The Financial Conduct Authority (FCA) will issue updated social media guidance as part of its work to combat illegal and non-compliant financial promotions.
The guidance will modernise the information firms should use when promoting financial products or services online.
For example, the FCA has consulted on extending its guidance to reflect the current ways social media is being used to advertise financial services and products.
Lucy Castledine, director of 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 in notoriety of ‘finfluencers’ and the potential for consumer harm taking place online.
The FCA teamed up with the Advertising Standards Authority to help educate consumers and influencers about the risks involved in promoting financial products.
This work included an infographic, roundtable discussions and live events to build up awareness of the harm that can take place.
FCA engagement also helped secure changes to the advertising policies of several tech firms to only allow financial promotions approved by FCA-authorised firms.
The regulator will continue this 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 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 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.
