The FCA has proposed new guidance for social media ‘finfluencers’ – after seeing a growing number of promotions falling short.
Promotions need to be clear, fair and not misleading. They also need to be balanced, and include details of risks as prominently as those of the rewards. The rules cover all sorts of content – including memes. It will consult for eight weeks before implementing changes.
The consultation was released this morning: Social media guidance set for revamp | FCA
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “The Wild West of social media ‘finfluencers’ hColesas received a warning shot from the FCA. It’s not so much that there’s a new sheriff in town, it’s the same old sheriff, but they’ve laced their boots up and left the comfort of their office. Among the guidance is a reminder that some of these promotions can actually constitute a criminal offence.
The FCA is alarmed at the rise in financial influencers, or ‘finfluencers’, on social media – particularly because so many are focused on newer business models like buy-now-pay-later and cryptoassets. They often target young people, with faith in influencers. And we know it has an impact: the FCA says that 58% of the under 40s who’ve invested in high-risk products like cryptocurrency were influenced by social media hype.
In a world where would-be crypto-currency investors have received tips from Kim Kardashian, and memes promoting Buy-Now-Pay later schemes, it has seemed as though anything goes. The FCA says it has seen a growing number of ads falling short of existing guidance, so this is an effort to clarify the rules, and then start taking people to task.
There’s an awful lot to welcome in these rules. Clearly they should be fair, clear and not misleading. They need to be balanced – so they don’t just highlight the potential benefits of a product but the relevant risks too. And the risks can’t just be hidden away in small print, or on links you need to click on to understand.
The clampdown on bad actors is vital, in order to help people save and invest with confidence. However, for responsible businesses doing the right thing, the challenge will be to implement rules that provide the right balance between offering the best information to help people make informed decisions, and offering it in a format that they will actually want to read. The pension example in the consultation, for example, isn’t going to do an incredible job of building enthusiasm for investing for the future.”