Financial regulatory & Financial services

Online financial scams: Google to vet advertisers following FCA threats

The FCA has announced that it is prepared to take action against the online platforms if they cannot come up with ways to block these ads, spurring Google to announce changes to its Google Ads policy so that advertisers are being properly vetted.



There is no doubt that the pandemic has boosted the amount of time that consumers spend online and, in turn, online scammers have ramped up their fraudulent advertising particularly on social media and search engine platforms. This advertising led the Financial Conduct Authority (“FCA”) to issue 1,200 consumer warnings last year regarding financial scams advertised on social media, double the number issued in 2019. Remarkably, the prevalence of these scams required the FCA to issue its own “ScamSmart” ads on Google to make consumers aware, costing the regulator £600,000 to date.

Under the UK’s Financial Services and Markets Act 2000, financial promotions can be communicated only by a person who is authorised by the FCA, or the communication must be approved by a person authorised by the FCA. Accordingly, the focus has turned to the tech giants who are not only communicating such scams, but are profiting from them. Up until 31 December 2020, under EU policy the online platforms were not required to comply with the UK’s rules on financial advertising. Post-Brexit, however, the EU exemption no longer applies and the FCA has demanded that online platforms now comply with the regulations.

The FCA’s position

The FCA’s Head of Enforcement, Mark Steward, was questioned by the Treasury Select Committee on 14 June 2021 about what was being done to control such scams. Mr Steward said that the FCA is prepared to take legal action against search platforms and social media companies if they allow non-FCA-approved advertisers to post financial ads on their platforms. Mr Steward said that the FCA was working with the platforms to come up with ways to identify adverts which would cause damage to consumers. It was revealed that the platforms do not have robust means of detecting the non-compliant ads, meaning that the ads are simply being processed and appear in Google searches and social media on a daily basis, without any vetting. Mr Steward made it clear that the FCA is prepared to take legal action if the platforms do not find a way to properly filter the adverts:
“We shall see how successful they really are, because the proof will be in the pudding. If the proof is not in the pudding, we are going to have to take action of a different kind.”

Google’s response

The FCA’s message spurred Google into action, announced last week in its blog “Further measures to help fight financial fraud in the UK” that it intended to make changes to the Google Ads policy, such that from 6 September 2021 all financial services advertisers have to prove that they are authorised by the FCA if they want to show the ads to UK users. Google also explained that the new policy update was only the “latest step” in its commitment to tackling online financial crime, and they continue to use machine learning and human review to “take action”.

Other safeguards – the Online Safety Bill

Google’s crackdown comes amidst the debate regarding the new proposed UK “Online Safety Bill”, expected to come into force later this year, which establishes a new regulatory regime to combat illegal and harmful content online. While the bill prohibits financial fraud and user-generated online scams, it does not prevent fraud via advertising. The Treasury Select Committee objected to this omission and demanded that Mr Steward and the FCA take active steps to ensure MPs consider its inclusion during the pre-legislative scrutiny process.

What next?

Only time will tell if online platforms come up with innovative ways to filter out the scam adverts from legitimate financial promotions. Of course, the obvious first step (as taken by Google) is the introduction of a verification process to ensure advertisers are FCA approved, but this is unlikely to block online scams in their entirety. Indeed, while the FCA is waiting to see if the “proof is in the pudding” as to the efforts of the social media platforms, consumers will be waiting to see if FCA itself is prepared to take action if the platforms fail to comply with their obligations.




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