FCA targets finfluencers with new social media guidance

So-called finfluencers have been warned by the UK financial watchdog that they could face prosecution if they fail to follow new rules.

A finfluencer creates a video using a camera
Finfluencers are followed by millions of people on social media
(Image credit: Getty Images)

New Financial Conduct Authority (FCA) guidance has sought to tighten the rules finfluencers have to follow when they promote financial products on social media - although they will not face any extra penalties for failing to comply.

The UK’s financial watchdog has introduced more stringent outlines of what does and does not constitute a compliant advert. It has underlined that promotional activity must be “fair, clear and not misleading”, with finfluencers and the firms that hire them facing prosecution if they fail to abide by the rules.

The updated guidance includes screenshot examples of what advertising should look like on platforms like Instagram or TikTok. However, the FCA has not updated its finfluencing rules or the penalties for breaking them.

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It comes almost a year after the FCA launched a consultation into how finfluencing could be better regulated. With some of the biggest finfluencing names attracting millions of followers, there have been fears that a lack of adequate financial education is making young people especially vulnerable to bad advice or false advertising they see online.

Finfluencers must ‘ensure they’re on the right side of the rules’, FCA warns

The FCA’s new guidance has outlined how influencers and companies can go about advertising financial products to consumers. However, it has not created new rules to govern the controversial content.

Instead, it has emphasised existing laws, which could see unauthorised finfluencers serve prison time if they don’t follow the rules. In a bid to keep people on the right side of the law, it has created a checklist finfluencers can use and has alerted them to relevant legislation that governs their activities. For example, when giving investment advice, they have to abide by objectivity rules and be authorised by the FCA.

The watchdog has also sought to underline that firms hiring people to push their products will find themselves on the hook if they’re not communicated properly, or are advertised by someone who has not been authorised by the FCA to give financial advice.

In a bid to make the rules clearer, the FCA has provided specific examples of what good and bad promotional content looks like. One example includes where to put a risk warning on a TikTok video, with a compliant post prominently displaying it on the screen rather than in the post’s caption. Another shows how to balance an investment post so that it gives an accurate impression of a product’s pluses and minuses, rather than only displaying the best possible outcome.

Another change in the guidelines is that they now push companies to put more consideration into whether social media is the right place to advertise, especially if their products are complex, given the limited characters and space on platforms. They single out Buy Now Pay Later products and debt counselling services as two areas that could struggle to comply with the rules.

Announcing the latest update, FCA director of consumer investments, Lucy Castledine, said: “Any marketing for financial products must be fair, clear and not misleading so consumers can invest, save or borrow with confidence. Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.”

FCA research released in 2021 found 58% of under-40s who had invested in high-risk products, like crypto assets, had been directly encouraged to do so by posts they had seen on social media. Celebrities with large followings, such as Kim Kardashian, have been among those promoting these risky holdings

Meanwhile, scam adverts have fraudulently used trusted names, like Martin Lewis, to flog products - although new protections in the Online Safety Bill mean social media platforms have to remove them, or run the risk of being heavily fined.

The FCA, which has the power to take down misleading or potentially harmful advertising, said it has “ramped up” its online scrutiny over the past year. In 2023, it said it removed more than 10,000 misleading promotions from social media - a near-20% increase year-on-year.

Henry Sandercock

Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV. 

Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years. 

After moving to NationalWorld.com - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.