Authored by Romin Dabir and David Calligan

As many as 40% of Gen Z say that they rely on finfluencers when deciding on whether to invest in financial products. Invitations or inducements to invest in financial products are financial promotions and will be subject to detailed and complex rules. The FCA has recently brought charges against nine “celebrities” (including a former contestant on Love Island) for making illegal financial promotions on social media platforms such as Instagram. Regulators in the US and Europe are also increasingly focussing on this issue. It is a trap for the unwary, not just for the hapless celebrities concerned, but also for any firms whose products may be mentioned in these activities. 

We have summarised the FCA’s recent guidance on financial promotions on social media that contains some important messages and represents a shot across the bows for those who may be involved in these activities. The FCA makes clear its expectations of firms:

Firms working with affiliate marketers, such as influencers, should take proactive responsibility for how their affiliates communicate financial promotions. This includes having appropriate monitoring and oversight systems to ensure that affiliates understand their responsibilities and do not communicate illegal or non compliant financial promotions. Firms remain responsible for the compliance of every promotion they make or cause to be made.

For a more in-depth consideration of the issues involved, you can also listen to our podcast “Influencing finance: The rise of influencers promoting financial products” on this topic.

The increasing prevalence of social media advertising, coupled with the resource constraints the FCA is facing, makes it probable that the FCA will come down hard on those firms found not to have heeded these warnings. Take steps to ensure that your firm does not find itself in its crosshairs.

Please get in touch if you’d like to discuss further.