FCA guidance consultation on social media usage
What has happened?
The FCA plans to take another significant step in 2023 in its work to combat illegal and non-compliant financial promotions.
The proposals for new social media guidance contained in the FCA’s Guidance Consultation GC 23/2, issued in July 2023, are intended to modernise the information firms should use when promoting financial products or services online.
What are the key points of this Guidance Consultation?
The FCA is consulting on guidance on how its financial promotion requirements should apply to promotions on social media. Views are sought by 11 September 2023 and the FCA will review all responses to this consultation and, subject to responses received, intends to publish final guidance later in 2023.
The FCA will retain the key principles of FG15/4 (see details of this at FG15/4 - Social media and customer communications: The FCA’s supervisory approach to financial promotions in social media | FCA), including its expectations for financial promotions to be standalone compliant. It will retain the same expectations on the prominence of required information but will use this guidance to clarify how it expects these principles to be applied to different social media marketing channels, as well as looking to address specific design features on social media that act to obscure required information. It also provides graphic examples of promotions across a variety of financial services to aid understanding of its expectations.
Where applicable, the Consumer Duty will raise the expectations of firms communicating financial promotions on social media beyond the current requirement of Principle 7 that they are ‘clear, fair and not misleading’. Principle 12 (alongside PRIN 2A) requires firms to act to deliver good outcomes for retail customers and the FCA is using this guidance to supplement the expectations of this requirement for communications on social media.
The FCA is providing guidance on emerging marketing trends on social media such as affiliate marketing. It is using the guidance to stress that firms should be monitoring the communications of firms using their affiliate links to ensure that they provide good outcomes for consumers.
The Consultation also looks to address the harm that can occur where UK consumers interact with financial promotions which direct them to a non-UK entity while the UK consumer still believes they are engaging with an FCA-regulated firm. It suggests techniques firms can use to mitigate this risk, as well as stressing to firms that any communication capable of having an effect within the UK will be subject to the rules.
The FCA intends to use this guidance to tackle harm arising from influencers communicating approved financial promotions, particularly for firms approving communications for high-risk investments (HRIs). PS22/10 strengthened the requirements for Section 21 approvers of promotions for investment business, including HRIs. It highlights how these should apply to firms approving the communications of influencers on social media, explaining that they should play an active role in ensuring the continuing compliance of the relevant communication for its lifetime.
The FCA is using the guidance to tackle harm occurring from unauthorised influencers communicating illegal financial promotions. It has seen cases of influencers communicating financial promotions without realising that they fall within the financial promotion perimeter. This is because firms and influencers often assume there must be direct monetary compensation for an influencer’s post to be subject to the financial promotion regime. It, therefore, provides additional guidance on the perimeter in relation to financial promotions on social media under Section 21 of the Financial Services and Markets Act 2000.
How can we help you?
Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as-and-when, our team of specialists can serve as your right hand in meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.
Are you looking for compliance support for your social media financial promotions, use of influencers, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or send an email to info@thistleinitiatives.co.uk.