UK FCA Publishes Guidance on Social Media Financial Promotions

On 26 March 2024, the Financial Conduct Authority (FCA) issued its finalised guidance in relation to financial promotions on social media (Finalised Guidance). 

Background

The Finalised Guidance follows the FCA’s July 2023 consultation on a draft version of this guidance (Consultation). Annex 1 of the Finalised Guidance contains a feedback statement to the Consultation in which the FCA summarises the feedback received and its response. 

The Finalised Guidance replaces the FCA’s previous guidance on social media and customer communications, which was published in March 2015.

Who will the Finalised Guidance be relevant for?

The Finalised Guidance will be of primary interest to:

• authorised persons involved in communicating or approving financial promotions on social media;
• unauthorised persons involved in communicating financial promotions on social media (such as influencers, “finfluencers” or other affiliate marketers); and
• trade bodies that represent the above persons.

Social media financial promotions 

The FCA’s financial promotion regime is technology-neutral and applies across all advertising channels, including social media. 

Although the Finalised Guidance does not create new obligations, it clarifies the FCA’s expectations of firms and other persons communicating financial promotions on social media and indicates how firms might approach complying with their existing regulatory obligations. The Finalised Guidance also helps to clarify for unauthorised persons (such as influencers and “finfluencers”) and other affiliate marketers when their communications fall within the FCA’s regulatory perimeter and how the FCA’s rules might apply to their activities.

The FCA provides a clear warning that unauthorised persons who promote financial products or services that are subject to regulation without the approval of an authorised person, may be committing a criminal offence (which can lead to two years imprisonment or an unlimited fine). In particular, the FCA reminds authorised firms working with influencers or other affiliate marketers that they should take proactive responsibility for how their affiliates communicate financial promotions. 

Influencers themselves should consider whether they are the right person to promote the financial product or service. The FCA and Advertising Standards Authority previously published an infographic (Infographic), which is designed to help influencers when they are approached with the opportunity to promote a financial product. The Infographic also identifies when influencers may be at risk of communicating financial promotions illegally.

However, the Finalised Guidance provides non-exhaustive guidance and does not set out a complete description of the steps firms should take when communicating financial promotions or approving them for communication on social media. 

The Finalised Guidance sets out guidance on the perimeter to provide additional clarity on when a communication may constitute a financial promotion. The FCA also highlights its consumer duty and notes that it expects firms and other persons to consider the Finalised Guidance alongside their obligations under this duty to deliver good outcomes for retail customers.

Concluding remarks

The FCA acknowledges that social media has become an increasingly important part of firms’ marketing strategies, which allows them to target large audiences with greater speed and efficiency. However, the FCA has published the Finalised Guidance due to concerns that poor quality financial promotions on social media can lead to significant consumer harm due to the complex nature of financial products and services and the potential wide reach of financial promotions relating to such products and services.

Firms remain responsible for the compliance of every promotion they make or cause to be made and should ensure that the influencers they work with comply with the financial promotion rules and guidance.

The Finalised Guidance and the Infographic are available here and here, respectively.