The U.K.’s financial watchdog wants to crack down on illicit marketing of financial products on social media.
That crackdown, the Financial Conduct Authority (FCA) announced Monday (July 17), will involve applying the tough new consumer duty for other financial companies set to go into effect at the end of the month.
“We’ve seen a growing number of ads falling short of the guidance we have in place to stop consumer harm,” said Lucy Castledine, director of consumer investments at the FCA.
“We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect of firms when marketing financial products online. And for those touting products illegally, we will be taking action against you.”
The consumer duty goes into effect July 31 and is considered a cornerstone of the FCA’s campaign to institute higher consumer protection standards for financial institutions.
It will also require eMoney firms in the U.K. to change their practices, FCA Director of Payment and Digital Assets Matthew Long said in a letter to eMoney company CEOs and directors earlier this year.
“For many firms, meeting the Duty will require a significant shift in culture and behavior,” Long wrote in the letter.
The duty will create rules dealing with products and services, price and value, consumer understanding and consumer support, Long added.
The FCA has also recently unveiled what it described as “tough rules” for cryptocurrency marketing, announcing last month that companies who market crypto assets to consumers in the U.K. will need to introduce a “cooling-off” period for new investors starting Oct. 8.
As part of a package of measures designed to make sure those who buy crypto have a handle on the risk, “refer a friend” bonuses will also be banned.
“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision,” Sheldon Mills, the FCA’s executive director for consumers and competition, said in a news release.
He added that the rules offer consumers time and appropriate warning to make informed decisions, and argued that crypto is still a high-risk investment.
“The crypto industry needs to prepare now for this significant change,” Mills said. “We are working on additional guidance to help them meet our expectations.”
The release cites FCA research estimating that crypto ownership more than doubled between 2021 and 2022, with 10% of Britons surveyed saying they own crypto.