Financial Promotions on Social Media


INSIGHT
Published
Mar 25th '24
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The Financial Conduct Authority (FCA) has released revised guidance on the use of social media for financial marketing, which replace the earlier 2015 guidelines (FG15/4). The updated guidelines take into account how social media is changing and how new platforms like Telegram and TikTok are becoming more popular. Its goals are to make the current regulations more understandable and help the firms comply with the requirements.

 

Senior managers should be aware of the major revisions made to the prior version of the guideline in the revised version. The main distinctions have been summed up as follows below:

 

  • Expanded Scope: By addressing the FCA’s expectations for a wider range of stakeholders participating in conveying financial promotions on social media, the new guideline goes beyond the parameters of FG15/4. This comprises:
    • Authorised Firms: In addition to meeting the minimum standards, licenced businesses are now expected to actively manage affiliate marketers, including influencers, to make sure they are aware of their obligations and don’t spread financial promotions that are unlawful or in violation of the law. This entails putting in place the proper mechanisms and controls to keep an eye on affiliates’ marketing endeavours and determining if it is feasible to continue supervising affiliates in an efficient manner.
    • Unauthorised Persons Responsibility: The guidelines draw attention to the obligations that unauthorised individuals, such as influencers, have while endorsing financial goods. This involves being aware of the legal ramifications of marketing regulated financial goods or services without authorization from an FCA-authorized person, which might result in a criminal offence, and avoiding non-compliant financial promotions.
    • Online services and platforms: According to the FCA, online platforms have to take the financial promotion regime into account. Services like social media platforms and search engines should put in place the proper procedures and safeguards to lessen the possibility of unethical financial advertisements on their websites. The FCA confirms that Ofcom will be in charge of this operation.

 

  • Consumer Duty: The revised guidelines comply with the latest legal frameworks, including the Consumer Duty, which mandates that financial promotions facilitate retail customers’ comprehension and provide them with the tools they need to make wise decisions. This is an attempt to shield customers from the intricacies of financial services and goods, which are frequently accentuated on social networking sites.
  • Marketing Strategies: The FCA highlights how crucial it is to coordinate marketing plans in order to provide favourable results for retail clients. It also emphasises how important it is to think carefully about whether social media is appropriate for financial marketing and how crucial it is to avoid taking advantage of customer vulnerabilities by contacting or targeting them excessively.
  • Social Media platforms: The guidelines emphasise the necessity of determining if social media is appropriate for advertising financial goods and services. It calls attention to the special qualities of these platforms, such their constrained size and quick content rotation, which might make it more difficult to communicate complicated financial information clearly.
  • Risk Warning Prominence: Across the many social media platforms, there is a greater focus on the visibility of risk warnings. Every slide that has a promotion on it should include a caution for Instagram stories. If a video or live stream is longer than a certain length, a warning should be displayed throughout the duration of the promotion or for only the portion that includes the promotion. Furthermore, the FCA attests that character-limited media can be utilised with abbreviated risk warnings.
  • Guidance for Non-UK Entities:In order to assist non-UK based organisations in adhering to UK financial promotion requirements, there is also assistance available for those marketing to UK clients. According to the guidelines, these companies must either make sure that their promotions are free from certain laws or obtain authorization from an authorised person before releasing any content.

 

The Finalised Guidance (FG24/1) serves as a blueprint for efficient digital financial communications in addition to a collection of regulations. It is recommended that businesses pay attention to these modifications and decide what needs to be done to guarantee compliance.

 

Please get in contact to find out how we can assist if you would like to talk about your existingstrategies, or if you require a compliance review.

 

Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.

 

Download: Financial promotion guide

 

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