FCA to Control 'Finfluencers' and Illegal Promotions on Social Media
- The FCA wants to modernize the information that firms use in social media promotions.
- The regulator continues its fight against rogue service providers.
The Financial Conduct Authority (FCA) has announced its plans to ramp up its efforts to combat illegal and non-compliant financial promotions. The proposed new social media guidelines will modernize the information that firms should use when promoting financial products or services online.
The British FCA is currently consulting on extending its guidelines to account for contemporary ways that platforms like Facebook, Instagram and TikTok are used to advertise financial services and products.
FCA Continues Its Efforts to Combat Illegal Financial Promotions
The FCA has intensified its scrutiny of online, often illegal, financial promotions in response to the rising popularity of 'finfluencers' and the potential for online consumer harm. The FCA has also collaborated with the Advertising Standards Authority (ADA) to educate consumers and influencers about the risks associated with promoting financial products.
Last year, the FCA required certain brokers to withdraw 'misleading' ads on social media. Furthermore, precise rules for promoting services and products in the cryptocurrency market will start to apply in the country. Starting on 8 October 2023, the FCA will prohibit incentives to invest in crypto, such as 'refer a friend' bonuses. Firms must introduce clear risk warnings and a 24-hour cooling-off period for first-time investors to contemplate their investment decision. All these activities are part of the regulator's strategy, which focuses on increasing the safety of the end consumer.
Now, the FCA has decided to address the problem more broadly and not limit itself solely to the market of digital assets. The new regulations are to apply to all financial instruments and their providers, who use popular social media platforms to attract new customers.
"We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm,” Lucy Castledine, the Director of Consumer Investments at the FCA, stated. “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 Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term financial products online. And for those touting products illegally, we will be taking action against you.”
A few months ago, the FCA began educating finfluencers to reduce the practice of advertising dishonest 'get rich quick' schemes. The institution collaborated with Sharon Gaffka, a prominent social media influencer in the country and participant in the reality show dubbed Love Island.
Moreover, the FCA has managed to secure changes in the advertising policies for several Big Tech companies, allowing only financial promotions approved by FCA-authorized firms. The regulator plans to continue this engagement to protect consumers.
The Rising Importance of Social Media in Retail Trading
The steps taken by the FCA are not baseless actions. The internet and social media are places where people seek investment information and advice, increasingly making investment decisions on the opinions of influencers.
The study prepared by the Cypriot market watchdog CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term revealed that about 22% of retail investors made their investment decision based on digital promotions and celebrity endorsements, whereas 42% researched the products and another 37% acted completely on recommendations from friends and family. While only 31% of the investors sought advice from financial experts.
Further, 31% of surveyed respondents make financial investments based on the advice from a financial influencer using platforms, such as TikTok, YouTube, Instagram, and Twitter. In France, these decisions are made by as much as 42% of the respondents, while only 24% of Germans rely on finfluencers and 34% in the United Kingdom.
Tens of millions of people watch the top financial influencers. The record holder is Humphrey Yang, who is followed by 54 million people. Yang is a former financial advisor, who now creates content on personal finance and investing.
The FCA believes that the materials presented by influencers often overly simplify the complexity of some financial instruments. That's why the regulator wants to consult with the industry on how to better control advertisements on social media.
The Financial Conduct Authority (FCA) has announced its plans to ramp up its efforts to combat illegal and non-compliant financial promotions. The proposed new social media guidelines will modernize the information that firms should use when promoting financial products or services online.
The British FCA is currently consulting on extending its guidelines to account for contemporary ways that platforms like Facebook, Instagram and TikTok are used to advertise financial services and products.
FCA Continues Its Efforts to Combat Illegal Financial Promotions
The FCA has intensified its scrutiny of online, often illegal, financial promotions in response to the rising popularity of 'finfluencers' and the potential for online consumer harm. The FCA has also collaborated with the Advertising Standards Authority (ADA) to educate consumers and influencers about the risks associated with promoting financial products.
Last year, the FCA required certain brokers to withdraw 'misleading' ads on social media. Furthermore, precise rules for promoting services and products in the cryptocurrency market will start to apply in the country. Starting on 8 October 2023, the FCA will prohibit incentives to invest in crypto, such as 'refer a friend' bonuses. Firms must introduce clear risk warnings and a 24-hour cooling-off period for first-time investors to contemplate their investment decision. All these activities are part of the regulator's strategy, which focuses on increasing the safety of the end consumer.
Now, the FCA has decided to address the problem more broadly and not limit itself solely to the market of digital assets. The new regulations are to apply to all financial instruments and their providers, who use popular social media platforms to attract new customers.
"We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm,” Lucy Castledine, the Director of Consumer Investments at the FCA, stated. “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 Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term financial products online. And for those touting products illegally, we will be taking action against you.”
A few months ago, the FCA began educating finfluencers to reduce the practice of advertising dishonest 'get rich quick' schemes. The institution collaborated with Sharon Gaffka, a prominent social media influencer in the country and participant in the reality show dubbed Love Island.
Moreover, the FCA has managed to secure changes in the advertising policies for several Big Tech companies, allowing only financial promotions approved by FCA-authorized firms. The regulator plans to continue this engagement to protect consumers.
The Rising Importance of Social Media in Retail Trading
The steps taken by the FCA are not baseless actions. The internet and social media are places where people seek investment information and advice, increasingly making investment decisions on the opinions of influencers.
The study prepared by the Cypriot market watchdog CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term revealed that about 22% of retail investors made their investment decision based on digital promotions and celebrity endorsements, whereas 42% researched the products and another 37% acted completely on recommendations from friends and family. While only 31% of the investors sought advice from financial experts.
Further, 31% of surveyed respondents make financial investments based on the advice from a financial influencer using platforms, such as TikTok, YouTube, Instagram, and Twitter. In France, these decisions are made by as much as 42% of the respondents, while only 24% of Germans rely on finfluencers and 34% in the United Kingdom.
Tens of millions of people watch the top financial influencers. The record holder is Humphrey Yang, who is followed by 54 million people. Yang is a former financial advisor, who now creates content on personal finance and investing.
The FCA believes that the materials presented by influencers often overly simplify the complexity of some financial instruments. That's why the regulator wants to consult with the industry on how to better control advertisements on social media.