Context
The FCA’s press release introduces proposals for new social media guidance (Guidance Consultation GC 23/2) to modernise the information firms should use when promoting financial products and services online, and to extend current guidance to reflect the ways social media is being used to advertise financial services.
Key points to note
- 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 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 Guidance Consultation includes guidance to provide additional clarity on when a communication might constitute a financial promotion.
- The previous Guidance, FG15/4, was issued in 2015 and, whilst many of its key principles still hold, it is heavily based around character-limited media such as Twitter and makes no reference to the use of influencers communicating financial promotions. Since we issued the guidance, social media has become an increasingly important marketing tool for firms, allowing them to reach a wide audience quickly when communicating financial promotions.
- In Q4 of 2022, 69% of financial promotions communicated or approved by authorised firms which were amended or withdrawn following our intervention involved website or social media promotions.
- The draft Guidance (Annex 1 at page 6 of the Guidance Consultation) covers a number of key themes:
- What is a financial promotion?
- The FCA’s financial promotion Rules.
- Standalone compliance (a theme that the Regulators have published information about since the early 2000s).
- Compliance issues on social media.
- Risk warnings.
- Prominence standards on social media channels.
- Recipients sharing or forwarding communications.
- Unsolicited promotions.
- Approval and record keeping.
- Affiliate marketing.
- What is an influencer?
- Firms and their responsibilities as financial promotions approvers.
- An examination of ‘in the course of business’.
Next actions
Provided for information and awareness, but if firms wish to respond they can do so by using an online response form, of by e-mailing responses to gc23-2@fca.org.uk.