Social media influencers can now be seen in practically every area of consumer product marketing, from fashion and beauty products to travel and health & fitness. In brief, social media influencers are individuals who have established credibility within a certain niche area, and who then use this credibility to connect with a large audience via social media platforms, commonly partnering with companies to promote the products and brands of those companies. Within the field of financial services, influencers are commonly referred to as “finfluencers”.
Whilst the Advertising Standards Authority has recently undertaken a successful campaign to ensure that advertisements placed by influencers are clearly identified as such (for example, by use of “#ad”), the Financial Conduct Authority has been a little slower in updating their guidance for finfluencers about social media customer communications in the field of financial services - its last guidance dated from 2015 and made no reference to social media influencers.
However, following a public consultation, the FCA has recently published new guidance for social media and finfluencers, which can be found here. The FCA has recognised that social media influencers now play a prominent role in the marketing of financial products, particularly investment and credit products targeted at younger consumers who are perhaps more likely to trust the information provided. The FCA has also recognised that advice given by finfluencers can often be misleading. As a result, the FCA has clarified its expectations around communications about financial products and services.
The new guidance makes it clear that the promotion of financial products and services must be fair, clear and not misleading, such that consumers are informed not only of the potential benefits but also of the relevant risks. If finfluencers do not meet these requirements in their promotional activity on social media, not only do they run the risk of falling foul of the FCA, but they also risk causing damage to the brands that they are seeking to promote. The FCA has shown that it will actively monitor finfluencers and take appropriate action, having recently brought criminal charges against a number of finfluencers regarding alleged financial promotion breaches.
Accordingly, where financial service providers have actively partnered with finfluencers to promote their financial products, care should be exercised to ensure that any promotional social media activity undertaken by the finfluencer complies with the FCA’s guidance, as well as with any other specific guidelines or requirements relating to the financial product concerned, and of course with the ASA’s advertising code. This may involve both contractual arrangements with the finfluencer to ensure that all promotions are compliant for the lifetime of the financial products concerned, alongside educating and training the finfluencer as to what may and may not be posted in relation to those financial products.
However, bear in mind that not all finfluencers who post communications about financial products are associated with the providers of those financial products; some finfluencers may independently share their opinions about financial products, whether or not they have been paid to do so by the provider of those financial products. In these instances, there is again the risk that non-compliance by the finfluencer will result in damage to the reputation of the brand applied to the financial product concerned. As such, financial service providers should actively monitor social media activity relating to their financial products in order to identify any unauthorised and non-compliant promotional activity.
The new guidance of the FCA, and the FCA’s action in challenging finfluencers who fail to comply with the guidance, are welcomed and it is hoped that the promotion of financial products and services on social media will be less likely to confuse or mislead the consumer moving forward. However, financial services companies will still need to exercise caution and diligence in order to ensure that their brands do not suffer any reputational damage as a result of the unauthorised or ill-informed posts of finfluencers
