The City regulator has come under fire for spending money on Google adverts to warn consumers about “high risk” investments such as peer-to-peer lending.
The search term ‘ISA’ brings up a Financial Conduct Authority (FCA) advert which links to a webpage called “high return investments”.
“We have seen too many examples of consumers searching online for high-return savings and investments, investing in high risk investments and then losing all their money,” the FCA warned.
“If high returns are being promised or even suggested, then this means there are higher risks associated with the investment.”
P2P was listed as an example, alongside other types of investments deemed as high risk by the regulator such as cryptoassets and mini-bonds.
A chief executive of a P2P lending platform, speaking to Peer2Peer Finance News on the condition of anonymity, blasted the FCA for putting P2P in the same category as some unregulated investments.
“They’re bidding on keywords for ISA and other stuff which isn’t a particular problem, but if you go through the page it’s talking about land banking and lumping P2P in that too, which considering we pay thousands of pounds in fees to them every year, the last thing we want it spent on is lumping us with unregulated schemes,” he said.
“It’s outrageous and someone should call them out on it.
“We totally understand the FCA’s desire to warn against crappy investments, that’s 100 per cent acceptable and its job, but they shouldn’t be bidding against businesses they regulate.
“High-return bonds, cryptoassets, it just lumps us in and its one of those things. None of those guys need to be regulated and we do, and we’ve been lumped into it.”
On the webpage the regulator also issued guidance for investors with five questions to ask yourself before you invest.
These comprise: ‘Am I comfortable with the level of risk?’, ‘Do I fully understand the investment being offered to me?’, ‘Am I protected if things go wrong?’, ‘Are my investments regulated?’ and ‘Should I get financial advice?’.
This is not the first time that the FCA has warned consumers about the risks involved in P2P lending. It issued an announcement on 1 April 2019 – in the final throes of ISA season – telling investors to think carefully before investing in “high risk” Innovative Finance ISAs.
“We recently launched a pay-per-click (Google Ads) campaign to inform consumers about the inherent risks of high-return investments,” an FCA spokesperson added.
“We make no apologies for helping consumers to make better informed investment decisions and avoid potential scams.”