Why it matters

Under the Financial Services and Markets Act 2000 (FSMA), it’s a criminal offence for an unauthorised person to communicate a financial promotion unless it’s been approved by an authorised firm with the right permission. The FCA’s rules apply across all media, including TikTok, YouTube, and Instagram. If an influencer’s content includes an “invitation or inducement to engage in investment activity” then it could be classed as a financial promotion. And if your firm is named, you could be drawn into the regulatory spotlight, even if you had no involvement.

What's a financial promotion?

The law doesn’t define “invitation” or “inducement”, so we rely on their ordinary meanings. The context and purpose of the content are key.

Educational or factual content may fall outside and be acceptable. But if the content encourages investment activity (which includes entering into a regulated agreement), it may cross the line.

The FCA’s guidance (PERG 8.4.4G) asks: Would a reasonable observer think the communicator intended to persuade or incite someone to invest? Or that this was the purpose of the content? If yes, it’s likely to be a financial promotion.

A common scenario

Imagine a video where a creator praises a financial product, calls it “a smart way to borrow” and urges viewers to “get started today”. The lender is named, and there’s a link in the description.

This kind of content is promotional in tone, encourages the consumer to enter into a regulated agreement, and refers to a specific firm. As such, this could easily fall within the definition of a financial promotion.

What should you do?

If your firm is mentioned in content like this, assess the risk. If you believe it’s a financial promotion, or could mislead consumers, consider contacting the creator to ask for changes or its removal. You may also want to report the incident and your actions to the FCA.

Final thoughts

Influencer marketing is powerful, but in financial services it carries serious regulatory risk. Unsolicited mentions can expose your firm to scrutiny. There’s also a real risk to consumers. When financial products are promoted by individuals without proper authorisation, the content may be misleading or overly simplistic, leading to poor financial decisions.

Monitoring how your brand is referenced online is no longer optional. It’s essential.

About Walker Morris

Walker Morris is an award-winning law firm providing practical and commercially focussed solutions for consumer, motor, asset, and mortgage finance firms. We work with well-known players, fintechs and start-ups. We also advise lenders, brokers, and debt buyers.

We provide a true end-to-end service. We advise on:

permissions and authorisations
financial promotions and marketing
policies and procedures
regulatory processes
documentation (both customer facing documents and wider commercial documents)
contentious issues (including dealing with technical complaints, and test cases, to the Ombudsman, complex issues before the Court or discussions with a regulator)
remediation projects.

Our team of experts and former regulators draft innovative products and are at the forefront of product launches and developments. We author practitioner materials. We’re embedded in your industry and understand what you do.

For more information, visit www.walkermorris.co.uk.

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