Over 400 illegal crypto ads flagged by UK financial watchdog in 2023

The Financial Conduct Authority (FCA), the UK’s independent regulator for financial services, has intensified its scrutiny of financial promotions, particularly focusing on the crypto sector. A February 14 report from the FCA highlighted “significant levels of non-compliance” with the crypto promotion rules established on October 8, 2023. The regulator’s findings indicate a range of issues among both registered and unregistered crypto firms, including misleading claims about product safety and security without adequate evidence or risk disclosure.

In response to these findings, the FCA has issued 450 consumer alerts against digital asset companies for illegal promotions from October to December 2023. The authority is collaborating with technology companies to block and remove unauthorized promotions across various platforms, including websites and mobile applications, resulting in 35 apps being removed from app stores by the end of December 2023. This action underscores the FCA’s commitment to protecting consumers from misleading financial advertisements and scams.

Strengthening compliance and consumer protection

The FCA’s efforts extend beyond the crypto sector, reflecting a broader commitment to enhancing consumer protection in the financial market. In 2023, the regulator ordered the withdrawal or amendment of over 10,000 finance-related advertisements in the UK, demonstrating an increase in intervention activities. This action was part of the FCA’s strategy to ensure that financial promotions are clear, fair, and not misleading, enabling consumers to make informed decisions.

The introduction of new regulations, such as the cryptoasset financial promotions regime and the Consumer Duty, represents a significant shift in the FCA’s approach to financial services regulation. These measures aim to set higher standards of protection for customers, requiring firms to act in the best interest of retail customers and deliver good outcomes. The FCA’s proactive approach in identifying and addressing non-compliance is a clear signal to the industry to prioritize consumer interests and adhere to regulatory standards.

Future focus and industry impact

Looking ahead, the FCA intends to continue taking robust action against firms issuing illegal financial promotions in 2024. The regulator’s ongoing engagement with firms offering staking products and its review of s21 approvers underscore the comprehensive nature of its regulatory oversight. The FCA’s work to disrupt illegal financial promotions and educate stakeholders, including influencers and social media platforms, highlights the evolving challenges in financial regulation.

The FCA’s actions in 2023 have set a precedent for increased regulatory scrutiny and enforcement in the financial sector, particularly in the rapidly growing area of crypto assets. By working closely with other regulators, social media platforms, and industry bodies, the FCA aims to raise standards across the market and ensure that consumers receive transparent and accurate information.