FCA clamps down on social media ads
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
The Financial Conduct Authority is proposing guidance for firms advertising financial products on social media as more people look to ‘finfluencers’ for money advice.
The FCA is looking to tighten regulation of online, “often illegal”, financial promotions through refreshed social media guidance, citing the size of the social media advertising market and the rise of financial influencers talking about investment and credit products, creating a risk of consumer harm.
"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,” said Lucy Castledine, director, consumer investments at the FCA.
"And for those touting products illegally, we will be taking action against you," she added.
Promoting a regulated financial product or service without the approval of an FCA-authorised person, or providing financial advice without being FCA-authorised, can be a criminal offence. There are also certain restrictions on the marketing of some products such as crypto-assets.
The new guidance gives examples of compliant and non-compliant social media ads, stressing that firms should make sure risk warnings are sufficiently prominent on the ad.
The FCA has also joined forces with the Advertising Standards Authority to educate not just the public but influencers themselves about the risks of promoting financial products, with many of the latter potentially unaware that they are straying into regulated activities.
Its engagement has helped to bring about changes to the advertising policies of several big tech firms, the regulator said, meaning they only allow financial promotions that have been approved by FCA-authorised firms.
The role and responsibilities of social media companies previously came under scrutiny in the context of scams. This is because scammers have been able to advertise on social media platforms, while law enforcement agencies have had to put up warning ads on the same sites – meaning tech firms profited twice, including from crime.
The FCA said it will keep an eye on big tech companies with continued engagement “to ensure more is done to protect consumers”.
The consultation on the new guidance closes on 11 September.
The consultation on the new guidance closes on 11 September.
Is the FCA equipped to tackle social media adverts?
