The Financial Conduct Authority (FCA) is to target those using social media to promote financial products or services, amid concern over firms selling crypto schemes and financial products via misleading adverts.
The regulator is set to issue guidance to modernise the information firms should use when promoting financial products or services online. This comes as the FCA looks to clamp down on the way products are promoted. Crypto firms will be banned from using incentives such as ‘refer a friend’ bonuses to customers, while buy-now pay-later bosses have been told they face prosecution if they fail to adhere to financial promotion rules. Warning that a “growing number” of adverts are “falling short” of the existing guidance,
The FCA has been ramping up its scrutiny of online, often illegal, financial promotions, recognising the significant increase in notoriety of ‘finfluencers’ and the potential for consumer harm taking place online. It has also teamed up with the Advertising Standards Authority to help educate consumers and influencers about the risks involved in promoting financial products. This work has included an infographic, roundtable discussions and live events to build up awareness of the harm that can take place.
The consultation follows the announcement of new advertising rules for crypto firms marketing to UK consumers. From 8th October 2023, 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 supports two of the FCA’s core commitments set out in the 2023/24 business plan to reduce and prevent serious harm and set and test higher standards.
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.”