The UK’s Financial Conduct Authority Shares Updated Guidance for Influencers Promoting Financial Products and Services

Financial Conduct Authority

The UK's Financial Conduct Authority (FCA) published a consultation to update its guidance for social media promotions of financial products and services, including a section on influencers and their relationships with companies.

The FCA advises companies to consider the demographics of their target audience when working with influencers. Companies should also ensure that influencers understand the products they are promoting and how to comply with regulations. Additionally, companies should monitor influencers' promotions to ensure they remain compliant throughout their lifetime.

Influencers must also comply with the FCA's rules, as well as the guidelines and policies of the social media platforms on which they are posting. The FCA provides examples of what it considers to be a promotion and requires influencers to comply with advertising guidelines. This includes straightforward scenarios, such as influencers being directly compensated by a company to promote a product or service. It also includes more nuanced situations, such as influencers promoting a product or service in the hope of driving views or engagement to be paid by the platform and to leverage growth in their following to secure future brand partnerships.

The updates are more reflective of today's landscape, as they address the emergence of new financial products and services like cryptocurrency and buy now pay later options. They also address the growing power of influencers in financial advice, with the emergence of short-form platforms like TikTok and Instagram Reels being key platforms for their type of content. The current guidelines, which were last updated in 2015, mostly cover text-based platforms like Twitter and have no mention of influencers.

The FCA's move follows several incidents of regulatory bodies cracking down on finance influencers and fintech companies. In the past year, there have been a number of high-profile cases, such as Kim Kardashian being charged by the SEC for unlawfully promoting a cryptocurrency, celebrities being sued following the collapse of FTC, and eight influencers being charged for an alleged “pump-and-dump” scheme.

The FCA's consultation paper is open for comment until March 24, 2023.