The Financial Conduct Authority has updated its existing guidance on social media and customer communications to ensure it is clear and up to date.
In a consultation today, the FCA said it is carrying out additional work to combat illegal and non-compliant financial promotions.
The latest proposals, which build on the FG15/4: Social media and customer communications guidance from March 2015, will modernise the information firms should use when promoting financial products or services online.
For example, the regulator is reminding firms that any form of communication - including through social media - is capable of being a financial promotion if it includes an invitation or inducement to engage in investment activity.
This will include communications through ‘private’ or invitation only social media channels like chatrooms such as Discord and Telegram.
It said authorised persons must comply with rules when communicating or approving financial promotions and ensure they are generally subject to the requirement to be fair, clear and not misleading.
Promotions that fail to meet this standard can cause consumers to buy products and engage in services that aren’t suitable for their needs, leading to poor outcomes for them.
The FCA also said communications through social media can reach a wide audience very rapidly and when designing their financial promotions, firms should carefully consider the way material on social media is distributed.
“We expect financial promotions to be standalone compliant,” it said.
“This means that each stage of a financial promotion must comply with our rules. “
However, promotions of complex financial products might require additional supporting information or disclosure to enable consumer understanding.
In this case, firms may include supporting hyperlinks or separate pathways for a consumer to access this.
Links to additional information should be clearly and prominently brought to the consumer’s attention and should give consumers enough information to make an informed decision.
Elsewhere, the FCA also reminded firms that there are requirements to include risk warnings or other statements in promotions for certain products/services.
These rules are media neutral, so apply to social media as they would any other channel.
“We expect risk warnings on social media to be clear, prominent and without a design feature that reduces their visibility or prominence,” it said.
“Firms should be aware that specific sectors have more prescriptive risk warning requirements and firms should familiarise themselves with these rules before communicating or approving financial promotions on social media.”
Where rules allow shortened risk warnings, firms should ensure the shortened clause is clearly visible, and the full warning is included after click-through.
Lucy Castledine, director, consumer investments at the FCA, said: "We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm.
"We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect of firms when marketing financial products online.
