Who: The Advertising Standards Authority (ASA) and the Financial Conduct Authority
Where: United Kingdom
When: 24 Apr 2023
Law stated as at: 11 May 2023
What happened:
The ASA has partnered with the FCA and former Love Island contestant Sharon Gaffka to educate influencers on the rules and risks around promoting financial products. This practice has been dubbed ‘finfluencing’ and there have been recent examples of influencers falling foul of ASA rules, having promoted cryptocurrencies in a way which trivialised the investment.
The regulators have created an infographic which is designed to help influencers who are approached to promote financial products. The infographic contains a checklist which will help influencers make decisions when choosing to promote financial products and ensure such promotion is done correctly:
- Are you providing advice about a financial product?
- Are you authorised by the FCA or has your post been approved by an FCA authorised person?
- Have you or your agent done your due diligence?
- Does your post follow the ASA rules, e.g. correctly labelling ads that are legal, truthful and responsible?
- Promoting crypto? You must make it clear that (i) cryptocurrency is unregulated; (ii) profits may be subject to tax; and (iii) the value of any investment could fall.
- Don’t suggest that crypto-assets would be an easy investment decision or create any sense of urgency.
Why this matters:
The ASA and FCA wish to engage with influencers and their agents to provide clear information about what could be an illegal financial promotion. Influencers are often promoting products without knowledge of the relevant rules and without understanding the potential harm that could be caused to their followers.
There has been a lot of activity in the area in the past year, with the FCA intervening on nearly 9,000 promotions, leading to the amendment or withdrawal of such promotions. This figure is nearly 14 times the amount of interventions by the FCA in 2021. While the ASA has seen better levels of ad disclosure and general compliance with the rules, the complex nature of financial products means that more care should be given, and more advice should be provided to influencers to help them avoid the pitfalls of advertising products that they may not fully understand themselves.
The regulators are hopeful that the campaign will make sure that influencers stay on the right side of the rules. The plan is for the regulators to meet with the Influencer Marketing Trade Body later this year to hold an open roundtable discussion on illegal financial promotions.
