Written by Hazel J. Greene, Senior Analyst

The Financial Conduct Authority (FCA) is stepping up its efforts to protect consumers from potential harm caused by misleading financial advertisements on TikTok and other social media platforms. In response to the growing influence of “finfluencers” and the popularity of TikTok, the FCA has launched a consultation process to revamp its social media guidelines. This blog post sheds light on the FCA’s concerns, the identified risks and the actions being taken to address them.

As the popularity of TikTok continues to soar in the United Kingdom, concerns have been raised about the impact of “finfluencers” – influencers who give financial advice – on consumers. Lucy Castledine, the Director of Consumer Investments at the FCA, expressed the agency’s worries that many ads on TikTok fail to adhere to the existing guidance designed to protect consumers from harm.

Understanding the need to adapt and modernize its guidelines, the FCA aims to address the potential risks posed by misleading financial promotions and inadequate risk disclosures on social media platforms. In an effort to safeguard consumers’ interests, the regulator is seeking to mitigate the adverse effects of non-compliant practices prevalent online.

The FCA has identified several instances where financial advertisements on TikTok fail to adequately disclose the potential risks associated with certain products. For instance, some TikTok users promote debt counseling without providing sufficient information about the possible consequences. Additionally, an Instagram advertisement promoting “buy-now-pay-later” schemes was flagged for lacking proper risk disclosure regarding unregulated credit.

The FCA also expressed concerns about the use of memes in advertisements within the crypto sector. With cryptocurrencies gaining significant traction on social media platforms, users might be unaware that these memes are subject to regulatory guidelines. Consequently, the circulation of misleading or non-compliant information becomes a potential risk that the FCA aims to address.

To combat these issues, the FCA has initiated a consultation process that spans across various financial services sectors. The consultation will remain in effect for the next eight weeks, during which the regulator aims to ensure greater compliance with its guidelines. Furthermore, the FCA’s engagement with major technology companies has resulted in significant changes to their advertising policies, with financial promotions now restricted to those approved by FCA-authorized firms.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.