The latest from the FCA, who are cracking down on misleading ads in the financial services sector;
Over 10,000 financial adverts and other promotions were withdrawn or changed in 2023 following intervention from the Financial Conduct Authority (FCA), an increase of 17%, year-on-year. The FCA also published 2,285 alerts to help prevent consumers from losing their money to scams, up from 1800 in 2022. After being given new powers by the Government, the regulator has focused on illegal cryptoasset promotions to UK consumers, issuing 450 consumer alerts between 8 October 2023 and 31 December 2023.
The regulator has highlighted its concern at the rise of influencers promoting financial products, including credit and investments on social media which often targets younger age groups.
Lucy Castledine, Director of Consumer Investments at the FCA, said:
“People need clear, fair and accurate information to base their financial decisions on. We will continue to intervene and take action when we identify firms not meeting our minimum standards.”
As of 7 February 2024, authorised firms need permission from the FCA if they want to approve promotions for unregulated persons. This makes sure firms approving financial promotions have the required competence and expertise for the promotions being offered. This is underpinned by the Consumer Duty which came into force in July 2023. The Consumer Duty requires firms to demonstrate that they are providing consumers with information which helps them to make effective and informed decisions about financial products and services.
Photo; Pexels.
HOW DO WE SOLVE A PROBLEM LIKE INFLUENCERS?
It’s a tough question, especially when it comes to so-called influencers who are selling people get rich quick schemes or investments.
Here’s some comment from CFA Institute;
“The FCA highlighted its concern at the rise of influencers promoting financial products, including credit and investments on social media which often targets younger age groups. With more than 1 in 3 (38%) UK Gen Z investors citing social media influencers as a major factor in their decision to start investing, new research from CFA Institute examines the risks finfluencer activity can pose to consumers’ financial health.
It found that the majority of finfluencers made no disclosures in their content – just 25% of the content analysed across YouTube, TikTok and Instagram contained any form of disclosure (eg. the poster’s professional status, marketing disclosures eg. #ad). To address these risks, the report sets out the following policy recommendations for regulators to improve governance of finfluencer content. It calls on regulators to:
- Co-operate to design and implement a more universal definition of an investment recommendation.
- Engage in constructive dialogue with finfluencers directly and explain which of their activities are regulated.
- Record and publicly report data on complaints and whistleblowing activities regarding finfluencers.”
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