FINANCIAL advisers, mortgage brokers and other regulated firms are being warned to take a closer look at their online reviews after guidance from the Financial Conduct Authority (FCA) suggested fake reviews could create Consumer Duty risks.
One adviser warned: “The FCA’s guidance may look subtle, but it’s actually quite big.”
The regulator’s guidance says that “misleading or inauthentic information, where it materially affects how consumers understand products or services, could undermine those [Consumer Duty] outcomes”.
A FCA spokesperson added to Newspage: “Consumers deserve accurate information when making financial decisions, and fake reviews undermine that. Firms must communicate in a way that is fair, clear and not misleading – and we expect them to act swiftly when they become aware of reviews that could deceive their customers.”
This is particularly relevant for mortgage brokers, wealth managers, insurers and investment firms, where online reviews increasingly play a major role in how consumers choose who to trust with their money.
While fake reviews have traditionally been seen as a competition or marketing issue, the FCA’s latest guidance suggests they are becoming a compliance and governance issue, too.
Stronger powers
This comes after the introduction of the Digital Markets, Competition and Consumers Act 2024, which explicitly banned fake reviews and gave the Competition and Markets Authority (CMA) stronger powers to investigate and take action against businesses that fail to prevent them.
In March, the CMA launched five new consumer law investigations as part of a crackdown on fake and misleading reviews – opening cases across sectors including funerals, food delivery and car sales.
The FCA’s guidance says that “firms should not post inaccurate or misleading information about their products and services”.
It adds that “where third‑parties form part of a firm’s distribution model or marketing approach, firms should consider what steps are reasonable and proportionate to identify and manage potential risks, including from misleading information”.
Guidance “significant”
Daniel Mohacek, CEO of TruthEngine, said: “The FCA’s guidance is significant because they move fake reviews beyond being a simple marketing or reputation issue. The regulator is effectively recognising that if consumers are relying on misleading reviews to make financial decisions, there can be real consequences for consumer outcomes.
“Reviews now play a major role in how people choose banks, mortgage providers, wealth managers, insurers and investment platforms. If those reviews are manipulated, consumers may not be making decisions based on accurate information.
“While the FCA has stopped short of introducing specific new requirements, the direction of travel is clear. Firms should be asking whether they understand the risks associated with online reviews and whether their governance, compliance and Consumer Duty frameworks are keeping pace with a digital marketplace where trust is increasingly formed online.”
Long overdue
Financial advisers welcomed the news. Martin Rayner, Mortgage broker and financial adviser at Compton Financial Services, said: “The FCA’s stance is long overdue. It is not unheard of for firms to suddenly appear with vague, generic five-star reviews that tell consumers very little about the service.
“Once that starts, other firms feel pressure to compete on the same basis and trust in the whole review system is lost. If fake or manipulated reviews influence a customer’s choice of mortgage broker or financial adviser, that should clearly create a Consumer Duty risk.
“Consumers cannot make informed decisions if the information shaping those decisions is misleading from the outset. Businesses that have spent years building genuine client feedback should not be competing against firms manufacturing credibility.”
Harry Goodliffe, Director at HTG Mortgages, added: “Trust is becoming a compliance issue. The FCA’s guidance may look subtle, but it’s actually quite big.
“Consumer Duty is all about helping customers make informed decisions, and fake reviews undermine that. Any broker relying on reviews they know aren’t genuine could be taking a bigger regulatory risk than they realise.”
Important shift
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, also said advisers should take note of the FCA’s guidance and described it as “an important shift”.
She said: “This is an important shift because reviews are not harmless decoration. In financial services, trust is part of the decision-making process.
“If a client chooses a mortgage broker or IFA because the online reputation has been manipulated, their understanding has already been distorted before advice even begins.
“Any regulated firm using fake, incentivised or misleading reviews is playing with Consumer Duty risk. It could affect consumer understanding, fair value and trust in the whole advice process.
“You cannot say you are helping clients make informed decisions while artificially engineering the evidence they rely on.
“My view is simple: if the review is not genuine, it should not be there. In advice, reputation has to be earned, not manufactured.”
