Recent action by the Financial Conduct Authority against claims management companies highlights a familiar issue.
Misleading financial promotions remain a persistent concern. While the enforcement action focused on CMCs, the underlying message is much broader. The same risks exist across consumer credit, particularly in high-volume, digitally driven distribution models.
For lenders, brokers and compliance teams, this is a timely reminder. Promotional activity is no longer being assessed purely on technical compliance. It is being judged on how it shapes customer understanding and behaviour.
A familiar problem in a different sector
The FCA’s intervention centred on advertising that created unrealistic expectations and failed to present information clearly.
This is not unique to claims management. Similar issues arise across consumer credit, particularly where marketing emphasises speed, simplicity or approval without giving equal prominence to cost, eligibility or risk.
Phrases that suggest certainty, minimise complexity or imply guaranteed outcomes can quickly create a misleading impression. Even where disclaimers are present, they may not be sufficient if the overall message is unclear.
The principle is straightforward. Promotions must reflect the reality of the product, not just its appeal.
The link to customer outcomes
Under Consumer Duty, financial promotions are directly linked to customer outcomes.
If a promotion leads customers to apply for products they do not fully understand or are unlikely to be eligible for, this raises questions about whether the firm is delivering fair outcomes. High decline rates, early withdrawals or complaints can all point back to issues in how products are presented.
The focus is therefore shifting from whether a promotion is technically correct to whether it supports informed decision-making.
This is a higher bar, and one that requires more than a compliance sign-off process.
Digital journeys increase the risk
The risk is particularly acute in digital environments.
Marketing messages are often condensed, optimised for conversion and deployed across multiple channels. Affiliates, introducers and third parties may also play a role in generating traffic, adding further complexity.
In these environments, there is a tendency for messaging to drift. Small changes in wording, layout or emphasis can alter how a product is perceived. Without consistent oversight, this can lead to promotions that no longer align with regulatory expectations.
The FCA expects firms to maintain control across all channels, including those operated by third parties.
Oversight and accountability
One of the key themes in recent regulatory activity is accountability.
Firms cannot rely on third parties to manage compliance in isolation. Where promotions are issued on a firm’s behalf, responsibility remains with the authorised entity.
This requires more than contractual arrangements. It involves active monitoring, clear approval processes and ongoing review of how products are presented in practice.
Where issues are identified, firms are expected to act quickly. Delayed or inconsistent responses can increase regulatory risk.
What firms should be doing now
The most effective firms are taking a more structured approach to financial promotions.
This includes reviewing how products are described across all channels, ensuring that key information is presented clearly and consistently, and testing whether communications genuinely support customer understanding.
It also involves looking beyond individual promotions to assess overall customer journeys. If patterns suggest that customers are misunderstanding products or applying inappropriately, this should be addressed at source.
The key question is whether promotions reflect the reality of the product experience.
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance supports consumer credit firms in reviewing and strengthening financial promotions frameworks.
We work with firms to assess how products are presented across digital and offline channels, test alignment with Consumer Duty expectations and ensure effective oversight of third-party activity. This includes promotions audits, governance reviews and support in strengthening approval and monitoring processes.
As regulatory scrutiny continues to increase, firms that take a proactive and structured approach to financial promotions will be far better positioned to manage risk and maintain customer trust.