FCA says crypto firms not following new advertising law

The Financial Conduct Authority noted the need for compliance Wednesday in a report that examines the regulator’s efforts to enforce restrictions on illegal financial promotions that went into effect last October

The U.K.’s financial watchdog says crypto currency companies still are not following the country’s new advertising law.

The Financial Conduct Authority noted the need for compliance Wednesday in a report that examines the regulator’s efforts to enforce restrictions on illegal financial promotions that went into effect last October.

The rules require crypto firms to be registered with the Financial Conduct Authority, or have their ads — which must be “clear, fair and not misleading” — approved by authorised firms. Additionally, companies are required to note the risks of investing in crypto currencies, and to offer a 24-hour cooling off period for first-time customers.

As per the report, the FCA issued 450 consumer alerts between October 8 — when the rules became official — and December 31. The authority also says it is working with tech firms to remove and block illegal promotions.

So far, its work has led to 35 apps being pulled from app stores as of the end of last year. The authority promised “robust action” against firms issuing illegal financial promotions.

We remain concerned that regulated firms are not doing enough to meet their own obligations when providing support services, such as payment services, to crypto firms that are illegally promoting to UK consumers, the report said.

We are engaging with these firms to remind them about their regulatory obligations including, but not limited to, carrying out appropriate due diligence on their clients, KYC checks and ensuring that they are not dealing with the proceeds of crime, the report added.

The Financial Conduct Authority says it has also been focusing on companies trying to capitalise on the trend of consumers seeking loans or other help with debts. The agency says it has seen an increased use of TikTok and sponsored advertising to pull in vulnerable consumers to engage in discussions on managing debt, which goes beyond the scope of the law.

Consumers are then typically steered towards an Individual Voluntary Arrangement (IVA) solution that may not be suitable to their circumstances, and in some cases, unauthorised companies are going further in engaging (or falsely claiming to engage) directly with creditors or lenders on behalf of consumers to negotiate their debts, the report added.