Knowledge Hub
by Zumo team
February 2024
A short overview of what businesses should consider as the UK FCA ramps up financial promotions related actions.
Recently, the UK Financial Conduction Authority (FCA) has released a series of public communications detailing its ongoing actions to ensure ‘ fair, clear and not misleading’ advertisement of financial products to UK consumers. Since October of last year, this has applied equally to cryptoasset promotions, and in this short overview we consider the latest developments of note from the perspective of businesses wishing to provide and market cryptoasset services to UK consumers.
What has happened
In its latest statement, the FCA reports it has issued 450 consumer alerts relating to illegal cryptoasset promotions issued between 8 October and 31 December 2023, part of its wider remit to restrict misleading financial advertisements and promotions.
As part of this, 35 apps have been removed from App Stores at regulator request, and individual enforcement actions taken against a large overseas unregistered cryptoasset exchange, non-compliant affiliate programmes, and deficient S21 approvers (regulated firms approving promotions on behalf of an unregistered cryptoasset firm).
Sources:
https://www.fca.org.uk/data/financial-promotions-data-2023
https://www.fca.org.uk/news/press-releases/financial-watchdog-stops-thousands-misleading-ads-promotions
https://www.fca.org.uk/data/financial-promotions-quarterly-data-2023-q4
What it means
Since 8 October 2023, UK financial promotions rules extend to any business offering crypto products to a UK retail clientele. From the standpoint of firms dealing with cryptoassets, this latest news from the regulator is evidence that the FCA will continue to act robustly to disrupt any firm seeking to operate in the UK in breach of financial promotions requirements while also offering future guidance on the areas (e.g. operational touchpoints with technology providers and regulated firms) that will continue to form a focus of regulatory scrutiny in 2024.
While headlines may have focused on prison time and fines applicable for financial promotions non-compliance, this latest reporting is a reminder to firms that the FCA will also seek to push non-compliant firms out of the UK marketplace through pressure points such as App Stores or the provision of ‘on/off ramp’ payments and banking services to non-compliant providers.
The S21 approver route also continues to come under regulator scrutiny amidst concerns surrounding the appropriate competence and expertise of S21 approvers. This is reiterated with the voluntary restriction of one S21 approver, and compulsory restriction of another, in the FCA’s most recent report (https://www.fca.org.uk/data/financial-promotions-data-2023).
What to do next
As the first digital asset platform to integrate the frontend and backend requirements of the FCA’s financial promotions regime for cryptoassets, Zumo is at the forefront of adapting to these regulatory changes. Book a discovery call to see how Zumo can empower you to retain UK business and navigate the new regime.
