{"id":79,"date":"2023-10-10T15:45:41","date_gmt":"2023-10-10T15:45:41","guid":{"rendered":"https:\/\/iqeq.com\/gb\/2023\/10\/10\/appealing-to-the-millennial-investor-fca-addresses-financial-promotions-on-social-media\/"},"modified":"2024-08-07T14:15:45","modified_gmt":"2024-08-07T14:15:45","slug":"appealing-to-the-millennial-investor-fca-addresses-financial-promotions-on-social-media","status":"publish","type":"post","link":"https:\/\/iqeq.com\/gb\/insights\/appealing-to-the-millennial-investor-fca-addresses-financial-promotions-on-social-media\/","title":{"rendered":"Appealing to the millennial investor: FCA addresses financial promotions on social media"},"content":{"rendered":"
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By Elliot Mills, Senior Compliance Consultant<\/em><\/p>\n

Millennials. A generation not only redefining cultural norms, but also reshaping the world of investing. Millennials are fast becoming the global economy\u2019s main source of wealth and spending and, as such, are having a real influence on trends in every industry, including financial services \u2013 to the point that new regulation is required.<\/strong><\/p>\n

To previous generations, stock markets and investment portfolios seemed like distant realms accessible only to the wealthy or those fluent in financial jargon. Millennials have dismantled these barriers and disrupted established trends by embracing user-friendly platforms, apps and social media to support their unique approach to investing.<\/p>\n

What\u2019s more, millennials have experienced multiple major market swings in their lifetime, including market collapses, recissions, a global pandemic and growing concerns about social and environmental injustices. The scepticism such volatility creates as further spurred millennials and younger generations to turn to social media to guide their investment choices, rather than working with a financial professional and receiving investment advice in the traditional way.<\/p>\n

FCA responds to growing investor reliance on social media<\/h2>\n

Accordingly, the UK\u2019s Financial Conduct Authority (FCA), along with the wider financial services industry, has recognised that the social media appeal to the millennial investor \u201chas become an increasingly vital part of firms\u2019 marketing strategies<\/a>\u201d.<\/p>\n

On 17 July 2023, the FCA opened a consultation<\/a> on proposed guidance detailing how its financial promotion requirements apply to social media. The FCA\u2019s aim is to ensure firms understand how its rules apply to social media and for firms to think carefully before promoting financial products or services on these platforms.<\/p>\n

In their guidance, the FCA has reminded firms that all forms of communication, including social media, can be a financial promotion if it includes an invitation or inducement to engage in investment activity \u2013 even in private channels like Discord or Telegram.<\/p>\n

Firms should also be aware that where third parties share financial promotions (e.g. retweets or re-posts), the originating firm remains ultimately responsible for complying with the rules.<\/p>\n

The FCA\u2019s Principle 3 (that a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems) applies to all authorised firms, including payments and e-money firms as well as more traditional investment firms and banks.<\/p>\n

What you need to know about the FCA\u2019s proposed guidance<\/h2>\n

Key takeaways for firms looking to communicate with investors via social media include:<\/p>\n