The Financial Conduct Authority (FCA) has teamed up with the Advertising Standards Authority (ASA) to issue a new set of social media guidance for financial promotions.
The new guidance clarifies the expectations placed on marketing agencies, brands and influencers around how they communicate financial promotions across social media.
Promotions should provide a balanced view that highlights both benefits and risks, allows consumers to make informed decisions, and highlights exactly when communication amounts to a financial promotion.
Information that could cause confusion or is misleading will not comply with the new rules, which state that adverts and promotions on social media should be held to the same scrutiny as all other marketing activity.
One of the FCA’s examples of potential non-compliant text was the phrase: ‘How could £1 daily become £2,500?’. A more compliant suggestion for the same piece of marketing was: Start your pension young and prepare for retirement’.
It also highlights that details of ‘buy now pay later’ schemes should be clear, not misleading, and outline the risks and consequences so consumers can make a reasoned decision.
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The guidance is aimed at all those involved in communicating or approving financial promotions, including the crypto asset sector, unauthorised influencers and affiliate marketers and trade bodies that represent the above groups.
The FCA has also teamed up with the ASA to create an infographic designed to help the influencer make a more informed decision about whether or not they should promote an investment activity.
The flow chart allows influencers to decide whether they are the right person “to promote a product or service as well as highlighting when they may be at risk of communicating financial promotions illegally.”
Head of business crime and regulatory at Primas Law John Hartley said the new guidance meant the FCA expects financial promotions to be “standalone compliant”, meaning each communication must comply with the rules individually.
“Ultimately, this new guidance is intended to assist firms who offer genuine investment opportunities to thoroughly consider whether social media is the right platform to promote these opportunities as well as increased guidance for influences who are asked to promote certain investment opportunities,” he explained.
“The FCA offers existing guidance on ensuring that information is prominent in financial promotions, and this is no different to those intended to be used for promotion on social media.”
It comes after a recent report found that millions more is needed to finance the watchdog, to help protect consumers and prevent financial crime.
