The government has bowed to a mass of pressure from regulators, insurers, charities, consumer groups and other public bodies by making major changes to its Online Safety Bill to include the regulation of scam adverts.
The changes have been greeted by the Financial Conduct Authority (FCA) executive director of enforcement and market oversight Mark Steward: “We welcome that the Online Safety Bill will now require the largest platforms to tackle fraudulent advertising.
“We have been clear about the need for legislation and appreciate the government’s positive engagement on this.
“We look forward to working closely with government and regulatory partners as they finalise and implement details of the draft bill.”
The regulator, Financial Services Compensation Scheme, Bank of England, the Treasury Select Committee and many insurers have been calling for paid-for online adverts to be included within the scope of the Bill.
The government’s move was also applauded by the Personal Investment Management & Financial Advice Association (PIMFA) which said it could help wipe out online fraud and cloned websites.
“We will of course examine the detail within the Bill but this is a step in the right direction to protect consumers from fraud,” it added.
The government’s decision to exclude fraudulent online adverts and user-generated content from the original proposals bewildered and infuriated many organisations and prompted major lobbying campaigns.
After agreeing last May to only bring user-generated content into the scope of the laws, the government appears to have completely backed-down under the weight of unanimous calls for the rules to be extended.
In August, Aviva told Health & Protection that the government had to act as its research showed people were fearful of financial adverts.
“Currently, there’s no legal responsibility for technology firms to verify the legitimacy of the companies which pay them to publish adverts on their platforms,” Aviva director of fraud prevention Rob Lee said at the time.
“This potentially leaves millions of internet users exposed to unscrupulous adverts.
“If the government is to realise its ambition, then we believe financial scams promoted by paid-for adverts should be included in the Online Safety Bill.”
Meanwhile in November, Economic Secretary to the Treasury John Glen spent almost an entire 3,000-word speech telling UK financial regulators to be proactive when considering online risks.
However, he did not discuss why the government was ignoring calls to ban or regulate online advertising for financial scams, including those coming from regulators themselves.
Holding search engines and platforms to account
A consultation has also been launched as part of a wider overhaul of how online advertising is regulated in the UK, including proposals to improve transparency and accountability and tackle harmful, fraudulent and misleading adverts.
A new legal duty will be added to the Online Safety Bill requiring the largest and most popular social media platforms and search engines to prevent paid-for fraudulent adverts appearing on their services.
“Together the measures aim to boost people’s trust and confidence in being online by making sure the UK’s rules and regulations keep pace with rapid advances in technology,” the government said.
It added: “The change will improve protections for internet users from the potentially devastating impact of fake ads, including where criminals impersonate celebrities or companies to steal people’s personal data, peddle dodgy financial investments or break into bank accounts.”
