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The United Kingdom’s Financial Conduct Authority (FCA) has issued new guidance cracking down on financial promotions by social media influencers. The 47-page report outlines stricter requirements for “finfluencers” – users who advertise financial products on platforms like TikTok and Instagram.
“Social media has become a central part of firms’ marketing strategies. Firms are on the hook for all their promotions and the FCA has warned they need to ensure influencers they work with communicate to their followers in the right way,” the FCA has announced.
The financial market regulator warns that influencers face up to two years in prison if they fail to provide proper risk warnings alongside promotions. This applies even if the influencer operates outside the UK, as long as the promotions can reach people in the country. Breaching the new rules constitutes a criminal offense punishable by imprisonment, unlimited fines, or both.
“Promotions aren’t just about the likes, they’re about the law,” states Lucy Castledine, the FCA’s Director of Consumer Investments. The agency vows to take action against the illegal touting of financial products.
The move aims to rein in a growing trend of finfluencer marketing that concerns regulators. In 2022, the UK’s financial watchdog ordered over 10,000 promotions to be amended or removed – a 17% increase from the prior year. The clampdown targets internet personalities posting non-compliant financial ads.
For firms, partnering with influencers provides direct access to coveted demographics at a time when retail investing booms. However, the FCA guidelines now set stringent requirements for promotions on short-form video apps like TikTok.
Risk warnings must be prominently and continuously displayed throughout promotional videos. Brief captions, voice-overs, or flashing text do not suffice. For multi-image posts like Instagram carousels, the risk warning must appear on every slide in an undiminished size.
“Social media will not always be the best place to promote complex products,” the FCA states. “Firms need to consider whether a platform that offers limited characters or space is the right place to do so.”
The crackdown underscores regulators’ growing scrutiny of influencer marketing in the financial sector. As finfluencer promotions proliferate, the FCA demands full transparency on potential risks to protect consumers.
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Courtesy : https://www.netinfluencer.com/uk-finfluencers-jailtime-non-compliant-ads/