(Reuters) – Google should voluntarily take action immediately to better vet paid-for promotions for financial products, Britain’s Financial Conduct Authority said on Thursday after a damning report on the watchdog’s handling of a collapsed fund.
Nikhil Rathi, chief executive of the FCA, said Google should make checks with regulators to see whether potential advertisers had already been shut down in some other guise, before promotions are posted online.
“We believe some considerable effort could be put in to deal with how these are screened before they are allowed to advertise, with cross referencing with data bases that we run and international regulators run as well,” Rathi told Reuters.
“There are steps that can be taken now,” he said.
Rathi has met Google twice since taking office in October.
“There is a constructive discussion going on. I think what’s important is action in this online space as well,” he said.
Google said it had no immediate comment.
The FCA and Rathi’s predecessor, now Bank of England Governor Andrew Bailey, were heavily criticised on Thursday in a report into the watchdog’s “failures” in handling London Capital & Finance, an investment fund that collapsed last year.
LCF was regulated by the FCA and used Google to promote unregulated mini-bonds in a “misleading” way, the report ordered by the finance ministry said.
The FCA had told LCF in 2017 that its website and sponsored Google promotions were misleading, and also failed to contain a “capital at risk” warning, the report said.
But it was not until December 2018 that the FCA ordered LCF to withdraw all existing marketing for bonds, and the company collapsed a month later.
Britain’s financial services minister John Glen said he will now consider whether paid-for advertising on online platforms should be regulated by rules on financial promotions.
Glen said that fraudulent online advertising could be designated as a “priority harm” under planned new laws on online content, meaning it would be policed by the FCA.
FCA Chair Charles Randell said the consumer investment market needs a careful review to spell out where investors are protected.
“In the long term, there is clearly a fundamental change in our society and in the way people engage with decisions, particularly online and the government recognises that,” Randell said.
Reporting by Huw Jones; Editing by Alexandra Hudson