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FCA gives a final warning on misleading adverts

Back in January, the Financial Conduct Authority (“FCA”) published a letter to the CEOs of regulated firms warning them against misleading financial promotions. As we noted in our previous blog, onthe subject, the letter specifically concerned firms not making clear which parts of their business are subject to FCA regulation and, importantly, which are not.

It appears that the letter may not have had the desired effect.

Last week, the FCA published another ‘Dear CEO’ letter (“Letter”). The regulator states that it has ‘identified a number of examples where it appears the due diligence carried out on a financial promotion may have fallen well short of the [expected] standard’.


The FCA is concerned that firms conduct adequate due diligence, especially in relation to retail investment products, in order to highlight the risks involved to consumers. The Letter comes after a statement indicating that there will be an independent investigation into the existing regulatory regime and the FCA’s supervision of London Capital & Finance plc (“LC&F”). Misleading adverts from LC&F promoting a risky mini-bond issue ultimately led to ‘unacceptable levels of harm’ to consumers.   It is therefore any surprise that the FCA is redoubling it efforts to stamp out this practice going forwards.

Continuing obligations and consequences

The Letter highlights that firms have a continuing obligation to review financial promotions. If a firm finds that a promotion is no longer conforming, they must withdraw its approval. Therefore, it is crucial for firms to have adequate systems and controls in place to comply with the rules on financial promotions as set out in the FCA’s Conduct of Business Rules.

The FCA reminds firms that, as well as being able to remove the infringing advert and cancel the proposed issue of products to investors, the regulator can also instigate criminal proceedings against firms.

With the spotlight on the regulator, the Letter appears to be final warning on the subject of misleading financial promotions. It would be prudent of firms to review their practices now to avoid any future disciplinary action.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume IX, Number 106


About this Author

Garon Anthony Litigation Attorney Squire Patton Boggs Birmingham, UK

Garon is a partner in the Litigation Practice Group. He advises clients across the full range of commercial dispute issues, including cyber liability/data breach, professional negligence, banking, pensions and insurance.

Garon regularly acts for clients who are subject to investigations or disciplinary proceedings by national and international regulators, including most recently the Financial Conduct Authority, the Financial Reporting Council and the Dubai Financial Services Authority.

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Rose Chaudry, Squire Patton, Commercial Litigation Lawyer, Tortious Contracts Attorney

Rose Chaudry is an associate in the Litigation team with expertise in general commercial litigation. Rose qualified in September 2015 after completing her training contract with the firm.

Rose regularly acts for a diverse client base, including individuals and companies, from SMEs to PLCs. Rose has experience advising on a wide-range of matters of both a contractual and tortious nature, including breach of contract, breach of warranty, debt recovery, professional negligence and insurance.

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