Financial Promotions Through Social Media

Question 1

Briefly explain the concept around financial promotions through social media

Answer 1

1. Any form of communication through social media is capable of being a financial promotion if it includes an invitation or inducement to engage in investment activity
2. This includes communications through “private” or “invitation only” social media channels like chat rooms, posts on public forums (Reddit) as well as content on communications by unauthorised “finfluencers”
3. Memes are also capable of being financial promotion and a subject to the financial promotion restrictions.
4. Financial promotion rules are based on detailed authorisation record- keeping requirements. (in SYSC)

Question 2

The FCA notes the use of memes by finfluencers is particularly prevalent in the cryptoasset sector.

What conditions should be obeyed for adverts used across social media channels?

Answer 2

1. Must be fair, clear and not misleading
2. Provide a balanced view of the benefits and risks.
3. Carry the prescribed risk warnings so consumers can make effective, well-informed financial decisions
4. Unauthorised persons promoting financial products or services without FCA approval - can be punished by up to 2 years in prison, unlimited fine or both.