as well as more specific requirements under MiFIDII and PRIIPs, mean that data included in any promotion, including on performance and fees, needs to be highly accurate.

You can help to ensure accuracy – as well as saving time when producing financial promotions – by creating searchable online libraries of pre-Compliance-approved wording, data and other content.

4. Back up any claims with the necessary evidence

Your advertising copy has to meet FCA requirements around clarity and substantiating claims.  Ensuring your Compliance team has given the requisite sign off can help to make sure this is the case.

5. Follow the FCA’s rules on being ‘clear, fair and not misleading’

This is a central tenet of the financial regulator’s governance. Many of its rules are based around the need to ensure that customers are treated fairly and that any marketing, advertising or sales material is clear, fair and not misleading. Make sure you have a good grasp of the rules, and what they mean for your adverts.

Our blog on how to avoid producing misleading adverts has more good advice on how to achieve this.

Stay on the right side of all your regulators

The FCA isn’t afraid to take action where financial promotions don’t come up to its standards, fining firms if it believes adverts are misleading. The regulator also has the power to ban your promotions if they don’t meet its requirements, so the stakes are high.

You can read more here about the ways the Authority challenges unfair, unclear or misleading promotions.

And as we’ve said, whether or not the product you’re advertising is regulated by the FCA, you will fall under the auspices of the ASA/CAP.

To read more about the advertising and marketing compliance rules that apply to all UK firms, you can download a copy of our free whitepaper, Compliance for non-regulated businesses. Read a copy here.

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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