FCA cracks down on promotions after 164 cases fall foul of rules

The City watchdog concluded that the posts were "misleading" as there was no guarantees that any investment would result in positive gains in the short or long term.

In the majority of cases where regulated firms have been in breach due to their social media posts, the FCA has not published notices.

The regulator told FTAdviser that where firms' social media posts have been non-compliant, it has sent letters expressing its concerns to those firms direct.

It will either contact the firms themselves or individuals at their principal firms.

According to the FOI submitted by FTAdviser, there was an increase in social media-related cases for authorised firms in 2021, seeing the total jump from 10 to 14 (40 per cent).

But the FCA labelled this increase “minimal” in its response.

Cases regarding authorised firms where the primary media type is ‘social media’

Source: The FCA

The regulator highlighted that the figures it supplied to FTAdviser in the table do not include cases where the primary media recorded is not social media, but a social media promotion may have been raised as a secondary issue.

This means the FCA has likely encountered more than 59 in-breach social media posts shared by regulated firms over the past three years.

Head of personal finance at AJ Bell, Laura Suter, said the FCA is "turning up the heat" on influencers touting investment schemes, crypto platforms or other trading schemes.

"The FCA is aiming to make it harder for adverts and promotions to be approved, in a bid to stop people handing over their cash for investment schemes based on inaccurate social media posts," said Suter.

“The FCA has been slow to move on tackling the huge number of social media posts luring people into investing in high-risk schemes or crypto trading without stating the real risks involved. Its latest move is to have more oversight of the adverts and promotions that are put out to advertise all manner of investments.

'One of the most common themes'

At the end of last month, the FCA created a new 'Early and High Growth Oversight' function designed to provide "closer supervision" and help firms through the first stages of being authorised.

During 2021 to 2022, the regulator ran a pilot with 32 newly-authorised firms to help them adapt to its supervision.  

The pilot found one of the most common themes was how well these firms understood rules on promoting financial products to the public.

"Some firms were describing their products and services as 'FCA approved' on their websites. We don't 'approve' firms' offerings; we authorise firms and give them permission to offer regulated products and services," the FCA said.