LONDON, July 17 (Reuters) – Britain’s financial watchdog
on Monday proposed toughening up safeguards against the illegal
marketing of financial products on social media by applying a
stringent “consumer duty” that is being rolled out to banks,
funds and insurers on July 31.
The Financial Conduct Authority has said its new duty will
be a step change in protecting retail investors after years of
mis-selling scandals, by forcing firms to demonstrate how they
are giving consumer good outcomes.
“Where applicable, the Consumer Duty will raise our
expectations of firms communicating financial promotions on
social media above the requirement… to be clear, fair and not
misleading’,” the FCA said in proposals out to public
consultation.
“Firms advertising using social media must consider how
their marketing strategies align with acting to deliver good
outcomes for retail customers.”
In the fourth quarter of last year, nearly 70% of amended or
withdrawn financial marketing following FCA intervention
involved a promotion on websites or social media, the FCA said.
The watchdog is targeting so-called ‘finfluencers’ or widely
followed people on social media who promote financial products.
“Consumers exhibit high levels of trust in finfluencers, but
their advice can often be misleading,” the FCA said.
“Promoting a regulated financial product or service without
approval of an FCA authorised person, or providing financial
advice without FCA authorisation, may be a criminal offence.”
Promotions should also include risk warnings, it added.
(Reporting by Huw Jones;
Editing by Bernadette Baum)
