Financial Conduct Authority Tightens Rules on Social Media Advertising
In an effort to curb the spread of misleading financial promotions on social media, Britain’s Financial Conduct Authority (FCA) has issued new guidelines for influencers and firms. The FCA’s recent announcement emphasized the importance of advertisements being fair, clear, and not misleading, especially when they involve financial products.
The rise of social media as a key marketing tool has led the FCA to clarify that influencers, who are often paid to promote products, must obtain regulatory approval before advertising financial services. Failure to do so could result in criminal charges. This move is part of a broader initiative to protect consumers from online scams and dubious adverts.
The FCA’s statement highlighted the responsibility influencers have not only to their followers but also to their own reputations. The watchdog stressed that promoting products illegally could have serious consequences for an influencer’s credibility.
Furthermore, the FCA cautioned financial firms about the suitability of social media for advertising complex financial products. With platforms often limiting the amount of information that can be shared due to character or space restrictions, the FCA advised firms to consider whether social media is an appropriate channel for their promotions.
The regulator has increased its scrutiny over financial promotions, as evidenced by the significant rise in the number of misleading adverts removed last year. In 2023, over 10,000 adverts were taken down, a notable increase from approximately 8,500 in 2022. This demonstrates the FCA’s commitment to maintaining the integrity of financial advertising on digital platforms.
