It has today set out guidance for firms and marketing partners, such as influencers, to help them stay on the right side of the law.

It said social media has become a central part of firms’ marketing strategies which means “Firms are on the hook for all their promotions.”

The FCA warned firms that they must ensure influencers they work with communicate to their followers in the right way. Meanwhile the regulator reminded influencers that promoting a financial product without approval from an FCA-authorised person with the right permission could be a criminal offence.

The financial watchdog said consumers need to be alert to dubious adverts and scams online, but it is also important that influencers ensure they’re on the right side of the rules and consider what would happen to their own reputations if they’re found to promote products illegally.

Lucy Castledine, director of consumer investments at the FCA, said: “Any marketing for financial products must be fair, clear and not misleading so consumers can invest, save or borrow with confidence. Promotions aren’t just about the likes, they’re about the law. We will take action against those touting financial products illegally.”

She said social media will not always be the best place to promote complex products and that firms need to consider whether a platform that offers limited characters or space is the right place to do so.

Scrutiny of financial promotions has been ramped up and last year the FCA removed more than 10,000 misleading adverts, up from around 8,500 in 2022. 

A round up of the crucial points in the new guidance:

• Under the Consumer Duty, financial promotions must support retail customer understanding and communicate information to retail customers in a way that equips them to make effective decisions.
• The FCA expects financial promotions to be standalone compliant. This means that each communication must comply with its rules when considered individually.
• The FCA expects promotions to provide a balanced view of the benefits and risks, and clearly communicate information that will help consumers make effective, well‑informed decisions. Firms should consider factors such as their target audience, what recipients need to know, the kind of decision to be made by recipients, and where confusion could arise in determining how to support consumer understanding.
• Some promotions will require specific information, such as a risk warning with prescribed wording, to be displayed prominently.
• 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.
• Unauthorised persons, such as influencers, who promote financial products or services that are subject to regulation without the approval of an FCA authorised person may be committing a criminal offence.
• Even when an influencer does not have a commercial relationship with a firm, their communications on social media about financial products or services may still be subject to the financial promotion restriction and require approval to communicate.
• Influencers should consider whether they are the right person to promote a product or service.