City watchdog cracks down on social media promotions
The Financial Conduct Authority (FCA) has proposed plans for new social media guidance to combat illegal and non-compliant financial promotions.
The guidance supports two of the FCA’s core commitments set out in the 2023/24 business plan to reduce and prevent serious harm to consumers, and will be consulted on over the next eight weeks.
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“We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm,” said Lucy Castledine, director of consumer investments at the FCA.
“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.”
The City regulator has been ramping up its scrutiny of online financial promotions, recognising the significant increase of ‘finfluencers’ – financial influencers.
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The FCA has also teamed up with the Advertising Standards Authority to help educate consumers and influencers about the risks involved in promoting financial products.
The consultation follows the announcement of new financial promotions rules for crypto firms, in line with those imposed on peer-to-peer investments.
From October 8 2023, the FCA will ban incentives to invest in crypto, such as ‘refer a friend’ bonuses.
Firms must also introduce clear risk warnings and a 24-hour cooling period to give first-time investors the time to consider their investment decision.
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