FCA warns firms and finfluencers to keep their social media ads lawful

The FCA warns firms and financial influencers to keep social media ads lawful, as it publishes new finalised guidance on financial promotions on social media. The new guidance replaces the FCA’s previous guidance on social media communications published in 2015. Cristina Faro, Sarah Drew and Fern Dempsey of Capital’s Financial Services Regulation team outline the FCA’s updated guidance below.

Social media is often central to a firms’ marketing strategy, but it might not always be best placed to promote complex financial products. The FCA confirms that adverts must present a balanced view of the benefits and risks of the promoted product or service, along with the right risk warnings, so consumers can make well informed financial decisions.

The FCA warns that firms must be alive to the risks that social media presents, and should consider whether a platform that offers limited characters or space, is the right place to advertise. It also asks firms to ensure that the influencers they work with communicate to their followers in the right way, so as to avoid directing younger and more vulnerable audiences towards inappropriate high-risk investments.

Influencers are reminded that promoting a financial product without approval from an FCA-authorised person with the right permission could be a criminal offence. It is important that influencers ensure they comply with the rules and appreciate the repercussions of promoting products illegally.

As ever, all adverts must be fair, clear and not misleading and the new guidance includes a range of compliant and non-compliant examples of Facebook posts, TikTok videos, Instagram stories, memes and livestreams to underline the FCA’s expectations.

The FCA have ramped up scrutiny, with Lucy Castledine, Director of Consumer Investments at the FCA, outlining the position:

Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.

Compliance with the financial promotion rules has been a key concern for the FCA in the last couple of years and action by the regulator to tackle advertising that falls foul of the rules is on the increase, with the FCA removing over 10,000 misleading adverts in 2023 and around 8,500 in 2022. These numbers are over 14 times higher than the number of misleading adverts the FCA removed in 2021.

The new guidance is a reminder that firms are responsible for all promotions made in respect of their products or services. The FCA is encouraging firms to undertake a review of their marketing channels to ensure firms have proper oversight over adverts and remain on the right side of the regulatory line. In addition, the regulator wants to see that firms are observing the higher standards of consumer protection outlined under the Consumer Duty and supporting customers to make good financial decisions.

If your business requires assistance or further information on remaining compliant with the rules on social media advertising and financial promotions, please get in touch with our Financial Services team.