- Many of the current online financial promotions are illegal in the UK
- The FCA will prohibit some incentives to invest in crypto on October 8
The UK Financial Conduct Authority is updating its rules for social media advertising, under which companies must use modernized information when promoting financial products or services online. The regulator plans to extend its guidance to reflect how companies are currently using social media to advertise financial products and services, according to a blog post.
Growing number of ads “falling short” of guidelines
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.
New measures will target “finfluencers”
The FCA recognizes the increasing popularity of financial influencers (“finfluencers”) and the concurrent potential for damage to consumers. To that extent, it has been inspecting online financial promotions more carefully, and has found many of them to be illegal.
Updated rules for crypto companies
The announcement follows an earlier one of new advertising rules for crypto companies that are active in the UK market. The FCA will prohibit refer-a-friend bonuses and other incentives to invest in crypto effective October 8, 2023.
Crypto companies also have to have clear risk warnings and a period of 24 hours for newbies to reconsider any investment decisions. These approaches are like the regime for high-risk investments in general.
Regulators are teaming up
The FCA and the Advertising Standards Authority have teamed up to assist in educating end users and influencers about financial product promotion risks. Their efforts include live events and roundtable discussions to raise awareness of the harm investors can suffer.
The FCA’s initiatives have resulted in changes to a number of Big Tech firms’ advertising policies, which include allowing promotions only by companies authorized by the financial regulator.
