Misleading financial advertisements and scams have grown increasingly common in the UK, prompting the Financial Conduct Authority (FCA) to intensify its efforts to protect consumers. Whether it’s a crypto scheme promising sky-high returns or a “too good to be true” investment offer, fraudsters use bold claims and slick presentations to lure unsuspecting people.
In 2024 alone, the FCA intervened in nearly 20,000 non-compliant financial promotions, nearly double the year before, highlighting the scale of the problem. Below, we explore how these scams operate, why the FCA is cracking down, and what you can do to stay safe.
Modern technology enables fraudsters to reach potential victims with minimal effort. A single paid advert or social media post can travel far and fast. Scammers exploit:
Platforms like Instagram, Facebook, and TikTok can host eye-catching ads that promise massive returns or quick loan approvals, often with few checks or restrictions.
• Search Engine Advertising
Fraudulent operators pay to rank for keywords such as “fast loan” or “crypto investment,” drawing users looking for quick financial solutions.
• Influencer Endorsements
Some “influencers” promote unregulated products (knowingly or otherwise), giving scams a veneer of credibility.
This mass exposure means consumers are bombarded with promotional material, much of which is either misleading or outright deceptive.
Cryptoassets are high-risk, volatile, and only partially regulated – ideal territory for scammers. While there are legitimate crypto projects, many ads understate the risks. Recent FCA rules (effective late 2023) require a 24-hour cooling-off period for first-time crypto investors, clearer risk warnings, and a ban on “refer-a-friend” bonuses. Despite these measures, ads promising huge gains persist, especially on social media.
• High-Return Investments
From exotic bonds to questionable property deals, misleading ads tout “guaranteed” earnings with minimal mention of potential losses. The FCA’s ScamSmart resource flags mini-bonds and land banking schemes as frequent offenders. Clone investment firms – unauthorised companies impersonating legitimate businesses, are also alarmingly prevalent.
• Loans and Credit Offers
When finances are tight, “instant approval” or “no credit check” adverts can be appealing. In reality, these deals often come with hidden fees, sky-high interest rates, or no actual loan at all. Reputable lenders must be FCA-authorised, provide transparent information about costs, and avoid pressuring borrowers into snap decisions.
• Insurance and Warranty Scams
“Ghost broking” involves fake brokers selling non-existent insurance policies, commonly for cars. Victims only discover they have no cover after an accident or traffic stop. Similarly, fraudulent extended warranties can be sold with official-looking paperwork but yield no actual protection. Always confirm your broker or insurer is FCA-authorised.
• Debt Management and Claims Services
With the cost of living rising, ads offering to “write off most of your debts” are popping up everywhere. While genuine solutions exist (e.g., Individual Voluntary Arrangements), some promotions fail to highlight fees or the long-term impact on credit. Claims management companies also sometimes mislead people about easy or fast payouts.
In 2024, the FCA forced the amendment or withdrawal of nearly 20,000 financial promotions, almost double the total from 2023. Many of these involved online ads by unauthorised firms or social media “finfluencers” breaching the Financial Services and Markets Act 2000.
The FCA collaborates with major platforms to remove dubious financial ads and ban offending accounts. Some influencers have even faced criminal investigations for promoting unapproved investment schemes. Under section 21 of FSMA, unauthorised financial promotion can result in imprisonment and unlimited fines.
By designating cryptoassets as high-risk, the FCA introduced tighter promotion standards. Firms must display prominent risk warnings and assess prospective customers’ knowledge before selling to them. The ban on “refer-a-friend” incentives aims to reduce viral marketing that often targets inexperienced investors.
Launched in early 2024, this rule requires any authorised firm that approves financial promotions for an unauthorised third party to obtain special permission. It aims to close a loophole where rogue operators could find a compliant firm to rubber-stamp misleading ads.
Effective from July 2023, the Consumer Duty holds regulated firms to a higher standard of care, demanding that they design products and communications with customer welfare in mind. Misleading promotions breach this principle, exposing firms to tougher sanctions and potential redress obligations.
Under FSMA, individuals or companies issuing unauthorised promotions can face:
• Up to two years’ imprisonment
• Permanent prohibition from regulated activities
Those involved in more severe fraud, such as Ponzi-type schemes, can receive even longer sentences under the Fraud Act 2006. Regulated firms that fail to comply with FCA rules risk fines, reputational damage, and orders to compensate affected consumers. The FCA has ramped up its criminal prosecutions in recent years, targeting both firm executives and high-profile influencers who break the law.
Before you engage with any financial product, confirm that the firm is authorised using the FCA Register. Clone scams often mimic genuine company names but use different contact details.
• Scrutinise Unrealistic Returns
Advertisers promising big profits with no risk are typically hiding something. Legitimate investments acknowledge the possibility of losses and provide balanced risk information.
High-risk promotions should highlight the chance of losing money. If an ad glosses over disclaimers or barely mentions risk, be wary.
“Limited time only” or “Act now!” lines are designed to rush you. A reputable provider will not demand immediate action. Take your time, research thoroughly, and consult a professional if unsure.
If you spot a suspect promotion, report it to the FCA and the platform hosting the advert. This not only helps protect you but also stops fraudsters from duping others.
• Seek Professional Advice
For sizeable investments or complex financial matters, consider consulting an FCA-authorised adviser. You can also turn to MoneyHelper, a government-backed resource for free guidance on budgeting, debt, and pensions.
The FCA is not the only body combatting misleading ads. The Advertising Standards Authority (ASA) enforces advertising codes, while the government’s Online Safety legislation puts responsibility on tech platforms to remove scam content. Law enforcement agencies often join forces with the FCA to investigate major fraud cases. By pooling resources and sharing data, regulators can respond faster and more effectively as scams evolve.
Advances in data analytics and artificial intelligence help the FCA detect dodgy promotions at scale, particularly online. Automated systems can flag red-flag keywords or patterns that signal scam activity.
No regulator can catch every scam, and criminals constantly adapt. That’s why campaigns focusing on public awareness, such as ScamSmart, remain crucial. Informed individuals are far less likely to be swayed by slick but empty promises.
The ongoing emphasis on the Consumer Duty and the Section 21 gateway suggests the FCA intends to maintain its strict stance. Penalties will likely grow steeper for firms that fail to ensure adverts are “fair, clear and not misleading.”
Misleading financial adverts threaten both individual savers and the integrity of the broader financial market. The FCA’s crackdown, from removing thousands of dubious ads to prosecuting high-profile offenders, signals a significant escalation in regulatory action. Yet the responsibility does not rest solely on authorities. Consumers also need to stay vigilant, adopt a healthy scepticism towards “guaranteed” deals, and report anything suspicious.
