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Dear CEO | Release Date: 6th May 2022

To read a shorter summary of this Dear CEO letter, click here.

To access the original FCA document, click here.

Long Summary

The Financial Conduct Authority (FCA) has issued a directive to CEOs, especially those at credit brokerage and high-cost lending firms, emphasising the need for strict adherence to regulations governing financial promotions. The communication underscores the necessity for all financial promotions to be clear, fair, and not misleading in line with the Consumer Credit sourcebook (CONC) guidelines. This summary aims to delineate the specifics of the FCA’s concerns, the regulatory expectations, and the steps firms must take to ensure compliance.

Regulatory Framework

The FCA’s regulatory framework under the Financial Services and Markets Act 2000 (FSMA) mandates that any financial promotion must either be communicated by an authorised person or approved by one. The letter reiterates the legal implications of failing to meet these conditions and highlights the need for compliance with specific sections of the CONC, particularly those related to the clarity and fairness of financial promotions.

FCA’s Concerns

Rising Demand for Credit

The backdrop of a significant cost-of-living crisis has led to an increased demand for credit, particularly affecting vulnerable consumers. The FCA expresses concern that this demand could result in financial promotions targeting these individuals, potentially leading to unsustainable lending practices.

Misleading Financial Promotions

The FCA identifies several types of financial promotions that could mislead consumers:

Specific Issues Highlighted

Inappropriate Phrasing: Terms like “no credit check loans,” “loan guaranteed,” and “pre-approved” were specifically noted as problematic, as they might lead consumers to believe that credit checks will not be conducted.

Omission of Risk Warnings: Some firms fail to include the mandatory risk warning about late repayments in their promotions, which is crucial for consumer information and protection.

Representative APR: The FCA points out that some promotions do not correctly display the RAPR, misleading consumers about the cost or benefits of the credit offered.

Role Clarity: Firms are reminded to clearly state whether they are operating as brokers or lenders in their promotions to prevent consumer confusion.

Actions Required of Firms

Review of Financial Promotions:

Firms must ensure that all current and future financial promotions comply with the relevant requirements of CONC 3.

A thorough review of processes, systems, and controls related to financial promotions should be undertaken.

Engagement and Oversight:

Firms need to enhance oversight of their appointed representatives and ensure that marketing across all platforms adheres to FCA regulations.

The board should be involved in reviewing and approving the measures taken to comply with FCA directives.


Firms are encouraged to maintain detailed records of their review processes and the outcomes of any actions taken to address compliance issues.

Conclusion and Key Takeaways

Immediate Compliance

Firms are urged to immediately bring their financial promotions into compliance with FCA standards, ensuring they are clear, fair, and not misleading.

Continuous Monitoring

The FCA intends to actively monitor the market for compliance and will not hesitate to take action against non-compliant financial promotions, which could include directives to withdraw or amend misleading advertisements.

Culture and Consumer Focus

Firms are reminded of the importance of fostering a culture that prioritises fair consumer outcomes and complies with both current regulations and the impending New Consumer Duty.

Support and Resources

The FCA directs firms to utilise available resources on its website for guidance on managing financial promotions and to ensure they are prepared for upcoming regulatory changes.

The letter is a clear directive from the FCA, highlighting the need for stringent compliance within the financial promotions landscape, especially in a time of economic strain for many consumers. It emphasises the regulator’s commitment to safeguarding consumer interests through rigorous oversight and enforcement of financial conduct.

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