“Fair and transparent” is the new mantra of the FCA when it comes to promotions. In 2024, where almost all of our communication and marketing is now done online—often in semi-private forums like a Discord server—it’s increasingly difficult to regulate. That’s why the FCA financial promotions rule has taken a broad approach that targets all communications.
Adhering to these regulations is important, not just for avoiding fines, but keeping one's public image intact. So, how exactly do you remain compliant when producing such large volumes of online marketing materials?
This guide outlines a few important principles in creating compliant content and the common mistakes to avoid.
Understanding FCA Marketing Rules
The mantra of all promotional content being “clear, fair, and not misleading” means that communications must be accurate and provide a balanced view of the risks involved. A big no-no is selling the upsides without mentioning the downsides. This is particularly aimed at high-risk investments like crypto assets because risk and reward often have a relationship, where you generally can’t have one without the other. So, it’s too easy and too deceptive to highlight the rewards without the risk, and the FCA knows better than anyone that the greater the reward advertised, the greater the need for a risk warning to balance this.
So, the FCA stresses the need for prominent risk warnings and full disclosure of all relevant information. Firms must avoid making exaggerated claims or omitting important details. These regulations are designed to protect consumers, but they’re also key to maintaining trust in the markets. Trust has never been so important and so noncompliance is a big cause in breaking this.
Key Principles of Digital Compliance
Disclosures about risks and the nature of financial products must be easy to understand and accessible, so this means a big font that contrasts enough to be easily noticeable. It’s important to maintain up-to-date and accurate information across all digital platforms. For example, financial promotions may boast about recent performances. But, not only should this be accurate and mention the risks, you need to be careful not to post it on a social media platform that you forget about and it become misinformation over time. To avoid this, “the past three months” should instead be “from April 1st 2024 to July 1st 2024”. Be wary of writing US date formatting to a UK audience, too.
Firms should therefore have all promotional content reviewed regularly in order to maintain compliance over time, and reflect any changes in regulations as well as cleaning obsolete information.
Marketing materials should not create a false impression of security or downplay the risks associated with investments.
Creating Compliant Social Media Content
When partnering with influencers, firms need all material connections to be disclosed clearly. Influencers should be briefed on FCA rules and monitored for compliance; all posts verified by an in-house team, if possible. At a minimum, if an influencer is paid to promote a financial product, they must clearly state this in their posts.
The FCA has provided some examples of good and poor practices to help firms create compliant content. Good practices include using plain language and explaining terminology (never assume pre-existing knowledge or context; treat all platforms as though discoverability is high), while poor practices involve vague disclosures and misleading claims.
Of course, promotional content should not imply that the endorsement of a product by an influencer guarantees its success. Firms should also be cautious about the platforms they choose for their promotions, ensuring they align with the target audience's needs and the nature of the product being marketed.
Common Pitfalls and How to Avoid Them
In just the first couple of weeks after the rules went live for cryptoasset firms, the FCA sent 200 warnings. The three most common problems that arose were
Making claims about the ease of use and security of cryptoasset services without proper risk warnings.
Poor accessibility of the risk warnings regarding small font or poor colour choices.
Firms not supplying customers with enough information regarding the risks of what’s being promoted.
It’s clear that we can learn much from this that is relevant to the promotion of overseas funds in the UK too. Although some of these instances were purposefully deceptive, many may fall victim to believing that the customer already “gets” the risks, or assumes they know the industry. In truth, these firms may be one of the first times a customer has ever come into contact with crypto, or other such technology-focused products, and so some level of educational duty is now expected of these firms.
And so, the biggest pitfall of all is not understanding the extent and range of people that one’s own marketing promotions may reach. Therefore, the absolute least must be expected at all times, which is that you’re speaking to a beginner who has never heard of the terms multi-asset, standard deviation or risk-adjusted returns.
Monitoring and Record-keeping
You can’t always get it right the first time, so monitoring digital content for compliance is needed.
Record-keeping is important here. Firms must maintain detailed records of all promotional activities, including social media posts and influencer partnerships. These records should include copies of the promotional materials, details of any financial arrangements and evidence of compliance checks. Otherwise, tweets and posts can be deleted upon investigation, which would only spur more trouble.
Using tools and technologies can help streamline this process. For instance, saving a copy of your online activity is simple, as most platforms have a “Download all data” request, which can be done frequently.
Compliance monitoring tools can further automate the review of digital content, flagging potential issues before they become problems. At the very least, LLMs like ChatGPT may be a good first set of eyes when flagging complex jargon that may need explaining (i.e. Custom GPT instructions that you’re speaking to an 8-year-old). There is no substitute for experts though, and choosing an experienced UK approver for financial promotions is essential.
Final Word
Compliance with FCA marketing rules in digital and social media promotions is increasingly important. There are some key principles that are somewhat evergreen, but ultimately you are required to stay persistently updated in order for an organisation, its processes, and its employees to stay ahead of the changes. Promoting overseas funds in the UK requires an FCA authorised entity, and the quality, expertise and experience of this partner will make or break your success.