The FCA finalise its guidance on financial promotions on social media

The Financial Conduct Authority (FCA) has implemented rules to protect consumers from misleading and unclear financial promotions on social media. The FCA emphasises that social media users should be aware of the inherent risks associated with financial investments advertised on these platforms. The FCA defines financial promotions as any type of communication that persuades someone to invest in a financial product. This encompasses posts on social media platforms such as Facebook and Twitter. The FCA has outlined regulations regarding the wording and information required within these promotions. For instance, financial promotions must present a balanced perspective, explaining both the potential benefits and risks of the investment. The FCA discourages the use of social media for promoting complex financial products due to the limitations of the platform to adequately explain intricate details.

The FCA’s rules apply to all firms that communicate financial promotions and influencers who endorse financial products on social media. Only authorised firms by the FCA or exempt persons are permitted to communicate financial promotions. Influencers promoting financial products must comply with these regulations as well. The FCA has also established guidelines on how risk warnings should be displayed in financial promotions.

Here are some of the key points outlined in the FCA’s rules:

  • Clear and fair presentation: Financial promotions must be worded clearly and fairly, avoiding misleading or deceptive statements. They should accurately describe the financial product and the associated risks.
  • Risk warnings: Financial promotions must include prominent risk warnings that are clear and easy for consumers to understand. The warnings should not be obscured by disclaimers or other text.
  • Target audience: Financial promotions must be targeted towards an appropriate audience that understands the complexity of the financial product being advertised. Complex financial products should not be promoted on social media due to the platform’s limitations in conveying intricate details.
  • Identity of the firm: Financial promotions must clearly identify the firm responsible for the promotion. This includes the firm’s name and contact information.

By implementing these rules, the FCA aims to create a safe environment for consumers who encounter financial promotions on social media. Consumers should exercise caution and conduct their own research before making any investment decisions based on social media promotions.

Click here for the full FCA guidance

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