On 26 March 2024, the latest FCA social media guidance was published. This follows the draft guidance published in July 2023. For a recap of key proposals, we recommend reading our previous article on GC23/2. This guidance supersedes and replaces the previous FCA guidance on social media from 2015.
The purpose of this article is to summarise any changes between the FCA’s proposals and its finalised guidance.
Summary of feedback
Respondents generally welcomed the FCA’s updated guidance, particularly given the evolving nature of social media and recent regulatory changes such as the Consumer Duty. They emphasised the need for more specific guidance on complying with the Duty and applying rules to various social media features. Concerns were raised about the perceived burden of compliance, especially regarding the requirement for prominence, which some feared might deter consumer engagement. Additionally, there were calls for clearer oversight of affiliate marketers, such as influencers, with some arguing for greater responsibility on the part of influencers and social media platforms to prevent scams and fraud online.
Summary of changes to initial proposals
The final guidance has minor amendments but remains largely unchanged from the draft guidance. Amendments are summarised below:
Prominence: The guidance emphasises that where information is required to be prominently displayed, it should not be hidden or cut off due to design, and if that is not possible, it should be included in an image. Risk warnings should stand out but do not necessarily need to be as large as the headline.
Consumer Duty: Firms should consider if their ads might reach unintended audiences on social media, leading to harm or non-compliance. Using social media tools to target ads may be inappropriate where the tools are incapable of excluding targets in a negative target market.
Affiliate Marketing: If an approved promotion is changed by an unauthorised entity, the person who approved it is not necessarily responsible. However, firms should reconsider their relationship with affiliates if there is concern about unauthorised changes. Affiliates are also given guidance on understanding whether they are involved in regulated activities.
Shared Social Media Profiles: Changes clarify when promotions from unregulated overseas entities or shared profiles could affect UK consumers and fall under UK financial promotion rules. The test for whether the financial promotion restriction applies is whether the promotion is capable of having an effect in the UK.
Checklist for Firms
Firms should promptly benchmark their existing financial promotions framework against the latest guidance. Consider the following actions:
- Update financial promotions policies and procedures for robust approval and monitoring.
- Explicitly consider Principle 12 in ongoing approval processes to ensure good customer outcomes.
- Maintain thorough records of approved financial promotions, including digital communications.
- Share this guidance with affiliates, including introducers and ‘finfluencers’, promoting the firm’s services.
- Monitor affiliate marketing actions for customer outcome alignment and assess partnership volume for effective monitoring.
- Ensure compliance with financial promotions requirements when working with ‘finfluencers’.
- Clearly differentiate between firms operating in different jurisdictions, especially when directing UK customers to overseas entities.
- Cryptoasset firms should familiarize themselves with relevant regulatory guidelines before promoting on social media.
- Assess social media suitability for each product or service, considering complexity and target market, and ensure compliance with standalone promotion regulations.
How C&G can help
We are well placed to assist firms with their financial promotion approval framework. We offer health checks on existing controls, policy drafting and bespoke training solutions to firms and venues. Contact us with your requirements if you need assistance in this area.
