The regulator described the steps it is taking to increase scrutiny of advertisements about financial products and services on social media platforms.
By Rob Moulton, Jonathan Ritson-Candler, and Sara Sayma
On 3 February 2023 the FCA published an analysis of its financial promotions data for 2022. The data reflects the action taken against authorised firms for breaching financial promotion rules and referrals and investigations into unregulated activity over the last year. As part of its analysis, the FCA emphasised the link between good quality marketing information and good consumer outcomes.
Notably, the FCA has significantly increased its intervention activity in response to poor financial promotions compliance in authorised firms as well as in response to activity involving unauthorised firms and individuals making unlawful financial promotions:
- Following FCA intervention, 8,582 promotions were amended/withdrawn by authorised firms in 2022, an increase of 1,398% from the 2021 figures.
- The FCA issued 1,882 alerts in relation to unauthorised firms and individuals in 2022, an increase of 34% from 2021. This increase occurred despite a 24% decrease in reports (about potential misleading financial adverts or potential scams) received in 2022 compared with 2021.
Last year the FCA observed an increase in bloggers and social media influencers using social media platforms to promote financial products, particularly investment products, to younger age groups. The FCA also reported an ongoing trend in the number of bloggers promoting credit on behalf of unauthorised third parties, with a particular growth in financial promotions targeting students. In addition, the FCA highlighted a concern over “fin-fluencers” (influencers who publicise content on financial matters) and noted its plans to collaborate with other regulators to educate fin-fluencers about their obligations when promoting financial products and services, and about the possible consequences of issuing illegal financial promotions, including referral by the FCA for criminal investigation.
The FCA is increasing its engagement with search engines and social media platforms to stop scams and otherwise illegal promotions from appearing on their sites. In particular, the FCA has increased its capability to search social media platforms to identify illegal promotions faster and in larger volumes. While the FCA has no powers to require sites to be taken down, when illegal promotions are identified, the FCA has made requests for the platform hosting the harmful content to remove it.
The FCA also stated its expectations for social media platforms to improve their capabilities to identify and remove illegal financial promotions “on a proactive basis”. The FCA gave examples of certain social media platforms (following FCA engagement) changing their policies to permit only FCA-authorised firms to market financial services on their platforms.
Even when not relying on third-party influencers, firms should take note of the FCA’s increased and enhanced monitoring and also be reminded to consider carefully their use of social media to market their products and services. In particular, firms should be aware that a punchy social media post could be scrutinised by the FCA for compliance with the financial promotions regime. The FCA has previously provided guidance on compliant social media financial promotions, which firms should refer back to.
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