The U.K.’s financial watchdog is warning social media influencers against making misleading financial services promotions.
The Financial Conduct Authority (FCA) on Tuesday (March 26) issued guidelines aimed at social media advertising, telling influencers they could be breaking the law by promoting financial products without regulatory approval.
“Any marketing for financial products must be fair, clear and not misleading so consumers can invest, save or borrow with confidence,” Lucy Casteldine, the FCA’s director of consumer investments, said in a news release.
“Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.”
The FCA said that while consumers need to be wary of online scams and questionable ads, it’s important for influencers to make sure they remain on the “right side of the rules” and think about the potential harm to their reputation if they were found to be promoting products illegally.
Last year, the regulator warned against the growing threat from what it called “fin-fluencers” — unauthorized individuals offering investment advice.
The FCA has taken action against these influencers in the past. In this case, the authority found a director of a regulated firm using their personal social media account to promote the advice of unauthorized traders and other financial products. The FCA blocked that person from using their personal social media to promote financial services and required their firm to cease any financial services promotions.
As PYMNTS wrote last year, influencers are figures who can hold significant influence, providing insights, recommendations, and connections with their audiences.
“Creators are becoming this new distribution channel that can do that very authentically,” Kit Ulrich, general manager of creator shopping at LTK, said in an interview with PYMNTS CEO Karen Webster in October.
Reports have shown that 66% of Gen Z and millennials engage in shopping and making purchases through creators, while 56% of the wider population chooses to buy from creators, a 64% increase from the previous year.
Meanwhile, PYMNTS earlier this week examined the advent of the B2B influencer — business to business, as opposed to business to consumer (B2C) — born from the rise of digital B2B marketplaces, and the ongoing digitization of the B2B ecosystem.
“While B2C positioning often focuses on differentiation, lifestyle and emotional appeal to stand out in a crowded consumer market, B2B positioning should emphasize expertise, credibility and the ability to deliver tangible business outcomes that can establish trust and reliability,” that report said.