"And for those touting products illegally, we will be taking action against you."
Further action
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 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 City watchdog said its engagement has also helped secure changes to the advertising policies of several Big Tech companies to only allow financial promotions that have been approved by FCA-authorised firms.
The consultation follows the announcement of new advertising rules for crypto firms marketing to UK consumers.
From October 8, 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.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The regulator rightly has its sights set on the role of social media in propagating inaccurate and misleading information relating to finances as well as rogue financial promotions. Social media is a blessing and a curse.
“It provides a platform to share opinions and there is some good material out there, but there is also garbage content that frankly shouldn’t see the light of day.
“The advent of so-called finfluencers is a headache for the city regulator. The credentials of many so-called finfluencer are weak at best – if they exist at all. But there are also a number of well-versed and highly qualified financial professionals on social media offering solid guidance.”
Meanwhile, Rosie Hooper, chartered financial adviser at Quilter, said the consultation is making it harder for promotions to be approved and is cracking down on harm occurring from unauthorised influencers communicating illegal financial promotions via social media.
“This is long overdue given the spate of social media posts over a number of years that have lured people into high-risk schemes that don’t state the real risks of falling victim to scams on social media which have skyrocketed over recent years,” she said.
“This crackdown is particularly needed during the cost-of-living crisis as people are more likely to turn to alternative sources with the promise of high returns being tempting for cash-strapped individuals without their eyes open to risks involved.
“The incoming consumer duty raises expectations of firms communicating financial promotions on social media higher than ever before.
