Bailey tussles with Google over scam ads

Next Bank of England Governor calls for a major crackdown

The incoming Governor of the Bank of england has heaped pressure on Google to crack down on investment scams which are marketed online.

Andrew Bailey, who leads the Financial Conduct Authority (FCA), is pressing the company to take concrete steps to shield savers from bogus adverts, after Google recently imposed restrictions on firms that consolidate high-interest loans posing as debt charities.

The City watchdog wants to set up a hotline to flag up dodgy adverts so they can be removed quicker.

Bailey, who replaces Mark Carney at the helm of the Bank of england in February, said the FCA had already held ‘constructive discussions’ with the web giant but said it needed to do more.

As the new Isa season approaches, officials in Canary Wharf are increasingly concerned more savers will be duped by fraudsters or unauthorised firms peddling scams or risky investments. The FCA says cowboys are breaking the law by promoting unregulated products without the appropriate authorisation from a financial firm which is regulated by the FCA.

These ‘misleading or harmful adverts’ (such as the one for London Capital &

Finance pictured) can pop up whenever a saver performs a simple search on Google, says the watchdog. For example, tapping in the phrase ‘Cash Isa’ can bring up adverts for risky products.

Officials are frustrated by how little Google is doing to vet these adverts before taking their money.

But they are also concerned about how long it is taking Google to take down adverts, even when the FCA submits a form flagging it as a ‘bad ad’. Sometimes these adverts are not removed at all.

Bailey (pictured) told the Mail: ‘We have had some constructive discussions with Google which indicate that they are looking for ways to help protect customers from exposure to harmful firms.

‘We want to build on this so that Google do more to ensure that unauthorised firms and fraudsters are banned from paid advertising. For example, Google could check whether a firm is authorised by us before it allows them to pay to promote their adverts.

‘We would also like to make the process of flagging bad adverts easier so Google can take them down more quickly.’

Ideally, the FCA wants Google to do its own due diligence. It is seeking a more formal and direct relationship with Google so it can raise the alert on dodgy adverts. Currently, it has to submit a form flagging up the offending item. Ultimately, the FCA would like to provide Google with access to its register, so it can quickly check whether a firm is authorised.

Bailey’s comments indicate there has been progress since he lambasted Google last week for not doing enough to protect savers. The negotiations come in the wake of the FCA ban from next year on the sale of speculative investments called mini-bonds.

Google said: ‘We want ads to have adequate information to help people make informed financial decisions and we have robust policies around what is and is not allowed when advertising financial products and services. In the spirit of co-operation we’ll continue to work closely with the FCA as we work towards eliminating these types of scams online.’

The watchdog has been-concerned that tens of thousands of investors attracted by the promise of high returns could be lured into using their new Isa allowance to invest in bonds when the new tax year begins in April.

The alarm was raised by the collapse of London Capital & Finance this year, one of the City’s biggest-ever scandals. Some 11,625 savers who invested £237m in a high-risk bond scheme marketed as a fixedrate Isa are facing huge losses.