Regulation  

FCA orders investment platform to remove social media posts

FCA orders investment platform to remove social media posts
 

The Financial Conduct Authority has told investment platform Freetrade to remove all paid-for social media influencer posts after its use of an influencer for the company suggested consumers in debt could use the platform to make money. 

In a second supervisory notice, the FCA said all financial promotions issued or approved by a firm must be “fair, clear and not misleading”.

But the FCA concluded Freetrade had breached these rules as it failed to consider the extent to which vulnerable customers might access a financial promotion that it had approved, by a social media influencer.

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It asked Freetrade to remove all paid for sponsored influencer advertisements and posts across all social media platforms, including without limitation Instagram, TikTok, Facebook and YouTube within 24 hours of the first supervisory notice.

Following this, it asked the firm to confirm that it had done so together with a list of all advertisements and posts removed.

Freetrade was founded in 2016 and offers commission-free stock trading as well as a Sipp and a stocks and shares Isa.

The FCA took action after it had repeatedly warned Freetrade about its use of social media - in 2020 and again in 2021.

The regulator was critical of the fact Freetrade worked with an influencer who had gained widespread media interest around her story of “clearing her debt” and who was therefore likely to have vulnerable or indebted consumers among her followers.

In its notice, the FCA said: "The authority considers that the promotions provide consumers with the impression that they could reduce debt by following the steps taken by the social media influencer and use the dirm as a mechanism to make money.

"However, the authority considers this to be misleading as there are no guarantees that any investment will result in positive gains in the short or long term. Consumers already in debt are likely to be particularly vulnerable to this."

The regulator said it also identified a TikTok video which was posted to an Instagram story on the influencer’s profile, that promoted the benefits of using Freetrade to engage in investment business but did not include the required risk disclosure. 

“In this case the omission of a capital at risk warning contravenes this rule and has the capacity to mislead consumers,” the FCA said. “FreeTrade did not have appropriate oversight of the influencer’s financial promotion which would have allowed the firm to identify and request the removal of the TikTok video posted.”

The FCA first imposed the restriction in December 2021 and has decided not to rescind them.

The regulator first issued a supervisory notice in December after it found social posts about Freetrade that did not meet some of its financial promotions rules.

The City watchdog previously provided feedback to Freetrade in relation to breaches of the financial promotions rules in March 2020 and March 2021. 

Freetrade conducted an internal review of its financial promotions, at the FCA’s request, following this feedback. 

At the time, Freetrade confirmed it had made changes to its systems and controls and stated that it now accepted its standards had "not been high enough on ensuring that risk disclosures are included and are prominent (especially on social media)".