Advertising tactics used by unregulated investment firms have been a very hot topic, especially after the London Capital & Finance mis-selling scandal.
This prompted the Financial Conduct Authority to temporarily and then permanently ban the marketing of mini-bonds and similar securities products to retail investors in the UK.
The regulator has also been working with tech giant Google to tackle the spread of fraudulent ads on the search engine.
But now that Google is stepping up its verification process for financial advertisers, it seems that unregulated companies are finding fertile ground on social media platforms.
A Twitter user recently lamented that a sponsored post from a firm appeared on their Instagram feed promising 18% returns over 12 months.
International Adviser contacted Facebook, which also owns Instagram, to understand why it would allow an unregulated firm to advertise a product promising incredibly high returns over a very short period of time.
The social media platform said the advert did not violate its advertising policies and that, before they are published, Facebook and/or Instagram review adverts to ensure they meet the firm’s conditions.
According to Facebook’s website, such reviews look at how an ad’s creative, text, links and targeting compare against its policies.
A spokesperson for the social media platform told IA: “We do not want fraudulent activity on Facebook or Instagram. We meet with the FCA regularly and welcome the expertise they share to help identify and remove this type of content.”
Terms and conditions
Facebook and Instagram’s advertisement policy has very little detail when it comes to promoting financial products on the platforms.
Under the ‘prohibited content’ section, the policy says: “Ads must not promote financial products and services that are frequently associated with misleading or deceptive promotional practices.”
It clearly states that initial coin offering, binary options and contracts for difference trading are not allowed to advertise on either Facebook or Instagram.
The ‘restricted content’ section of the policy has a sub-paragraph that relates to “financial and insurance products and services” but is heavily focused on credit cards and loans.
It says: “Ads promoting credit card applications or financial services with accredited institutions must clearly provide sufficient disclosure regarding associated fees, including APR percentages, transaction fees, interest rates and the physical address of the entity offering the product within the ad’s landing page.
“Ads promoting credit cards, loans or insurance services must be targeted to people aged 18 or above. Ads promoting credit cards, loans or insurance services must not directly request the input of a person’s financial information, including credit card information.”
Additionally, the policy warns that adverts cannot promote “misleading or deceptive services” in relation to student loan consolidation, cancellation or refinancing.
Legislative action
A spokesperson for the FCA told International Adviser: “There are risks with taking unregulated investment advice and we engage with social media platforms to have pages which breach our regulation taken down.
“Consumers should be wary of adverts and advice online and on social media promising high returns [on] investments, and should always do further research on the product they are considering.
“The FCA believes that there is a strong case to include financial harms in the Online Safety Bill, given the scale of harm that investment fraud causes to consumers, many of whom are vulnerable.
“We are keen to discuss with the government how economic crime can be included in the proposed legislation.”
