Online Advertising Prevention ‘Much More Better Than Cure’, Says FCA
The Financial Conduct Authority said social media companies should be forced to stop financial advertisements by implementing “systems and controls.”
During the joint committee hearing on the online security bill yesterday (October 18), the FCA, alongside other regulators, was asked about its views on the government’s refusal to include paid advertisements in the online security bill.
The government’s proposed online harm legislation covers some financial harm, but paid advertising, one of the main sources of online investment scams, is still not covered.
Mark Steward, FCA’s executive director of enforcement and market oversight, said that under the Financial Services and Markets Act, unless an individual is registered with the FCA, he cannot serve ads in the UK targeting UK citizens with financial products.
However, he explained that despite this, this does not prevent advertisers from doing it, nor social media companies from allowing it to happen.
“We are strong supporters of an approach that would force social media companies to create systems and controls because we know from our experience in financial services how valuable regulated systems and controls can be in preventing damage.
“We believe this is an area where prevention is much more preferable than cure, as recovery is unfortunately very difficult, expensive and frustrating as it leads to perpetrators who are beyond their reach overseas.”
Steward said the FCA still wanted a crackdown on the paid ads included in the bill, despite the government’s insistence that there be a consultation on the regulation of online advertising later in the year.
He said: “The way the bill talks about code-making appears to be a way that regulators could identify areas where companies and social media platforms need to design their own systems and controls to prevent damage does occur.
“These systems and controls may include an obligation to ensure that anyone advertising a financial promotion is authorized by the FCA or it may involve the obligation to perform certain checks at the gateway where you have information. that could be inconsistent or contradictory.
“[The] the obligation must be somewhere in the system because at the moment it is not filtered, for the moment the only filter for the industrialized production line for these advertisements is whether they pay the fees to the media company social and that doesn’t seem to be the right filter given the amount of damage it causes.
In June, Google took action to crack down on financial fraud appearing on its platforms by forcing all financial service advertisers to demonstrate that they are FCA authorized.
But last month, the search engine suggested that fraud committed through paid advertising should be included in the hotly debated online security bill, saying the bill was not “targeted enough”. “to” effectively tackle “these types of online scams if they have been included.