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Social media sites warn about risky investment proposals Financial Conduct Authority

The City Regulator has warned social media sites that it may take action if it consistently promotes risky and sometimes fraudulent investments for inexperienced consumers.

The Financial Conduct Authority is concerned with the increasing impact that sites such as YouTube, Instagram and TikTok have on a new breed of mainly young DIY investors who believe that while investing in cryptocurrency, foreign exchange trading and other high Are taking great financial risks. – Products.

In a speech, FCA Chief Executive Officer Nikhil Rathi said that large internet companies “need to take more and more responsibility” for their role in connecting consumers with these investment proposals. He said a lot of “investment opportunities” that people were looking for online were “too good to be true”, and the FCA was looking at how social media sites are following the new rules on so-called financial promotions. “We will take action if needed,” he said.

FCA also has search engines like Google in its sightseeing sites; And is accused of profiting from investment scam advertisements on the platform. The regulatory powers of the sector include enabling fine companies and ban advertisements. Previously, online platforms were exempted from the financial promotion regime, but this exemption was lifted when Britain left the EU.

The FCA regulates advertising for most financial services, including many types of investment products; Under the rules All financial promotions “must not be clear, fair and misleading”. The regulator’s website, which was updated this month, makes it clear that these rules apply “regardless of media type”, stating that financial promotion can take the form of a website, Facebook post or tweet.

Rathi said in his UK Fintech Week speech: “We see no reason why different standards should be applied to search engines or social media than newspapers. If these platforms display, and benefit from, select risky ads for risky advertisements – and in some cases fraud – they should also follow the financial promotion rules. “

He said that the impact of these websites was increasing on consumers – particularly on new DIY investors. Compared to more experienced investors, those with less than three years of experience were more than twice as likely to rely on YouTube or social media sites to research or discover investment opportunities, according to the regulator.

“Consumers should not be subject to lower standards or greater risks because they invest online … consumers – and firms benefit when the financial incentive rules apply to both digital and more traditional media,” Rathi said. Rathi said.

Social media has been a major driver in the rapid growth in the number of young investors in recent years. #Investing and #finance have millions of posts on Instagram, while such content on TikTok videos has generated billions of views.

In March, the FCA stated that these often smaller and more diversified DIY investors were making risky choices because they liked the challenge and the position, and they were often swayed by the influencers they followed.

In September 2020 regulator said It was important that firms such as Google bear a “clear legal obligation” for the financial promotions they promoted, at least in the same way as traditional publishers.

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