FCA - Financial promotions on social media new guidance.

The Financial Conduct Authority (FCA) recently published its updated guidance on using 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 regulatory expectations for compliance.

The Finalised Guidance FG24/1

1. 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.
2. Is a set of rules and a roadmap for effective digital financial communications. As you know, firms are advised to take note of these changes and determine the steps necessary to ensure compliance.  

READ HERE: https://www.fca.org.uk/publication/finalised-guidance/fg24-1.pdf or read a summary below.

The revised guidance presents significant updates from the previous version, which senior managers must know. Below, we have summarised the key differences as follows:

1. 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.
2. Unauthorised Persons Responsibility: The guidance highlights the responsibilities of unauthorised persons, including influencers, when promoting financial products. This includes avoiding non-compliant financial promotions and understanding the legal implications for promoting regulated financial products or services without approval from an FCA-authorised person, potentially committing a criminal offence.
3. Online platforms and services: The FCA notes that online platforms should consider applying 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 Ofcom will oversee this activity.
4. Consumer Duty: The updated guidance aligns with recent regulatory regimes such as Consumer Duty, which requires financial promotions to support retail customers' understanding and equip them to make effective decisions. This is a step towards protecting consumers from the complexities of financial products and services often amplified on social media platforms.
5. 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.
6. 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.
7. Risk Warning Prominence: There is an enhanced emphasis on the prominence of risk warnings across the different 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 if it is shorter or for the part including the promotion if it is longer. Additionally, the FCA confirms that shortened risk warnings can be used when using character-limited media.
8. Guidance for Non-UK Entities: Guidance is also provided 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.

SOURCE

• https://www.fca.org.uk/publication/finalised-guidance/fg24-1.pdf