The Financial Conduct Authority has outlined new guidance proposals aimed at combatting illegal and non-compliant social media ads and promotions and the potential damage from some ‘finfluencers.’
It said it has acted after seeing a growing number of rule-breaking social media ads.
The regulator said the new guidance was being introduced to ensure firms stay on the right side of the rules when advertising financial services and products.
The proposals will modernise the information firms should use when promoting financial products or services online.
For example, the FCA is consulting on extending its guidance to reflect the current ways social media is being used to advertise financial services and products.
Lucy Castledine, director, consumer investments at the FCA, said: “We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm.
“We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect of firms when marketing financial products online. And for those touting products illegally, we will be taking action against you.”
The FCA has been ramping up its scrutiny of online, often illegal, financial promotions, recognising the significant increase of ‘finfluencers’ (social media influencers who publish messages about financial services) and the potential for consumer harm taking place online.
The FCA has also teamed up with the Advertising Standards Authority to educate consumers and influencers about the risks involved in promoting financial products. The work has included an infographic, roundtable discussions and live events to build up awareness of the harm that can take place.
The regulator said its engagement has also helped secure changes to the advertising policies of several Big Tech companies to only allow financial promotions that have been approved by FCA-authorised firms.
The regulator will be continuing the engagement to ensure more is done to protect consumers.
The consultation follows the announcement of new advertising rules for crypto firms marketing to UK consumers.
From 8 October, the FCA will ban incentives to invest in crypto, such as ‘refer a friend’ bonuses. Firms must also introduce clear risk warnings and a 24-hour cooling period to give first-time investors the time to consider their investment decision. These measures are similar to the regime in place for other high-risk investments.
The new social media guidance can be found at https://www.fca.org.uk/publication/guidance-consultation/gc23-2.pdf and will be consulted on over the next 8 weeks.
