The UK Financial Conduct Authority (FCA) issued guidelines warning firms and “finfluencers” to keep their social media post in line with the law.
The UK’s Financial Conduct Authority has issued “guidance” for firms and influencers of memes, reels and gaming streams promoting financial services.
UK Financial Watchdog Warns Influencers That Could Be Sharing Misleading Advice
The UK’s financial watchdog, the Financial Conduct Authority (FCA), warned financial influencers, or “finfluencers”, who may share misleading advice online regarding tips about popular meme coins.
In a statement issued on Tuesday, the FCA said all advice “must be fair, clear and not misleading.” The regulator went on to say, “…meaning they must have balance and carry the right risk warnings so people can make well-informed financial decisions.”
Social media has become a powerful marketing tool and a key element to a firm’s marketing strategies, but it is also widely used to spread misinformation. As such, the FCA warned firms that they are “on the hook” for all marketing promotions and cautioned them to ensure the influencers they work with communicate information correctly so as not to add to the spread of misinformation and so-called “fake news.”
‘Finfluencers’ Could Face Up to Two Years in Prison
The FCA reminded influencers that promoting a financial product without prior approval from an FCA-authorised person and with the correct permission could constitute a criminal offence.
In its “Finalised Guidance on Financial Promotions on Social Media”, the FCA said influencers who do not comply with its standards could face up to two years imprisonment, an unlimited fine, or both. Prior to its “Finalised Guidance”, the FCA consulted on updated guidance for promotions on social media. Following consultation, several “Big Tech” companies amended their advertising policies to allow financial promotion approved by FCA-authorised firms.
In collaboration with the Advertising Standards Authority, the FCA educates influencers about the risks of promoting financial products. The work between the FCA and the Advertising Standards Authority came about after introducing stricter rules on advertising high-risk investments, including crypto.
FCA Cracks Down on Social Media Advertising
In its statement, the FCA explained that social media platforms may not be the best place to advertise or promote complex products. It said:
“Social media will not always be the best place to promote complex products. Firms need to consider whether a platform that offers limited characters or space is the right place to do so. Scrutiny of financial promotions has been ramped up and last year we removed over 10,000 misleading adverts, up from around 8,500 in 2022.”
Lucy Castledine, Director of Consumer Investments at the FCA, said:
“Any marketing for financial products must be fair, clear and not misleading so consumers can invest, save or borrow with confidence.
Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.”
The FCA ramped up its guidelines for crypto marketing in 2023 by introducing stricter guidelines for the industry to follow. The FCA’s stricter marketing rules took effect on October 8, 2023, introducing a “cooling-off” period for crypto buyers and scrapping “refer a friend” bonuses. The FCA went on to ban free promotional NFTs and cryptocurrency airdrops, arguing that giving away free NFTs and crypto via airdrops could encourage users to invest in crypto that they realise “can be a problem later.”
It should be understood that NFTs and airdrops were not banned; only promotions involving them were.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
