FCA plots new rules to batter rogue social media ads

The City watchdog is aiming to crack down on illegal and non-compliant financial advertising on social media with the introduction of new rules, which if broken, will lead to tough enforcement action, the regulator claims.

The new Financial Conduct Authority guidance will “modernise” the information companies use to promote financial products and services online, the regulator said, which will also reflect how social media is currently being used to advertise them.

Part of the FCA’s past work has included working with the Advertising Standards Authority in creating live events to help educate and boost awareness on the potential harm consumers can face due to illegal online promotions.

Big tech companies have also faced greater regulation, with the introduction of advertising policies that have forced them to only allow financial promotions approved by FCA-authorised companies.

The new social media guidance will be subject to an eight-week consultation period, the FCA said, alongside its work on crypto advertising rules, which are coming into force on October 8.

FCA director of consumer investments Lucy Castledine said: “We have seen a growing number of ads falling short of the guidance we have in place to stop consumer harm.

“We want people to stay on the right side of our rules, so we are updating our guidance to clarify what we expect of firms when marketing financial products online. And for those touting products illegally, we will be taking action against you.”

The war against rogue online advertising has been raging for years. In February, the FCA revealed it had forced firms to amend or remove 8,582 promotions during 2022 – a 14-fold increase on the previous year – with so-called “fin-fluencers” a constant thorn in the regulator’ side.

But Quilter financial adviser Rosie Hooper told Investment Week that the plans were “long overdue”. She added: “This crackdown is particularly needed during the cost of living crisis as people are more likely to turn to alternative sources with the promise of high returns being tempting for cash-strapped individuals without their eyes open to risks involved.

“The incoming Consumer Duty raises expectations of firms communicating financial promotions on social media higher than ever before. However, the powers of the FCA only goes so far and will not be enough to stop outright scammers.

“The importance of legislation to make social media platforms responsible for taking down scam ads in a timely manner via the Online Safety Bill is paramount. Stopping scam ads when people’s cash is so stretched should be a priority for the Government.”