The City regulator has said that online platform operators like Google should bear “clear legal liability” for the financial promotions on their sites, and is considering whether it needs greater powers to oversee them.
In its annual regulatory perimeter report, the Financial Conduct Authority (FCA) said that these platforms should have the same legal liability as traditional publishers of financial promotions, when it comes to promoting high-risk investments and scams.
The regulator said that it is currently in talks with the Treasury about applying the financial promotions regime to these platform operators and is considering whether it requires any new powers over them.
Read more: A timeline of FCA oversight and job changes
“Online platforms, such as search engines and social media platforms, play an increasingly significant role in communicating financial promotions to consumers,” the FCA said in the report.
“As a result, consumers are being more readily exposed to adverts, ranging from scams and promotions of high-risk investments to false or misleading adverts (falling either side of the regulatory perimeter) which, directly or indirectly, lead consumers onto paths resulting in harm.
“As the digital world continues to develop, the potential harms to consumers change in both nature and severity.”
The FCA has made consumer investments a business priority, after a number of high-profile scandals such as the collapse of mini-bond provider London Capital & Finance and peer-to-peer lending platform Lendy, which both left thousands of everyday investors out of pocket.
It has clamped down on the mini-bond market and has sounded warnings about the risks of other alternative investments including P2P.
“These are challenging times for firms, consumers and the wider economy,” said Christopher Woolard, interim chief executive at the FCA.
“The coronavirus crisis may exacerbate existing perimeter issues and encourage unlawful activity.
“We are focused on providing assistance to those consumers who need it. We continue to take action to protect consumers from losing money they can’t afford on high risk investments and falling victim to scams.”
The FCA said that it will publish a final policy statement by the end of the year on its proposal to make the temporary marketing ban on speculative mini-bonds permanent.
P2P has also come under fire from the FCA. In February, the FCA defended its Google adverts campaign which warns consumers that P2P lending is a high-risk investment.
The regulator was criticised after spending money on the campaign, which resulted in a Google search of the term ‘ISA’ leading to an FCA webpage entitled “high-return investments”.
The regulator listed P2P as an example on the website, alongside other types of investments such as cryptoassets and mini-bonds.