Yahoo Finance City watchdog eyes law change as Google fails to act on dangerous ads
The City watchdog has warned it may seek fresh powers and intervene after it criticised Google for not doing enough to protect consumers from high-risk and unregulated investments.
Rogue firms are able to promote and sell risky investments to consumers searching for savings accounts and safe protected bonds by paying Google to promote their products above legitimate firms.
The Financial Conduct Authority and Google have held talks to discuss the problem but the search engine’s promotions fall outside the regulator’s remit. The FCA is powerless to force action unless the Government changes the law.
At the regulator’s annual public meeting, the watchdog's chairman Charles Randell said the lack of progress was “deeply frustrating” and suggested further legislation would be needed.
Telegraph Money has repeatedly reported on how illegitimate firms are able to exploit this gap in the rules and sell wildly unsuitable investments to DIY investors.
The FCA has spent hundreds of thousands of pounds to promote its consumer advice in Google’s search results. However, this has led to the perverse situation where the search engine is profiting from both the rogue adverts and the regulator’s attempts to stop them.
Mr Randell was critical of the fact Google was earning money from rogue firms but also "from us as we have to try and post our own advertisements”.
He said that urgent change was needed and suggested the regulator would pursue legislation changes.
A press conference was held after the public meeting and, following a question from this newspaper, Mr Randell used his mobile phone to conduct a Google search for “high-return investments”.
“Half of the results returned on the first page are quite clearly scams,” he said, citing adverts suggesting investors could return 50pc profits in one week.
“These are all scams, and whatever Google is doing so far it’s not working," he said.
Jonathan Davidson, the regulator’s director of supervision, suggested that all financial firms seeking to advertise with Google should be screened against the FCA’s register of approved firms.
At present many rogue adverts are only removed following complaints from the FCA or financial campaigners. The regulator described this as “problematic”.
A Google spokesman said that it had updated its policies to better prevent predatory adverts and that it was now seeking greater information about advertisers’ identities, business models and relationships with third parties.
“Protecting the community from ad scams and fraud is a key priority for Google,” the company said.
Previously, Google has restricted advertising to people who searched for debt advice.
This was due to concerns that heavily indebted people were being persuaded to sign up for rogue and expensive debt management plans, rather than being directed to free support.
Elsewhere, the regulator said it was monitoring the controversial buy now, pay later sector with interest.
While the majority of activity in the sector is unregulated, the FCA said that companies were relying on historic “exemptions in the law” that were intended to cover other areas of financial services to avoid coming under the regulator’s remit.
