Financial Promotions on Social Media

The Financial Conduct Authority (FCA) recently published its updated guidance on the use of social media for financial promotions, superseding the previous guidance from 2015 (FG15/4). The new guidance reflects the evolving nature of social media and the emergence of platforms such as TikTok and Telegram.  It aims to clarify the existing regulations and assist Firms in meeting the regulatory expectations for compliance.  

The revised guidance presents significant updates from the previous version, which senior managers need to be aware of. Below we have summarised the key differences as follows: 

• Expanded Scope: The new guidance extends beyond the scope of FG15/4 by addressing the FCA’s expectations for a broader spectrum of stakeholders involved in communicating financial promotions on social media. This includes:

  • Authorised Firms: Beyond the standard requirements, authorised firms are now expected to take proactive responsibility for affiliate marketers, such as influencers, ensuring they understand their responsibilities and do not communicate illegal or non-compliant financial promotions. This includes implementing appropriate systems and controls to monitor affiliates’ marketing activities, as well as assessing the feasibility of maintaining effective oversight of any affiliates. 

  • Unauthorised Persons Responsibility: The guidance highlights the responsibilities of unauthorised persons including influencers, when promoting financial products. This includes the need to avoid non-compliant financial promotions and understand the legal implications for promoting regulated financial products or services without approval from an FCA authorised person, potentially committing a criminal offence. 

  • Online platforms and services: The FCA notes that online platforms should consider the application of the financial promotion regime. Services such as search engines or social media sites should implement appropriate systems and controls to reduce the risk of illegal financial promotions on their sites. The FCA confirms that this activity will be overseen by Ofcom. 

• Consumer Duty: The updated guidance is aligned to recent regulatory regimes such as the Consumer Duty, which requires financial promotions to support retail customer understanding and equip them to make effective decisions. This is a step towards protecting consumers from the complexities of financial products and services that are often amplified on social media platforms. 

• Marketing Strategies: The FCA emphasises the importance of aligning marketing strategies  to deliver positive outcomes for retail customers. It also stresses the need to consider the suitability of social media for financial promotions, and the importance of not exploiting consumer vulnerabilities through excessive contact or targeting. 

• Social Media platforms: The guidance highlights the need to assess the suitability of social media for promoting financial products and services. It draws attention to the unique features of these platforms, such as limited space and rapid content turnover, which may hinder the effective communication of complex financial information. 

• Risk Warning Prominence: There is an enhanced emphasis placed on the prominence of risk warnings across the different types of social media channels. For Instagram stories, warnings should be clear on every slide with a promotion. For videos or live streams, warnings should be visible throughout the entire promotion where these are shorter in length or for the part including the promotion if longer. Additionally, the FCA confirm shortened risk warnings can be used where using character limited media. 

• Guidance for Non-UK Entities: There is also guidance for non-UK based entities promoting to UK customers, to support them with complying with UK financial promotion regulations. The guidance outlines the necessity for these entities to either have their content approved by an authorised person or ensure that their promotions fall within specific exemptions. 

The Finalised Guidance FG24/1 is not just a set of rules but a roadmap for effective digital financial communications. Firms are advised to take note of these changes and determine the steps necessary to ensure compliance. If you would like to discuss your current strategies, or need a compliance review, get in touch to see how we can help.