Social media can be a valuable tool for expanding your knowledge on complex topics, but it also has its drawbacks, especially in the finance industry.
Platforms such as Instagram, TikTok, and Snapchat have given rise to self-proclaimed “financial experts” a.k.a.: ‘Finfluencers’ who offer advice on saving, investing, and financial planning to large communities. However, many of these individuals lack the qualifications to provide such advice and are self-taught, which increases the risk of spreading misinformation that can have serious real-life consequences.
What is being done about it?
Reports indicate that the FCA has removed ten times more financial promotions this year compared to the previous year and is keeping a close eye on the situation. Additionally, the FCA is working towards implementing stronger screening measures and stricter regulations for this new practice. This is intended to impose more limitations on what creators can post. However, it is expected that areas like Cryptocurrency, which are currently outside the FCA’s jurisdiction, will remain a challenge for some time.
The Times reported that the Financial Conduct Authority (FCA) is revamping its guidance amid rapid changes in the marketing of financial services, with companies increasingly using social media platforms to promote their products.
It is high time that this action is taken, considering the numerous social media posts over the years that have enticed individuals into risky schemes without disclosing the actual risks of falling prey to scams on social media, which have surged in recent years.
What does this mean for brands?
As a financially regulated organization, it is important to ensure that your practices and activities comply with both the Advertising Standards Agency (ASA) and the new FCA regulations when conducting influencer activity. Influencer activity has been a successful communication channel for businesses to engage with younger audiences, new customers, and expand their market share. However, with the significant increase in financial influencers who have little knowledge about the products they promote, consumer risk is now a major concern.
During the current cost-of-living crisis, it is crucial to crack down on fraudulent investment schemes. Many people are struggling financially and may be enticed by promises of high returns, but they may not be aware of the risks involved. It is important to protect individuals from these potential scams and importantly not muddy the waters of your brands with influencers that may fall into this category. Protecting your business reputation is important alongside your loyal customers.
What should I look out for when working with influencers?
- Verify the credibility of the individual.
- Do your own research.
- Look at the topics and posts their community has engaged with.
- Keep social media as a learning tool over it being a blueprint.
- If in doubt, rethink the activity.
For more information about your influencer management services, contact a member of our social media team today, by clicking here.