The Financial Conduct Authority (FCA) in the UK has announced a fresh crackdown on social media promotion of financial products. According to a press release on Monday 17 July, the financial watchdog said it will focus primarily on the use of memes to promote financial products.
“Too many people across the UK are being shown financial promotions from unsuitable sources. We’ll be ramping up our work to stamp out illegal financial promotions, particularly those found on social media,” the watchdog wrote in a tweet.
As part of efforts to ensure compliance with the rules of the agency in financial promotions on social media, the agency is updating and modernizing the information that companies should use when promoting financial products or services on online platforms.
In view of this, it says it is in consultations on how to expand its guidelines, considering the evolving ways in which social media platforms now serve as media for advertising financial products.
“We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm,” said director of consumer investments Lucy Castledine. “We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect of firms when marketing financial products online.”
Crypto Firms and Meme Advertising
The FCA has expressed concern particularly concerning crypto firms which it says uses memes to advertise crypto assets. The agency further said that crypto firms are fond of circulating memes online without knowing that they are subject to its promotional regulations.
“Use of memes in promotions is particularly prevalent in the crypto asset sector,” it said in the press release.
Castledine also called out social media influencers who help to promote such memes, saying the agency has noticed “the significant increase in the notoriety of influencers,” adding “those touting products illegally, we will be taking action against you.”
Although the use of cryptocurrencies isn’t forbidden in the UK, the FCA has established guidelines for advertising them, including a risk warning for crypto assets which it considers to be high-risk investment options.
“We remind firms that there are requirements to include risk warnings or other statements in promotions for certain products/services. These rules are media neutral, so apply to social media as they would any other channel. We expect risk warnings on social media to be clear, prominent and without a design feature that reduces their visibility or prominence,” the agency said in the press release.
FCA Calls for Public Opinion
In its effort to curb indiscriminate advertising of risky investments on social media, the FCA has cautioned influencers and crypto companies that their promotions could constitute an offense, punishable by a potential two-year jail term, an unlimited fine, or both.
Such guidelines apply to companies outside the UK as well, as long as they advertise to UK citizens. The watchdog is also open to suggestions and is seeking public opinion on its proposed guidance by 11 September 2023.
The FCA had earlier this year invited crypto companies from around the world to rub minds on creating a regulatory framework for crypto in the country. Although the UK is stringent about advertising crypto to its citizens, it remains one of the most friendly climes for the industry.
