- The FCA aims to revamp guidelines surrounding financial promotions on social media platforms to curb illegal activities and consumer harm.
- The regulator has allied with the Advertising Standards Authority to educate consumers and influencers on risks tied to financial products promotion.
The Financial Conduct Authority (FCA), the UK’s primary financial regulator, is intensifying its fight against illicit and non-compliant online financial advertisements. The authority plans to revamp its social media guidelines, aligning them with the modern dynamics of online advertising of financial products and services.
New Age of Online Financial Promotion
Lucy Castledine, the FCA’s Director of Consumer Investments, highlighted an increasing number of advertisements that fail to adhere to existing guidelines, potentially leading to consumer harm. The objective of this guidance overhaul is to create a crystal-clear understanding of what the regulator expects from firms when marketing financial products online.
The increasing fame of ‘finfluencers’ – influencers in the financial sector, and the consequent potential for online consumer harm, has led the FCA to bolster its oversight of digital financial promotions. The authority has joined forces with the Advertising Standards Authority to educate consumers and influencers about the inherent risks in promoting financial products.
This collaborative initiative includes activities such as infographic creation, roundtable discussions, and live events to increase awareness of potential harm. Engagement efforts by the FCA have also brought about changes in the advertising policies of several Big Tech firms, mandating that financial promotions are approved only by FCA-authorized firms.
The FCA’s consultation to enhance its social media guidance comes on the heels of its announcement of fresh advertising rules for crypto firms aiming at UK consumers. Effective October 8, 2023, the FCA will prohibit incentives to invest in cryptocurrencies, such as ‘refer a friend’ bonuses. It mandates firms to introduce clear risk warnings and a 24-hour cooling-off period to give first-time investors ample time to contemplate their investment decision, aligning the measures with those for other high-risk investments.
This progressive move underscores the FCA’s commitment, as outlined in its 2023/24 business plan, to prevent and reduce serious harm while testing and setting higher standards. The intensified scrutiny of financial promotions on social media platforms signifies a significant step towards achieving these core commitments.
