End of Cold Calling In the UK: FCA Considers a Complete Ban for Finance and Crypto

<p>In 2022, as
part of investment crimes in the United Kingdom, investors lost a staggering
£750 million. Scammers often used phones in their activities and cold-called
their potential victims, encouraging them to trade. The UK Treasury has just
published a consultation paper on the proposal to ban cold calling by fintech in the
country, which was presented by the Financial Conduct Authority (<a href="https://www.financemagnates.com/tag/fca/" target="_blank" rel="follow">FCA</a>) in May.</p><p>The United Kingdom Wants
to Block Investment Cold Calling</p><p>On the list
of instruments whose providers are to be subject to a ban on using telephones
for <a href="https://www.financemagnates.com/terms/m/marketing/">marketing</a> purposes, we find payment and banking instruments, including
electronic money and cryptocurrencies. In addition, the latest document lists
insurance products, credit, mortgages, and investments in tangible items.</p><p>The British
government argues that without a ban on cold calling, scammers can continue to
move from one financial product to another to circumvent current laws or
exploit legal loopholes. The cold calling ban will not completely prohibit finance and crypto companies from contacting consumers; it will apply to marketing and promotional
activities. </p><p>"It
will also not affect the ability of firms to send routine customer service or
administrative messages, for example, informing customers when a product
contract is coming to an end," the HM Treasury added.</p><p>If a
consumer has expressed "clear and specific" consent to receive
marketing materials by phone, the ban will also not apply.</p><p>The
document presents a cryptocurrency case study, showing an example of a retail
investor who allegedly lost £65,000 through cold calling.</p><p>Five Main Goals of New
Legislation</p><p>The
government plans to implement a comprehensive ban on cold calling related to
financial services and products. This new <a href="https://www.financemagnates.com/terms/r/regulation/">regulation</a> aims to address the
existing loopholes in the current restrictions by ensuring the following:</p><ul type="disc"><li>Consumers will be aware that
legitimate firms will not approach them with unsolicited marketing for
financial services or products.</li><li>Consumers will be encouraged to
end and report any financial cold calls they receive as scams.</li><li>Legitimate businesses will have
well-defined rules to adhere to when promoting financial products.</li><li>Authorities can take legal
action against UK firms that persist in cold-calling consumers to
advertise financial products and services.</li><li>Fraudsters cannot circumvent
the ban by merely altering the financial product they are promoting.</li></ul><p>FCA Takes Numerous
Measures to Protect Investors</p><p>Undoubtedly,
the Financial Conduct Authority (FCA) is one of Europe's most proactive
financial market regulators. It updates its warning list <a href="https://www.financemagnates.com/forex/news-nuggets-15-august-devexperts-updates-dxcharts-fca-warns-against-seven-companies/" target="_blank" rel="follow">almost every day</a>,
adding unlicensed entities and introducing new legislation.</p><p>One example
is the 'Travel Rule’, which will come into effect <a href="https://www.financemagnates.com/cryptocurrency/uk-crypto-firms-brace-for-compliance-as-fca-sets-deadline-for-travel-rule-implementation/" target="_blank" rel="follow">on 1 September</a>. Under this rule,
cryptocurrency companies must provide information about transfers. They have
until 25 August to provide input on the new guidance. The Travel Rule emerged
in response to the growing need for transparency and accountability within the
domain of cryptocurrency transactions.</p><p>Earlier
this month, the FCA published <a href="https://www.financemagnates.com/institutional-forex/fca-cracks-down-on-rogue-financial-promotions-among-trading-firms/" target="_blank" rel="follow">data on financial promotions</a> for the second
quarter. According to data generated from 1 April to 30 June, the number of
interventions taken by the FCA resulted in 1,507 promotions being altered or
withdrawn by regulated entities. Additionally, the FCA issued 400 warnings to
unauthorized firms and individuals, of which 11% were related to clone frauds.</p><p>In July, <a href="https://www.financemagnates.com/" target="_blank" rel="follow">Finance
Magnates reported</a> that the FCA had intensified its effort to prevent
financial promotions that do not comply with regulations. Furthermore, the
regulator tightened the rules for advertising financial services on social
media platforms, such as TikTok and Instagram.</p>

This article was written by Damian Chmiel at www.financemagnates.com.