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The UK’s Financial Conduct Authority (FCA) has issued a warning to financial services firms and “finfluencers,” urging them to ensure that their social media advertisements comply with the law. To aid in this endeavor, the FCA has released guidance specifically addressing the promotion of financial services through memes, reels, and gaming streams on social media platforms.
As social media platforms increasingly dominate companies’ marketing strategies, the FCA emphasizes that financial services firms bear responsibility for their promotions and must ensure that influencers they engage with communicate appropriately to their followers.
Furthermore, the FCA cautions “finfluencers” that promoting financial products without approval from an FCA-authorized individual possessing the requisite permissions could constitute a criminal offense.
The FCA’s vigilance in scrutinizing financial promotions is evident from its removal of over 10,000 misleading adverts last year, marking an increase from approximately 8,500 in 2022.
The newly issued guidance outlines the requirements for social media adverts to be fair, clear, and non-misleading. Advertisements must provide balanced information and include appropriate risk warnings to enable individuals to make well-informed financial decisions.
Lucy Castledine, Director of Consumer Investments at the FCA, emphasizes the importance of adherence to regulations, stating, “Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.”
In a recent development in the US, Finra imposed its first fine related to social media influencers, penalizing fintech M1 Finance with an $850,000 penalty for posts made on its behalf.
Commenting on the FCA’s new guidance, Raza Naeem, Financial Regulation Partner at law firm Linklaters, highlights the necessity for firms to establish clear restrictions and processes to ensure compliance with regulations. Additionally, proper training of relevant employees and collaborating finfluencers is essential to avoid regulatory breaches.
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